The German Problem
Why Germany’s current-accountsurplus is bad for the world economy
THE battle-lines are drawn.When the world’s big trading nations convene this week at a G20 summit in Hamburg, the stage is set for a clash between a protectionist America and a free-trading Germany. President Donald Trump has already pulled out of one trade pact, the Trans-Pacific Partnership, and demanded the renegotiation of another, the North American Free-Trade Agreement. He is weighing whether to impose tariffs on steel importsinto America, a move that would almost certainlyprovokeretaliation. The threat of a trade war has hung over the Trump presidency since January.In contrast,Angela Merkel, Germany’s chancellor and the summit’s host, will bang the drum for free trade. In athinly veiledattackonMr.Trump,she delivered a speechon June 29th condemning the forces of protectionism and isolationism. Animminent free-trade deal between JapanandtheEuropeanUnionwilladdsubstancetoherrhetoric.
Bang the Drum for:Express support for; create atmosphere for.
Thinly Veiled:Not covered; blatant (明目张胆的).
Thereis no question whohas the better ofthis argument. MrTrump’sdoctrinethat trade mustbe balanced to be fair is economically illiterate. His belief that tariffs willlevel the playing field is naive and dangerous: they would shrink prosperityfor all. Butin one respect, at least, MrTrumphas grasped aninconvenient truth.He hasadmonishedGermanyforits trade surplus, whichstood atalmost $300bn lastyear,theworld’slargest(China’shoardwas a mere $200bn). His threatened solution—toput astopto sales of Germancars—maybeself-defeating,but the fact is that Germany saves too much and spends too little. And thesizeand persistence of Germany’s savingshoardmakesitanawkwarddefenderoffreetrade.
Have the Better of:Get the better of; winover.
doctrine/ˈdɔktrɪn; ˋdɑktrɪn/n[C,U] (any of a) set of beliefs held by a church, political party, group ofscientists, etc教义;主义;学说;信条:Catholic doctrines天主教教义*Marxist doctrine马克思的学说
admonish/ədˈmɔnɪʃ; ədˋmɑnɪʃ/v(fml文)
[Tn, Tn.pr]~ sb (for/against sth)give a mild but firm warning orscolding to sb温和而严正地警告或责备某人:The teacher admonished the boys for being lazy.老师责备男学生懒惰.
hoard/hɔːd; hɔrd/ncarefullycollected and guarded store of money, food or other treasured objects（钱财﹑食物或其他珍贵物品的）储藏,积存:a miser's hoard守财奴储藏的财宝
self-defeating:Causing even more problems, or causing exactly the same problems and difficulties that you are trying to prevent or deal with.
Imperfect harmony
At bottom,a trade surplus is an excess of national saving over domestic investment. InGermany’s case, this is not the result of amercantilistgovernmentpolicy,as some foreigners complain.Nor,as German officials often insist,does it reflect the urgent needforanaging society to save more. Therateofhousehold saving has been stable, if high, foryears;the increase in national saving has comefromfirms and thegovernment.
Mercantilism was a type of national economic policy designed to maximize the trade of a nation and specially to maximize the accumulation of gold and silver. It was dominant in modernizedparts of Europe from the 16th to the 18th centuries. It promoted governmentalregulation of a nation's economy for the purpose of augmenting state power atthe expense of rival national powers.
Underlying Germany’ssurplus is a decades-oldaccord between business and unions in favor of wage restraint to keep exportindustries competitive. SuchmoderationservedGermany’s export-led economy well through its post-war recovery and beyond. Itis an instinct that helps explain Germany’s transformation since the late 1990sfrom Europe’s sick man to today’smuscle-bound champion.
Underlying Germany’s surplus is a decades-old accord between business and unions in favor of wage restraint to keep export industries competitive: The main reason why Germany got such high surplus is the wage restraint. By controlling the wage level, export goods can be sold cheaper in global market since the overall cost is controlled. Lower price can make the export industries more competitive. The development and prosperity of export industry helped Germany get back on its feet after World War 2.
Moderation:Control of your behavior, so that you keep your actions, feelings, habits etc within reasonable limits.
There is much to envy in Germany’s model.Harmonybetween firms andworkershas beenone of the main reasons for theeconomy’soutperformance. Firms could invest free from theworry that unions would hold them to ransom. Thestate playedits part by sponsoring asystemof vocational training that is rightly admired. InAmerica the prospects for men without college degreeshaveworsened along with a decline in manufacturing jobs—a causeof the economic nationalismespousedby MrTrump.Germany has not entirely escapedthis, but it hasheld on tomore of thesorts of blue-collar jobs that Americagrievesfor.This is one reason why the populistAfDparty remainson the fringes ofGermanpolitics.
