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Before starting today’s post, a few quick comments:

1. I am quoted in CNNMoney.com. Considering that it is necessary to water things down a bit for the general audience, I thought it was actually pretty good. I said in the interview that 3% inflation for 2 years followed by 2% inflation was about right. But what he wrote is close enough. And he got the tricky negative interest on reserve thing exactly right–so I can’t complain.

2. Those readers thinking “I wish someone would take that arrogant Sumner down a peg or two” should be reading the comment sections of recent posts. Andy Harless, who is a distinguished monetary blogger, has been giving me some very tough questions. He has skillfully exposed some of the soft underbelly of my arguments, especially in the “Power Seduces” comment section. I will add him to my blogroll. He is very smart.

Here are 4 very different views of Germany:

Paul Krugman: Germany is an anti-Keynesian villain.

Tyler Cowen: Germany is an anti-Keynesian success story.

Der Spiegel (from Mark Thoma): Germany is a Keynesian success story.

Me: Germany? Successful?

I do understand that Germany has done very well on the jobs front, and deserves credit for that. But I don’t see that as a Keynesian success. Keynesian stimulus is supposed to create jobs by boosting NGDP, and NGDP has done much worse in Germany than the US (as has RGDP.) Their jobs success comes from reduced hours, not more output. Output is still well below 2008 levels, and is expected to remain lower for years.

Germany’s strength, in my view, is its manufactured goods export sector. I don’t know why they are so good at building BMWs and turbines, but my hunch is that it isn’t fiscal stimulus. It probably has more to do with an educational system that has a technical skills track, and which doesn’t bore normal boys out of their minds in a futile attempt to use schools to create an egalitarian society.

This reminds me of a point made by Tyler Cowen last month:

I’m a fan of the northern European social democracies, but in part they succeed because those countries don’t follow all of the prescriptions you might hear coming from their boosters in the United States.

PS. This New York Times article suggests that German technical education was already superior to ours by 1902.

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Tags: Germany

This entry was posted on July 21st, 2010 and is filed under Fiscal policy, Keynesianism, Misc.. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response or Trackback from your own site.



