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Big Blue Stifles German Industry Too

The German economy has remained relatively stable amidst Europe’s ongoing cataclysm, but recent developments suggest that Germans shouldn’t get cocky about their good fortunes. The New York Times paints a grim picture of a slowing German economy strangled by over-regulation and buoyed above its neighbors only because of its renowned export sector.

Much of the article’s analysis will sound familiar to readers across Europe—or indeed in any deep-blue American city. Germany’s business climate is exceedingly difficult to navigate, especially for small firms: Stringent rules cover work hours, labor relations, and zoning restrictions. But the really striking thing about this article is its claim that Germany has as much to gain from deregulation as Italy. All things considered, Germany has weathered the recession rather well; imagine how it would be doing if it eliminated these inefficiencies from its economy.

This article’s analysis points neatly to why Europe finds itself in a sinkhole. When even the vaunted German economy is choked by regulation and competition-stifling protectionism, it’s clear there’s a serious problem. America should consider itself warned as well. Both ends of the Atlantic will need to find a way out of this trap before their economies are completely crushed.

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  • Anthony

    Intimated economic policy approach (or euro opportunism) has certainly undermined success going forward; however, ECB and IMF remain two key vehicles to preclude contagion (sinkhole) WRM implies – lest hope asset quality remains high in European Union.

  • Kenny

    German is dying demographically.

    How will it fund its retirees in the near future — and al the freeloaders in the PIIGS?

    Answer: German can’t, so it won’t.

  • La Marque

    It is interesting that the NYT can see the problem in Germany, but seems to think that the US needs more regulation generally.

  • Brett

    It sounds like they have the same problem the Koreans and Japanese have – an efficient, highly productive export sector and an inefficient, protectionist domestic economy.

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