David Brooks on the Economy, Germany and the U.S.: The Parent Model

Posted by Kendall Harmon

The crucial issue [on the economy] is getting the fundamentals right. The Germans are doing better because during the past decade, they took care of their fundamentals and the Americans didn’t.

The situation can be expressed this way: German policy makers inherited a certain consensus-based economic model. That model has advantages. It fosters gradual innovation (of the sort useful in metallurgy). It also has disadvantages. It sometimes leads to rigidity and high unemployment.

Over the past few years, the Germans have built on their advantages. They effectively support basic research and worker training. They have also taken brave measures to minimize their disadvantages. As an editorial from the superb online think tank e21 reminds us, the Germans have recently reduced labor market regulation, increased wage flexibility and taken strong measures to balance budgets.

In the U.S., policy makers inherited a different economic model, one that also has certain advantages. It fosters disruptive innovation (of the sort useful in Silicon Valley). It also has certain disadvantages — a penchant for over-consumption and short term thinking.

Read it all.

Filed under: * Culture-WatchHistoryPsychology* Economics, PoliticsEconomyCorporations/Corporate LifeThe U.S. Government* International News & CommentaryEuropeGermany

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Posted August 27, 2010 at 7:07 am [Printer Friendly] [Print w/ comments]
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