Re: Japan and Germany

[Sven R Larson <larson@xxxxxx>]

Paul Pihllips is very much right in criticizing export-related
comparisons between Germany and Japan. About 90% of EU member states'
exports is intra-union and with the ongoing integration here the meaning
of accounting for that export as "export" is lost bit by bit. At the
same time, it's prudent not to take the comparison between Germany and
California too far. Germany is still formally a sovereign nation; the EU
doesn't tax people or companies directly but relies on member states to
collect taxes; some member states are deep into economic and political
integration while others have chosen to stay out of the monetary union
and/or the Schengen coordination of law enforcement. As to fiscal policy
EU doesn't have one while the member states do; on the other hand - as
is well known - the union level has monetary policy while states don't.

Try imagine Canada being swallowed up by the US and some provinces
adopting US$ while others don't; some allow the FBI to operate within
their borders while others uphold territorial integrity; and no Canadian
province would allow the IRS to collect taxes there but instead sends a
lump sum to Washington each month. At the same time, Congress - or maybe
one of its subcommittees - could monitor fiscal policy in the northern
provinces and impose sanctions upon those who don't balance their
budgets as requested.

This might give you and idea of what Europe is like today. Not exactly
transparent, but - to be positive - an interesting full-scale economic
and political experiment.

/srl

phillp2@xxxxxxxxxxxxxxx wrote:
> It seems to me that to try to compare Germany with Japan as
> export-led economies is both misleading and counter-informative. It
> would be like comparing New York State with Japan.  While the
> EU (and the European Community and ECM before it) is not a
> unified state, for economic purposes it effectively is such that most
> of Germany's exports and imports are effectively internal transfers
> between states of a union rather  than exports or imports in the
> traditional sense.  With the adoption of the Euro, much if not most
> of
> Germany's 'exports' cease to be exports but are equivalent to New
> York
> States 'exports' to California and the other how many it is other
> states in the union.
>
> Europe, as a whole, is a relatively self-sufficient economy on a par
> with the US such that exports *from Europe* is not the driving force
> of the *European economy*.  This can not be said of Japan which
> has no
> balancing hinterland to exchange with.  Trade and economic
> integration
> with China and perhaps other regional economies might create a
> more
> autonomous economic unit.  But that has been procluded by
> dependence
> on the American market and the American political system as
> others
> have documented.
>
> In short, I think we should get away from comparing Germany and
> Japan as equivalent 'export based' economies.
>
> Paul Phillips,
> Economics,
> University of Manitoba

--
Sven R Larson
PhD; Assistant professor of economics
Department of Social Sciences, Bldg. 22.2
Roskilde University
Pb 260
DK-4000 Roskilde, Denmark
Phone: (+45) 4674 2910