Posted on 06/12/2012 2:39:53 PM PDT by bruinbirdman
Governments in Europe should lower taxes and increase salaries to boost growth rather than insisting on austerity and continued saving, famous economist Nouriel Roubini told a German newspaper in an interview on Tuesday.
Roubini also said the German government should give its citizens incentives to go on holiday in countries in the south of Europe that were affected by the debt crisis to help those states recover.
Some leaders in major European countries have already shifted their rhetoric from austerity to growth, as tax increases and cuts in government spending have exacerbated the economic downturn, causing deep recessions in some euro zone countries. But Germany still insists on austerity as a way to bring budgets under control.
"The savings madness must be stopped. Governments must lower taxes and increase wages. Europe needs growth," Roubini told popular newspaper Bild.
"The German government should give every German household a 1000 euro ($1,250) travel voucher. However, it should only be used for holidays in crisis countries. That will help boost growth there. In addition, everyone who buys a holiday home in a southern European state should get a tax bonus, he added.
Pulling the plug on funding Greece, which has already been bailed out twice, would lead to the collapse of the single currency, Roubini
(Excerpt) Read more at cnbc.com ...
I'm glad to see you admit that.
All of the bad ideas being bandied about in the EU now originate from the UK and the United States. The Europeans may complain about Anglo-Saxon economies but, it appears, they are preparing to implement Anglo-Saxon monetary "solutions" to their problem.
No they are not. They wouldn’t be insisting on giving up sovereignty to the central government as a solution, nor giving up financial control to the central government.
And we now spend a cool trillion per year for government benefits to mostly working age Americans who have never, or seldom worked, or formerly employed Americans who've become part of the long term unemployed. And there are no jobs for most of those receiving the benefits.
Yeah, it's real cheap having all that manufacturing done elsewhere.
Of course it's a proven growth strategy, at least for nations who have so-called free trade with the USA: Japan, China, Mexico, just to name three of the more successful ones.
Lure the manufacture of US products to your nation, gain maximum possible access to the US market, and allow the minimum possible access to your market. It's worked time and again.
A travel voucher to smother Europe? How about Greece going back to the drachma. Germans will have plenty of dough to spend on resorts in Santorini or even to buy a villa on the Aegean.
A travel voucher to southern Europe? How about Greece going back to the drachma. Germans will have plenty of dough to spend on resorts in Santorini or even to buy a villa on the Aegean.
NAFTA allows for equal access to each member’s market. Canadian leftists, and unionists in particular, opposed NAFTA & still do. To hear them tell it, there’s no way that Canada can compete against the mighty U.S.A.
Free trade is a growth strategy, not a zero-sum game, because it enables each nation to concentrate on what it does best. That's the principle of comparative advantage. America has comparative advantages in innovation, design and high technology (among other things). If other nations undertake the low-skill, low tech, and low-paying work — that frees up Americans to do the things they're best at.
Labour-intensive manufacturing has been declining in the west for decades; to be replaced by more capital intensive, or innovative work. New manufacturing technologies (e.g. 3d printers, robotics, etc.) are bringing manufacturing back to the west, because low-wages aren't enough to compete anymore.
Quoting Olg-hai:
“The major reasons why manufacturing is more expensive in the USA are excessive regulations, union pressure (both private and public sectors) and a welfare system that rots the country from the inside out. Business startups in this country nowadays get crushed under these absurd regulations.”
If you had autarky, rather than free-trade, you'd have no choice but to buy these expensive products — and thus remove any incentive to reform regulations, rein in unions, reform the welfare system, etc.
For instance, the UAW used to cut a deal with one of the “Big Three” manufactures, which the other manufactures would then copy. These were sweet-heart deals, which bought labour peace. The auto companies could afford the deals, because they were protected behind high tariff walls. Only the consumer lost out, having less choices for over-priced vehicles. As tariff walls came down, these union sweet-heart deals became unsustainable. We know the rest.
* Not only the wealth, but the independence and security of a country appear to be materially connected with the prosperity of manufactures. Every nation, with a view to those great objects, ought to endeavor to possess within itself all the essentials of national supply. These comprise the means of subsistence, habitation, clothing, and defense.
I was just reading somewhere that if you'd followed his advice over the last few years you'd be like -30% return on cash or something. Roubini is a stopped clock.
Because there’s low value in consumables. You don’t see the great notion of trading a piece of paper, our dollar, for actual labor and capital turned into a product?
Just like farming the population of manufacturers is dropping while the dollar value of their production is increasing.
Bingo.
They’ve stuffed their “free trade zone” with bureaucrats from Brussels. It’s clogged and in more ways than one.
How is a trade deficit bad? It is a term invented by liberals to bash free trade. There is not and cannot be any “trade deficit” in a free exchange.
The year before NAFTA passed, the US had an almost 1 billion dollar trade surplus with Mexico. Now the US has a 60 billion plus trade deficit with Mexico. That is the only result that could have been realized because with poorer nations these aren't trade agreements, but agreements to transfer production facilities and technology for cheap labor. Mexico had little to sell the US until massive numbers of US plants and jobs were moved there.
It's the same with China, and it wasn't so different with Japan and South Korea when these nations were rebuilding after WWII. Both were initially cheap labor nations, and both followed the proven model for growth by gaining maximum access to US markets and allowing minimum access to their markets. Just as China has also been doing for a few decades now.
The real 'trade' with poor nations is US plants, jobs and technology for cheap labor and lax regulation. Other than some natural resources and unique agricultural products, that's about all poorer nations have to 'trade'.
If there is “low value in consumables”, then how do countries like Germany and China get so rich from them and be able to go so far as to dictate US policy?
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