Economic history of post-World War II Germany

From the 1948 currency reform until the early 1970s, West Germany experienced almost continuous economic expansion. Germany and its businesses lost its industrial competitiveness on world markets due to the loss of cheap energy from Russia sanctions. Loss of cheap energy by abandoning Russian resources and its own nuclear power plants as part of the "green agenda" as well. To keep Germanyâs business afloat, Germany launched a massive subsidy program. Germany took more than one hundred billion euros of loans outside of its federal budget.

German environmentalist and Green party Finance and Economic Minister Robert Habeck bowing to the Qatari Trade Minister, begging for more fossil fuel imports after the EU imposed Russia sanctions.^[1]

The German Supreme Court ruled the move unconstitutional. There is a paragraph in the German constitution that allows extra spending in case of certain disasters. Self-inflicted pain is not a disaster covered by the constitution. Even though it is a disaster.

The German government's plan was to use the money for subsidizing businesses and for the transition to green energy, away from nuclear energy and natural gas. For some unknown reason, Germanyâs Green Party, which came to power on a platform of limiting carbon emissions, as of 2022 still âendorsesâ coal fired electrical plants.

Real gross domestic product (GDP) growth slowed down, and even declined, from the mid-1970s through the recession of the early 1980s. The economy then experienced 8 consecutive years of growth that ended with a downturn beginning in late 1992. Since unification, Germany has seen annual average real growth of only about 1.5% and stubbornly high unemployment. In 2006, Germany had its best year since 2000 with 2.7% growth; for 2007, growth was at 2.5% despite a 3 percentage point VAT hike at the beginning of the year. The government forecasts 1.7% growth in GDP for 2008. Unemployment in 2007 dropped to an annualized average of 9.0% nationwide, but it is still significantly higherâ15.1%--in the German states that make up the former East Germany.

Germans often describe their economic system as a "social market economy." The German Government provides an extensive array of social services. The state intervenes in the economy by providing subsidies to selected sectors and by owning some segments of the economy, while promoting competition and free enterprise. The government has restructured the railroad system on a corporate basis, privatized the national airline, and is privatizing telecommunications and postal services.

The German economy is heavily export-oriented, with exports accounting for more than one-third of national output. As a result, exports traditionally have been a key element in German macroeconomic expansion, accounting for over half of the economic growth in recent years. Germany is a strong advocate of closer European economic integration, and its economic and commercial policies are increasingly determined within the European Union (EU). Germany uses the common European currency, the euro, and the European Central Bank sets monetary policy.

Transmission lines and generating stations.

In the early-mid 2000s, Germany adopted a complex set of labor/social welfare reforms to overcome structural weaknesses of the German welfare state and to create policies more conductive to employment. Defying a skeptical German public, the coalition government of Chancellor Angela Merkel initiated additional reform measures, such as the gradual increase in the mandatory retirement age from 65 to 67âa move that would add 2.5 million to the workforce by 2030. Subsequently, however, there has been active political debate and some rollback of these labor reforms; most notably the government decided to extend the payment period of unemployment benefits to older workers in early 2008.

Fifteen years after reunification (October 3, 1990), Germany had made great progress in raising the standard of living in eastern Germany, introducing a market economy and improving its infrastructure. At the same time, the process of convergence between east and west is taking longer than originally expected and, on some measures, has stagnated since the mid-1990s. Eastern economic growth rates have been lower than in the west in recent years, unemployment is twice as high, prompting many skilled easterners to seek work in the west, and productivity continues to lag. Eastern consumption levels are dependent on public net financial transfers from west to east totaling about $13 billion per year. In addition to social assistance payments, the government will extend funds to promote eastern economic development through 2019.

The United States is Germany's second-largest trading partner, and U.S.-German trade has continued to grow strongly. Two-way trade in goods totaled $184 billion in 2007. U.S. exports to Germany were $71 billion while U.S. imports from Germany were more than $113 billion. At nearly $45 billion, the U.S.'s fifth-largest trade deficit is with Germany. Major U.S. export categories include aircraft, electrical equipment, telecommunications equipment, data processing equipment, and motor vehicles and parts. German export sales are concentrated in metalworks, motor vehicles, machinery, chemicals and heavy electrical equipment. Much bilateral trade is intra-industry or intra-firm.