AfD :Alternative for Germany(German: Alternative für Deutschland, AfD) is aright-wing populist and Eurosceptic political party in Germany.
As of May 2017, the AfD had gained representation in13 of the 16 German state parliaments. The party is currently led by FraukePetry and Jörg Meuthen.
Out performance:To be more successfulthan someone or something else.
Espouse:To support an idea, beliefetc., especially a political one.
Hold on to:Hang on; Retain.
Grieve for:Feel sad for; mourn for.
fringe/frɪndʒ; frɪndʒ/n outer edge of an area, group or activity（地方﹑群体或活动的）外围:the fringe of a forest森林的边缘*on the fringes of society在社会的边缘*
But the adverse side-effects of the model are increasingly evident. It has left the German economy and global tradeperilously unbalanced.Payrestraintmeans less domestic spending andfewerimports. Consumer spending hasdropped to just 54% ofGDP,comparedwith 69% in America and 65% in Britain. Exporters do not invest theirwindfallprofits at home. And Germany is not alone;Sweden, Switzerland, Denmark and the Netherlandshavebeen piling up big surpluses,too.
windfall A windfall is a sum of money that you receive unexpectedly or by luck, for example if you win a lottery. (意外收入)
For alarge economy at full employment to run a current-account surplus in excess of8% of GDP puts unreasonablestrainonthe global trading system.Tooffsetsuch surpluses and sustain enough aggregate demand to keep people in work, therest of the world must borrow and spend with equal abandon. In some countries,notablyItaly,Greece and Spain,persistent deficits eventually led to crises. Their subsequent shift towardssurplus came at a heavy cost. The enduring savingsglutin northern Europe has madetheadjustmentneedlessly painful. In thehigh-inflation1970sand 1980sGermany’spenchantfor high saving was a stabilizing force. Nowit is a drag on global growth and atargetforprotectionists such as MrTrump.
Glut:A supply of something, especially a productor crop, that is more than is needed.
Penchant:A supply of something, especially a productor crop, that is more than is needed.
“the rest of the world must borrow and spend with equal abandon”:The unreasonable surplusof Germany influenced the global trading system. All the countries involved inthis system are interconnected. The global trade volume and capacity, however,are fixed. Once one country such as Germany runs high surplus, other countrieshave to abandon/sacrifice equal interest to make up for it.
The shift from thrift
thrift/θrɪft; θrɪft/n[U]careful or economical use of money orresources节俭;节约.
Can the problem be fixed?PerhapsGermany’sbumpertrade surplus will be eroded asChina’swas,byasurgeinwages.Unemploymentisbelow4%andtheworking-agepopulationwillshrink, despitestrong immigration. After decades of decline, the cost of housing is rising,meaning thatpaydoes not stretch asfar as it used to. The institutions behind wagerestraintare losing influence. The euromay surge.YettheGerman instinct for caution is deeplyrooted.Payrose by just 2.3% lastyear,more slowly than in the previoustwoyears. Left to adjust, the surplusmighttakemany years to fall to asensiblelevel.
Bumper: Unusually large.
The government should helpby spending more. Germany’s structural budget balance has gone from a deficit ofover 3% of GDP in 2010 to a small surplus. Officials call this prudence but,given high private-sector savings,it is hard to defend. Germany hasplenty of worthwhile projects tospendmoneyon.Itsschoolbuildingsandroadsarecrumbling,becauseofthesqueezeon
public investment required tomeet its own misguided fiscal rules. The economy lags behind in itsreadinessfor digitalization,ranking 25th in the world in average download speeds. Greater provision ofafter-school care by the state would let more mothers work full-time, in aneconomy where women’s participation is low. Some say such expansion isimpossible, because of full employment. Yet in a market economy, there is a tried and trusted way to bid for scarce resources: pay more.
crumble[I, Ipr]~ (into/to sth)(fig比喻) gradually deteriorate or come to an end渐渐垮掉;走向末路:The great empire began to crumble.这个大帝国开始衰落了. *hopes that crumbled to dust破灭的希望*Their marriage is crumbling.他们的婚姻开始出现裂痕.
Tried and Trusted:Proved to be reliableand dependable.
bid effort to do, obtain, achieve, etc sth; attempt（做﹑获得﹑实现...某事物的）努力;企图:make a bid for power/popular support争取权力[大众的支持].
Above all, it is long past time for Germany to recognize that its excessive saving isa weakness. Mrs. Merkel is absolutely right to proclaim the message of freetrade. But she and hercompatriotsneed tounderstand that Germany’s surpluses are themselves a threat to free trade’slegitimacy.
Compatriots:Someone who was born in or is a citizen of the same country as someone else.