Germany, the Euro and a new economic theory Prof. Dr. Heiner Flassbeck

Transcription

1 Kopenhagen, October 5, 2018 Germany, the Euro and a new economic theory Prof. Dr. Heiner Flassbeck

2 Redistribution favouring high employment? Unemployment and wage share 2) in the western world 3) 56% 10 55% 9 54% 8 53% 7 52% 6 51% Unemployment (right axis) Compensation 5 50% 4 49% 3 Unemployment rate in percent of active population; 2) Compensation of employees in percent of nominal GDP; 3) GDP-weighted average figures of Germany, France, Italy, Spain, UK, Sweden, Denmark, Finland, USA and Canada Source: AMECO

3 In the US: No change in the pattern of unemployment but lower wage share Unemployment and compensation 2) in the US 59% Compensation 12 56% 10 53% 8 50% 47% Unemployment (right axis) % 2 Unemployment rate in percent of active population; 2) Compensation of employees in percent of nominal GDP Source: AMECO

4 In Europe: A much lower wage share but very high unemployment Unemployment and wage share 2) in Europe 3) 59% 56% Unemployment (right axis) % 8 50% 6 47% Compensation 4 44% 2 Unemployment rate in percent of active population; 2) Compensation of employees in percent of nominal GDP; 3) GDP-weighted average figures of Germany, France, Italy, Spain, UK Source: AMECO

5 in percent of active population Why did Europe fail so miserably? Unemployment Europe 2) United States 0 Unemployment rate in percent of active population; 2) GDP-weighted average of Germany, France, Italy, Spain, UK Source: AMECO

6 Ratio in % of working population With an unchanged wage share the US performs much better than Europe Unemployment in different countries 14 EMU 2) Japan USA Ratio of unemployed to working population, saisonally adjusted, harmonized. 2) 18 EMU-countries. Source: Eurostat

7 Ratio in % of working population But Germany seems to refute Unemplyoment in the EMU EMU 2) Italy 9 France 7 Germany Ratio of unemployed to working population, saisonally adjusted, harmonized. 2) 18 EMU-countries. Source: Eurostat

8 Index 2000 = 100 Are real wages lagging behind productivity the recipe for success? 120 Real wages and productivity 2) per hour in Germany Productivity Real wages Gross income from employed labour, price-adjusted with GDP deflator, per hour worked by employees, 2000 = 100; Value for 2016 of the average number of hours worked by employees has been estimated 2) Real gross domestic product in national currency per hour of employment, 2000 = 100 Source: AMECO, OECD

9 Index 2000 = 100 Did France miss the right economic theory? 120 Real wages and productivity 2) per hour in France Real wages Productivity Gross income from employed labour, price-adjusted with GDP deflator, per hour worked by employees, 2000 = 100; Value for 2016 of the average number of hours worked by employees has been estimated 2) Real gross domestic product in national currency per hour of employment, 2000 = 100 Source: AMECO, OECD

10 Muss man wie Deutschland zugunsten der Reichen umverteilen, um die Arbeitslosigkeit zu bekämpfen?

11 Lag Frankreich mit einer Politik des Ausgleichs ganz falsch? Income Inequality (share of pre-tax national income) 50% 45% Middle 40% 40% 35% Top 10% 30% 25% Bottom 50% 20% 15% Source: WID

12 Arbeitslosenrate in % Reallohn pro Stunde (in 2005er Preisen) Warum war Griechenland nicht erfolgreich mit seiner drastischen Reallohnsenkung? Reallohn pro Stunde (Produzentenlohn) 2) Arbeitslosenrate Reallohn pro Stunde (Konsumentenlohn) 3) Arbeitslose in %, im Verhätlnis von beschäftigten zu unbeschäftigten Personen; Definitiert von Eurostat, linke Skala 2) Vergütung von Angestellten pro tatsächlich gearbeiteter Stunde; BIP-Deflator einbezogen, rechte Skala 3) Vergütung von Angestellten pro tatsächlich gearbeiteter Stunde; Deflator für privaten Verbrauch einbezogen, rechte Skala Quelle: Ameco (Mai 2013), Werte für 2013 sind Schätzungen der EU-Kommission.

13 Index 1999 = In particular not since the Beginning of EMU Productivity France 110 Germany Real gross domestic product in national currency per hour of employment, 1999 = 100 Source: AMECO

14 Ø annual rate of change of ULC in % The relevant relationship: Wages determine prices not employment 18% Inflation (CPI) und ULC Growth in different countries, and % 14% 12% R² = 0, % 8% 6% 4% 2% 0% -2% 0% 2% 4% 6% 8% 10% 12% 14% 16% 18% 20% Ø annual rate of change of CPI in % Source: Ameco; Apart from Switzerland all countries are marked with two dots for the given period of time. Japan ab CPI stands for consumer price inflation.

15 Ø annual rate of change of ULC in % Even better by using the GDP-Deflator 18% Inflation (GDP) und ULC Growth in different countries, and % 14% 12% R² = 0, % 8% 6% 4% 2% 0% -2% -2% 0% 2% 4% 6% 8% 10% 12% 14% 16% 18% Ø annual rate of change of GDP in % Source: Ameco; Apart from Switzerland all countries are marked with two dots for the given period of time. Japan ab 1980.

16 Index 1999 = 100 But Germany is cheaper 135 ULC France Germany Gross income from employed labour in national currency (euro) per employee in relation to real gross domestic product per employee; 1999 = 100 Source: AMECO

17 Index 2000 = 100 Real effective exchange rates 130 Italy France Germany = 100, based on unit labour costs (total economy); Performance relative to the rest of the former EU-15: double export weights Source: AMECO

18 Index 2000 = 100 World Export Shares (Goods) Germany Italy France = 100 Source: IMF, Direction of Trade Statistics

19 Index 1999 = Germany is too cheap in comparison to the inflation target 150 Greece Italy Spain France 120 ECB target: 1.9% Germany 90 Ratio of compensation per employee to real GDP per person employed; Index 1999 = 100 Source: AMECO. Geneva and Zurich, February 2015

20 Index 1999 = 100 and absurdly forces the others to deflationary adjustment ULC in Euro Inflation EMU (CPI) EMU w/o Germany 2) Inflation target 1.9% Germany Gross income from salaried employment in national currency per employee in relation to real gross domestic product per employee; Index 1999 = 100; 2) ULC growth rates of member countries weighted with GDP Source: AMECO

21 In % of GDP... Germany s success is of a mercantilist nature Current account balance of Germany and France 10% 8% 6% 4% Germany 2% 0% -2% France -4% In % of GDP; 2017: Estimates of the commission Source: AMECO

22 in % of GDP Its financial balances are unsustainable Currenct account balance of economic sectors In Germany 8 6 Private households 4 2 Companies Government -6-8 Foreign countries 2) -10 In % of nominal GDP; 2) Negative values mean foreign debt Source: AMECO

23 in % of GDP... once upon a time Germany has been a true market economy 10 8 West Germany Private households Foreign countries 2) Government -4-6 Companies As a percentage of nominal gross domestic product 2) Negative values mean foreign debt Geneva and Zurich, February 2015 Source: Deutsche Bundesbank, Ameco.

24 Critical Analyses on Politics and Economics Visit us at Publisher: Prof. Dr. Heiner Flassbeck & Dr. Paul

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