Can’t Believe How Heavily Regulated The German Economy Is

Germans Balk at the Price of Economic Change
They regulate the time stores can open and close. Their labor market is famously rigid. Their economy is in a slump and it probably won’t yield a damn thing. No changes.

Perhaps German can explain to me what the opening and closing of stores has to do with social justice, but I suspect it has to do with the economic fallacy that there’s a fixed amount of work available and it has to be divided up. If that were true, the United States would have mass unemployment because stores can open and close any time they want. The number of workers drive what is produced so there is no rationale for thinking the amount of work is fixed. If companies produce more they’ll need more workers.

Oy! This is giving me a headache.

Given the frequency of protests against an Iraq war in this country lately, you would be forgiven for thinking that the marchers who gathered last Sunday in Berlin were another group demanding, “Nein zum Krieg” — no to war.

But they were not. These protesters, several thousand of them, were not even expressing a view on the other great issue in German politics these days: the 4.7 million, or 11 percent of the workforce, unemployed and a government in prolonged semiparalysis over what to do about it. The protesters’ complaint had to do with a parliamentary decision allowing shopkeepers to stay open four hours longer on Saturdays, so that instead of a mandatory closing time of 4 p.m., they could stay open until 8 p.m.

The protesters were saying it would be contrary to what is often referred to as social justice in Germany to require shop employees to work longer hours on weekends. If that seemed slightly out of step in a country in “deep economic crisis,” as the daily newspaper Frankfurter Allgemeine Zeitung put it, a time when talk of deep economic reform is in the air, there they were anyway, embodiments of a political fact of life here. Even rather small changes in the elaborate rules governing economic life inevitably provoke spirited opposition from some quarters.

What does that portend for the long-anticipated program of major economic change, including cuts in the welfare state, that was announced in a major speech by Chancellor Gerhard Schröder on Monday?

Needless to say, what it portends is that Mr. Schröder’s program — criticized by the left and by parts of the right, as too much, and by other parts of the right as not enough — will pass in Parliament only with great difficulty and, in all likelihood, in a severely attenuated form. If recent history is any guide, the great German social welfare state, widely regarded as the root of the country’s economic problems, will emerge from the process largely unscathed.

Germany has one of Europe’s strongest commitments to what Mr. Schröder, in past if sporadic efforts at change, has called the nanny state. Many reasons are given for this, but one of them is that Germany has almost no tradition of laissez-faire liberalism of the sort that provided intellectual justification for both the Reagan revolution in the United States years ago, or the Thatcher revolution in Great Britain.

Finally, an American newspaper uses the word “liberalism” properly. Reagan and Thatcher were economic liberals because they favored free markets. I suspect things will have to get much worse before a Reagan emerges in Germany.

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