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A Clash Of Economic Civilizations?


Debates between German and other European economists are sometimes like a “clash of economic civilizations”. The guiding questions in this debate are whether the rest of Europe can learn from Germany or whether Germany’s reforms should rather not be replicated elsewhere. (For a more detailled analysis make sure to read ECFR’s new paper on whether the “German model” is a model for the rest of Europe).


But in Germany, a part of the business community has not been interested in how to solve the euro crisis, instead the debate focused on whether Germany should turn its attention elsewhere, and whether the country might be able to achieve decent economic growth rates even when the rest of the continent remains in crisis.


At an ECFR event two weeks ago in Berlin we tried to analyse the “German model” looking at debates in Germany – and in the rest of Europe. Germans see themselves as the model student of Europe and are convinced that all other countries should emulate this successful model. However, it is surprising for some Germans that criticism against the German economic model and the German approach to the crisis can also come in a more intelligent form than posters of Angela Merkel with a Hitler mustache.


The economic thinking of the German elite on the one side – and the elites in Spain or Italy on the other could not be more different. Antonio Cortina (Deputy Director Research Department from Banco Santander) for example argues that Germany should increases wages to promote domestic consumption and he calls for a German contribution to re-balance the economy in the Eurozone (something you would never hear from a banker in Germany). The German argument is critical towards this line of thinking. Dirk Heilmann (the chief economist of the Handelsblatt) thinks that more domestic demand in Germany would actually not help other European countries to overcome the crisis – because Germans would probably buy Chinese-made DVD players and not Italian shoes or Spanish olive oil. According to Heilman, Germany is not able to do anything to help the ailing Southern economies. They must help themselves.

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