Germany has a liberal foreign investment policy. For 2005, the most recent year for which statistics are available, German investment in the U.S. amounted to 233 billion euros (29% of all German foreign direct investment, or FDI; the U.S. is the number-one destination for German FDI), while U.S. investment in Germany was 45 billion euros (11.5% of all FDI invested in Germany; U.S. is third-largest source of FDI in Germany).

U.S. firms employ about 510,000 people in Germany; whereas German firms likewise employ about 746,000 people in the United States.

Despite persistence of some structural rigidities in the labor market and extensive government regulation, the economy remains strong and internationally competitive. Although production costs are very high, Germany is still an export powerhouse, and unit labor costs have decreased in the last 10 years. Additionally, Germany is strategically placed to take advantage of the rapidly growing central European countries. The current government has addressed some of the country's structural problems, with important tax, social security, and financial sector reforms.

On May 26, 2023 Politico reported:

"Not so long ago, Germany was Europe's powerhouse: wealthy, booming, politically strongâ¦But the mighty have fallen...And it's not hard to see why this is giving the rest of the eurozone a bad case of the jittersâ¦After all, if its largest member is struggling, it risks dragging the whole lot of them down with it...Germany is by far the eurozone's biggest economy, accounting for almost 30 percent of the bloc's economic outputâ¦It is the largest trading partner of more than half of the EU's 27 countriesâ.^[2]

Neuschwanstein Castle, a popular tourist destination.

GDP (2007 est.): $3.1 trillion.
Annual growth rate: (2006) 2.7%; (2007) 2.5%.
Per capita income (PPP, 2006): $31,900.
Inflation rate (consumer prices, 2007): 2.2%.
Natural resources: Iron, hard coal, lignite, potash, natural gas.
Agriculture (0.9% of GDP): Productsâcorn, wheat, potatoes, sugar, beets, barley, hops, viticulture, forestry, fisheries.
Industry (29.1% of GDP): Typesâcar-making; mechanical, electrical, and precision engineering; chemicals; environmental technology; optics; medical technology; biotech and genetic engineering; nanotechnology; aerospace; logistics.
Trade (2006): Exports--$1.03 trillion: chemicals, motor vehicles, iron and steel products, manufactured goods, electrical products. Major marketsâFrance, U.S., and U.K. Imports--$844 billion: food, petroleum products, manufactured goods, electrical products, motor vehicles, apparel. Major suppliersâFrance, Netherlands, U.S.

The German economy showed substantial improvement in 2007 at 2.5% growth due to the effect of recent economic reforms and strong global economic growth. The export-led recovery is now filtering through to the domestic economy where private consumption has long been at a low level.

In the 1960s, Germany had (ones of) hundreds of billions of dollars in GDP^[3], being the third-largest economy, only next to the United States and the Soviet Union. However, in 1970, Germany had a $210 billion dollar economy, still being the 3rd largest economy, but being closely approached by Japan. The Germans climbed up to $475 billion in 1975, but got bumped down to fourth by the booming Japanese economy. In 1980, Germany went up to $920 billion, but still kept fourth place. Germany suffered a crash to $660 billion in 1985, still being fourth. In 1990, Germany exploded to $1.6 trillion, compared to the Soviet Union (3rd)'s $2.6 trillion. However, Germany went up to $2.6 trillion, overtaking the crashing Russian economy, and thus getting third place. In 2000, Germany went down to $1.95 trillion, still keeping third. Germany went to $2.875 trillion, being closely approached by the booming Chinese economy. Germany went to $3.3 trillion in 2015, but got bumped again to fourth, because of China's rapidly-growing economy. However, Germany grew slightly faster, when Germany got to $3.4 trillion in 2015. Germany now has a $4 trillion economy (as of 2020), but may be bumped down by 2025 by India's $3 trillion economy, which is booming dramatically.

With a per capita income level of more than $28,700, Germany was broadly middle-class society. A generous social welfare system provides for universal medical care, unemployment compensation, and other social needs. Millions of Germans travel abroad each year.

