Critique of economic growth is not new. What is new is that the discussion about the need for growth no longer is a phenomenon of the feuilleton, or social groups. This gives rise to doubt. For the politics and economy, it is essential whether growth is the solution; or rather, it is the cause of present and future problems.
Significantly, at the same time, the confidence drops in social progress. As a rule, there is a one-dimensional notion of what is growth: An ongoing increase in the quantity / the greed for more and more/. Unmentioned is usually also that growth resulted from freedom. The entrepreneurial freedom to decide which products are made in what ways and offered to the market. Knowledge is the engine of growth; it is transformed into technical progress. In this respect the author calls for renunciation of growth seems rather odd: “You mean namely the renunciation of the implementation of new knowledge in a higher quality and more diverse product world, and the private sector and not for profit.”
Not everyone will agree with a state growth restriction. Those who demand an exit from the growth path should therefore be aware of the foreseeable consequences. Since the financial crisis, the view is widespread that a souled of limitless growth speculators have to answer for an unimaginable destruction of capital. Not true, contends the author: “The bankruptcy is solely responsible for a depreciation of the capital stock and normally for a change of ownership.” In addition, history proves him right. After the boom in railway construction from the mid-19th Century founder noise suffered a harsh crash.
This in no way led to the destruction of the railway networks. The same applies to the dot-com crisis at the turn of the 21st Century. Ultimately, the central thesis of the approaching end of global growth because of scarcity of resources has been proven wrong. “The extent or the speed of these innovations was always assumed so low that they do not absorb the impact of consumption on the scarce resources. The authors of the study completely underestimate the potential of technological progress.
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The euro is rising again but the price increase is mainly due to the depreciation of the U.S. dollar. At the annual meeting of the International Monetary Fund and the World Bank are concerned about the competitive devaluation of major currencies in focus. The “currency war” is mentioned. China in particular is in the pillory, which couples its renminbi than 15 years ago to the U.S. dollar. The external value of the Chinese currency is considered undervalued and promotes the export of Chinese consumer products.
The United States increased in late September, the import duties on imports of Chinese tires by 5% to 35%. Of course, if they cause a tangible trade war high rock, in the end everyone loses. This example shows how quickly established itself in times of crisis, a policy that can lead to currency and trade wars. The world is on track to repeat the old errors. It is our currency, but it’s your problem formulated “in 1971 the U.S. Treasury Secretary John Connally. After all, the United States certainly see the practical benefits of a weaker dollar.
The import of foreign goods is complicated, and the export of American production is facilitated. There is more. The fact that the euro had gained since its February low of around 15% is displaced. It everyone should know that for the German export industry is in the air continues to rise, euro rate fast thinner and ultimately the whole recovery is jeopardized. The mere term “currency war” by the media, unfortunately, are equal to the number of nine wise politicians and bankers to jump on it shows that there is no one solution to a real problem.
The first step to move away from the false theory would be „As high export surpluses automatically lead to economic growth and prosperity.” If all countries had taken a lesson from this error, the first step would be done. Second, it comes to the current account imbalances. Just not too much can be achieved. Of course, after the financial crisis, the U.S. budget deficit has grown to have a few hundred billion and the euro is suddenly too strong.
At the beginning of the last few weeks, Angela Merkel ally of Nicolas Sarkozy and “par ordre de mufti” announce in the current round of negotiations of the EU finance ministers that France and Germany wanted no automatic sanctions in the form of fines more to Member States. It comes to budgetary discipline for lack of preventive discipline. In the spring, when Greece was insolvent, the federal government insisted on a strict, punitive armoured regiment of the European Commission to protect the stability of the common currency.
Finally, the taxpayer shall also be liable to the fabulous sum of 148 billion euros, almost half a yearly budget of the Federation, for the euro rescue action. The contradiction is now formulated, and it is more than justified. The stability of the euro and ultimately the welfare of Germany as the strongest European economy depends on the dispute. If Germany is not careful, then it gets into a permanent paymaster role of a European transfer union in which we must be responsible for the unsound fiscal policies of other European budget sinners.
After the de facto bankruptcy of Greece and the financial troubles in Ireland, Portugal and Spain had, every politician be clear that the future must be set much more on fiscal prevention in Europe. A set of rules without automatic sanctions mechanism falls victim to political expediency. In addition, what good is a euro stability pact with lofty goals that are on paper, but do not lead to significant penalties? Without a common economic policy, there will be little more. If the other EU countries follow the German example and reduce their wages to improve their export capabilities, we also have a problem in Germany. Growth this year will depend in fact only on the export.
However, it does not produce any surplus. So how are the other countries resolve their deficits if Germany wants further towards export optimization? As can be sanctioned as much as you want. Either the German economy suffers because the other countries follow the German model and import less, or the deficits continue to rise.