There may be a chance for such a change to begin, but I doubt it. I strongly suspect that things have to get much worse before change can take hold; and even then, the country may lurch further into socialism rather than out of it.

Ich habe mit Staunen die Verdammung des ehemalig-
en deutschen Sozialsystems unter “The Meltdown of the German Welfare State” gelesen. Mit Staunen deshalb, weil Sie einige wesentliche Unterlas-
sungsfehler begangen haben, wie man sie von einem Wirtschaftsexperten eigentlich nicht erwartet. Erlauben Sie mir deshalb einige detaillierte Er-klärungen zum Thema.

Warum haben Sie unterlassen zu erwähnen, daß der Hauptautor der Zerstörung des deutschen Sozial-systems, Herr Hartz, jetzt als Bösetäter entlarvt wurde und sich seines Amtes, seiner Würden und hoffentlich auch eines Teiles seiner überhöhten Einkünfte enthoben sieht? Der Mann, der meinte dem dem deutschen Arbeiter Arbeitsmoral beizu-bringen ist jetzt als Wirtschaftsuntäter entlarvt
der gesetzes- und moralswidrig die eigenen Tasch-
en und die seiner”freien” Wirtschaftgesinnungsge-nossen füllte.

Sie haben auch vergessen zu erwähnen, daß der deutsche Arbeiter seit 1945 nicht nur den Wieder-aufbau der durch Bomben willkürlich zerstörten
Heimat geschaffen hat, sondern, was noch viel mehr Arbeit und Opfer erforderte, er hat auch die beinahe unstillbaren Forderungen nach Reparati-onen, Besatzungsunterhalt, Auslandshilfe, Wieder-gutmachungen und Asylantenunkosten erfüllen müs-sen. Wenn man diese Beträge und die diversen materiellen Abgaben zusammennimmt darf man füg-lich von einem zweiten Versailles sprechen.

Vielleicht hätten Sie als Wirtschaftsexperte ein ausgewogeneres Bild der Lage in Deutschland ge-
malt, wenn Sie die finanziellen Kosten die durch
das schlechte Management durch Vertreter der frei-en Wirtschaft verursacht worden sind und die Kost-en der Ausbeutung durch internationale Interessen
ins Verhältnis zu den Sozialkosten gesetzt hätten.

As much as I agree with Kent Welton, I see no possibility whatever that the trade being forced down our thoats by the Corporate State will abate, at least not until the imbalances that centuries of state oppression have created re-balance, resulting in the Thirdworldization of the West. This is happening as we speak, of course, with the only winners being the same crony capitalists who have always employed state power to achieve their sinister ends.

Would that we could seal our borders, allowing only as much immigration as emigration, while freeing our economy along Austro-libertarian lines and trading only with those countries who did likewise. The runaway success of such an endeavor would be a beacon to the world, ushering in the only globalization worthy of the name.

Hey, I can dream, can’t I?

I found the article to be quite good in its examination and explanation of recent political and economic developments in Germany. However, I would agree with Stefan that one must be circumspect about Merkel and the CDU/CSU’s free market credentials. The party’s election manifesto is a bit timid. For example, it suggests raising the valued-added tax to pay for reductions in non-wage labour costs and fill holes in the government’s gaping budget deficit. Spending decreases, not tax rises, are in order.

After all, with the SPD and CDU/CSU we are talking about mainstream political parties, whose disagreements about the size and the role of the state -as in most other countries- are more illusionary and real.

Nonetheless I sincerely hope that the German government’s grasp over the economy loosens substantially soon.

Babelfish translation of above (I love Linux!):

Herr Rohringer,

Ich möchte auf Ihre Punkte reagieren. Leider ist mein Deutsch eine rostige Spitze. Wenn ich Sie mißverstand, entschuldige mich ich.

Wenn ich richtig verstehe, geben Sie an, daß die strukturellen Probleme, die den deutschen Wohlfahrt Zustand gegenüberstellen, in einem großen Teil zur Misswirtschaft der Regierung durch die passend waren, die behaupten, mit dem “Freimarkt” einverstanden zuSEIN, aber wer die Regierung verwendete, um sich und ihre Freunde anzureichern.

