This week Il Diario di due economisti (today on Il Foglio, pag. 2, and tomorrow here) is about the German Model. For German Model is meant the way Germany made the structural reforms in the first half of last decade, which changed its institutions and above all labor market and industrial relations. The German Model is a mix of the German View – the fallacious idea that fiscal consolidation may be expansionary (or at least cyclically- neutral) in any case and circumstance – and the Social Market Economy (Soziale Marktwirtschaft) principles. These principles call for a corporatist solution of social conflict (once it would been called “class-struggle”), a way to make compatible or harmonize opposing interests through the active intervention of government, in the aim to minimize the negative effects of creative destruction. Continue reading
The German miracle (productivity gain + wage moderation)
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