Dieses verdammt kaum den Freimarkt. Rether verdammt es die, die die Energie des Zustandes verwenden, der töten soll, zu entführen, oder die zu berauben, die seinen Beamterlässen entgegensetzen würden, um persönliche Ziele zu erreichen. Es macht nicht aus, ob die Ziele altruistisch oder gierig sind. In Deutschland werden zu viele Leute von der Fülle beraubt, die sie verursachen, und zu viele Leute sitzen Leerlauf, weil der Zustand sie an gainfully beschäftigt werden hindert. Es ist genau diese erzwungene Nutzlosigkeit und das zu plündern ist Verurteilen der deutschen Wirtschaft

I think it is far too soon to rejoice and one shouldn’t compare Ms Merkel to Margaret Thatcher. Ms Thatcher was a believer in the free market system (albeit in a rather confused fashion), while Ms Merkel is committed to Germany’s “social market” model. The only real free market politicians in Germany are those in the FDP, and their influence in a future government is likely to be minimal.
As for Mr Rohringer’s criticism: I agree with everything you say about Mr Hartz, but one should not equate Hartz to the free market system. In fact it is the lack of competition in the market which tends to promote a “pseudo capitalism” under which figures such as Mr Hartz can prosper. Real capitalism means giving power to the shareholders, not to people like Mr Hartz who are supposed to represent their interests but only enrich themselves.
I also agree with what you write on German workers, but they are the ones who stand to gain the most from a genuinely free market.
Regards

Bruno

Well I am from Italy and I can tell you that all that welfare stuff doesn’t matter at all if you haven’t got a full time job. In Italy when a firm with more than 15 workers employs new workers, it is very difficult indeed to fire them unless they caused serious problems. The ex-worker will sue you and a judge may well decide you were justified in firing him, but then another judge will disagree, the trial will go on for years and in the end you may be forced to take him back and compensate him for loss of earnings. In the face of these difficulties firms have three choices:

1) Hire workers illegally
2) Don’t expand and stay a small firm for ever, with at most 15 workers
3) Hire only temp or part time staff.

For public workers (of which there are many) the situation is even better. Not even WWIII would cost them their job. Even if you’re no longer needed, they will keep you to do nothing.
This is all good news to those who have permanent jobs, of course. They may not get paid a lot but they do get at least 6 weeks paid holiday per year, plus all sorts of benefits. Those who don’t have a permanent job and lack the ‘connections’ to get them one don’t see any of this. This is why so many Italians with skills have taken advantage of the freedom of movement in the EU and taken jobs abroad (nearly always in the UK).

Oh and Italian health care is not that great unless you happen to live in some lucky areas. People have been known to die while on waiting lists for life saving operations, and some hospitals, especially in the south, sometimes stop taking in patients altogether, even emergency ones, because they don’t have the resources.

There will be no change in this unfortunate situation because unlike Germany Italy has no real free market parties or politicians.

Here my reply to Mr.Frank Vogelgesang, who says
he did not quite know what to make of my remarks.
(I apologize if this post is a duplication of a
previous one I made well over an hour ago. It
seems to have vanished into cyberspace.)

This time I write in English, so that there can
be no doubt as to what may arguments are.

Originally I thought that posting in German was
appropriate because German was Mr. Mises native tongue and because Mr. Frank Vogelgesang works
as a consultant in Germany. The problem concerns
Germany and much of the material needed to follow
the German economic meltdown is published in the German press. There are other participants in
this group who speak German and there will be
readers in Germany interested in following this
subject.

For my reply today I will use a letter I had
written to “Artisan” in which I repeated in English the salient points of my original post.
Here it is.

To Artisan from G. Rohringer,

I read your response to my post regarding Mr. Frank Vogelgesang’s article regarding the
“Meltdown of the German Economy”.

It often happens in discussions like this one that some discussants feel they must respond but can’t really refute certain facts and revert to a politically acceptable line of pseudoreasoning.

I am afraid that your response, while among the best of what has been offered, still suffers from the malady of mild misrepresentations of what I
said and of an unwarranted innuendo.

Let me explain.

Mr. Frank Vogelgesang claims that the German economy melted down because of excessive government regulations, including in particular
the framework of social laws making up the Sozialstaat. I for my part pointed out that there may well be other and even more important
reasons for the economic misery which has befallen Germany, reasons which the mentioned author has failed to mention and did not propose
for analysis.

The first of these points is that the German worker sees how Mr. Hartz on the one hand took away hard earned rights from the workers, on the
other has failed to uphold the most minimal standards of work ethics himself.

How can a manager who visits bordellos with his associates at business expense, expect to find cooperation among the working poor when he
puts such onerous burdens upon them as have become known as Hartz I to IV? I am of the opinion that a true advocate of liberterian
thought as Mr. Vogelgesang professes to be, would bring this fact to the attention of his readers and list it as one of the abuses that libertarian
philosophy has been put to and which results in grave damage to the morale of the working man. This then may be one of the reasons, why the German economy is not doing as well as some think it might: the working man is given no example to guide him into accepting sacrifice.

Next is the obvious, but tabooed fact that the German nation has been straddled with mind boggling reparations and payments of all kinds to
many different recipients. These payments have been very large and have been made under various names and guises. It is only good practice by a practictioner of economics to ask whether such losses of capital may not be responsible for the economic misery which Germany is experiencing. It will not do to gloss over this problem by
declaring it to be politically incorrect antisemitism, because one mentions the fact that such payments have been made. Even if it were true that stating this fact might be interpreted antisemitism, it still is a fact and its economic consequences are fair game for economic inquiry.

But there were not only payments to Jewish interests. There were payments for occupation to East and West which continue to this day,
payments for asylumseekers, payment for displaced persons, loss of income from patents and copyrights which were taken over without
compensation, demontage of factories, uncompensated slave labor by Germans, the cost of excessive crime crossing unprotected borders,
large net payments to the EU, foreign aid payments, shipment of large industrial gifts to various recipients and some time ago the sale of
products for low prices by a manipulated exchange rate which did not represent true market values
and the costs of large scale legal immigration.

It will not do to point out that some of these payments were made many years ago. Capital which
could not be invested, particularly a long time ago, leads to severe economic consequences down the road. All of this should have been included in a discussion of the Meltdown of the German Economy and it was not. The fact that such a discussion may not be to the liking of certain interests must not detract from recognizing that all these events took and are taking place and must not be overlooked.

Furthermore the hint that “you may wonder of course if Mr Rohringer really accepts a discussion in such discussion groups at all though…” sounds derogatory to me. To have one’s opinion and to state it, even though it may not be all that acceptable to a given group, does not imply inability or unwillingness to listen to somebody else’s point of view.

I wish that my point of view was as respectfully considered as I have considered Mr. Vogelgesang’s.

G.R.

Thank you Mr. Panetta,

I have read your lines with interest and I am happy that you agree with me that the German worker has been given poor examples of work ethic and that the hugereparations extracted from Germany may have contributed to the economic crisis.

You also say that, following the teachings of Mises such calamities would have been avoided, because these are precipitated by state interference and would not be possible in an economy in which only individuals, not organized labor or business participate.

Well, we do not really know what would happen in such an idealized world, since none has existed in memory.I do know however that “Hartz” was heralded as a step towards a free market economy in which labor finally would have to compete “fairly” against workers coming
from 2nd and 3rd world pay scales. I do not recall anybody on the Mises panel warning of the dubious value of Hartz I to IV or stating that they had been hatched by the state and its cronies. Now, after the revelations regarding
Mr. Hartz have become known, there seems to be an
attempt of distancing going on.

As far as reparations are concerned I do agree with you that the US is now bleeding for wars in a manner somewhat comparable to Germany with its reparations. I have no doubt that a price will be paid, the magnitude of which may be larger than expected. I do believe however that the price Germany paid on a per capita base is very
much larger.

At any rate a discussion of the Meltdown of the German Economy needs to have the facts stated first. Then one can propose an explanation of
the why and introduce one’s explanation and
remedy depending upon preferred views.

Thank you G.R.

To “Artisan”

I will be glad to respond to points raised by you, but I will not do so in any particular order.

First about the Hartz “treaties”. Are you aware that in their attempt to return to a free market economy, the authors have set the price in Euro and Cent for certain basic needs, such as toothbrush, soap, streetcartickets etc which they
consider to be allowable expenses and then,
based upon these findings, set an unemployment compensation? Please read the exact stipulations and you will also find the right of the state to question friends and relatives about possible unreported sources of support and the right to search appartments without court order for evidence of the presence of a cohabitant who might help support the unemployed? Would you not object to such an approach towards your fellow man as unworthy of anyone, enterpreneur, politician, economist and is it therefore a wonder that libertarian policies have earned a bad reputation?

One would expect “Austrians” to be the first to object to such a distortion of a “free”
market economy. I have not heard any condemnation
from this group, possibly however because Hartz may not be available in English and because it has been advertised under the banner of being antisocialist. For this reason I found its absence in Mr. Vogelgesang’s article a real deficit.

Now to the Memorial in Berlin. I had not thought of it in terms of economic practice and consider its erection to be a subject of discussion for groups interested in good taste or bad.

Now my own and possibly mistaken opinion of Mrs. Merkel and her party. She is a friend of US policies and of strong ties between Germany and the US. I believe that she is planning to support the current war in Iraq and get Germany involved financially and militarily. Since this is in the interest of the current purse string holder in the West, Germany’s economy may be given more economic breathing space as a result and this
may yield an apparent improvement in the economy. As “Austrians” well know, there will be a price to be paid later. I may not live to see this one played out, but I wish I could see the future more clearly. It will be interesting.

G.R.