With unification on October 3, 1990, Germany began the major task of bringing the standard of living of Germans in the former German Democratic Republic (G.D.R.) up to that of Western Germany. This has been a lengthy and difficult process due to the relative inefficiency of industrial enterprises in the former G.D.R., difficulties in resolving property ownership in eastern Germany, and the inadequate infrastructure and environmental damage that resulted from years of mismanagement under communist rule.

Crash of 2008

The worldwide Financial Crisis of 2008 hit Germany in the summer, revealing high risk policies pursued by numerous large banks looking for high rates of return outside Germany. In September the government unveiled a $635-billion bailout package for its floundering banks. Economic growth for 2009 is forecast to be an anemic 0.2%.

Automobile manufacturing is a major sector, but the financial crisis caused credit to be harder to obtain; many families postponed purchases. Auto exports fell 10% in October 2008 from October 2007; domestic sales dropped 8%. In contrast 2007 was a record year with production of 12.1 million vehicles and employment of 756,000 workers; an eighth of those jobs were created in the last five years alone.

Coronavirus response

See also: CCP global pandemic

Addressing Chinese communist president Xi Jinping the editor-in-chief of Germanyâs largest newspaper Bild wrote

"You, your government and your scientists had to know long ago that coronavirus is highly infectious, but you left the world in the dark about it. Your top experts didn't respond when Western researchers asked to know what was going on in Wuhan. You were too proud and too nationalistic to tell the truth, which you felt was a national disgrace....You rule by surveillance. You wouldn't be president without surveillance. You monitor everything, every citizen, but you refuse to monitor the diseased wet markets in your country. You shut down every newspaper and website that is critical of your rule, but not the stalls where bat soup is sold. You are not only monitoring your people, you are endangering them â and with them, the rest of the world....surveillance is a denial of freedom. And a nation that is not free, is not creative. A nation that is not innovative, does not invent anything. This is why you have made your country the world champion in intellectual property theft....China enriches itself with the inventions of others, instead of inventing on its own....The reason China does not innovate and invent is that you don't let the young people in your country think freely. Chinaâs greatest export hit (that nobody wanted to have, but which has nevertheless gone around the world) is coronavirus....your laboratories in Wuhan have been researching coronaviruses in bats, but without maintaining the highest safety standards. Why are your toxic laboratories not as secure as your prisons for political prisoners? Would you like to explain this to the grieving widows, daughters, sons, husbands, parents of corona victims all over the world?"....In your country, your people are whispering about you. Your power is crumbling. You have created an inscrutable, non-transparent China. Before Corona, China was known as a surveillance state. Now, China is known as a surveillance state that infected the world with a deadly disease. That is your political legacy."â^[4]

Bild calculated that China owed Germany â¬149 billion euros (USD $161 billion) for coronavirus damages. Bild said the compensation amounts to â¬1,784 euros per person if Germany's GDP drops by 4.2 percent. The Bild article was titled: "What China owes us."

A case about a man violating strict German lockdown rules by celebrating a birthday with his friends became the worldâs first COVID court case that dealt intensively with the medical facts of the disease and its economic consequences. The court ruled:

âBased on what has been said, there can be no doubt that the number of deaths attributable to the lockdown policy measures alone exceeds the number of deaths prevented by the lockdown many times over....At no time did a concrete danger of the overloading of the health system by a âwaveâ of COVID-19 patients occur. As can be seen from the DIVI Intensive Care Register, which was newly established on 17 March 2020, at least 40% of intensive care beds in Germany were vacant throughout March and April. In Thuringia, 378 intensive care beds were reported as occupied on 3 April 2020, 36 of which were occupied by COVID-19 patients. This was compared to 417 free beds.

On 16 April 2020, two days before the decree was issued, 501 intensive care beds were reported as occupied, 56 of them with COVID-19 patients. This contrasted with 528 free beds â¦ The maximum number of COVID-19 patients reported in Thuringia in the spring was 63 on 28 April, and the number of COVID-19 patients was thus at no time in a range where an overload of the health care system could have been feared.

This assessment of the actual dangers posed by COVID-19 in spring 2020 is confirmed by an analysis of billing data from 421 hospitals by the Quality Medicine Initiative, which concluded that the number of SARI (severe acute respiratory infection) cases treated as inpatients in Germany in the first half of 2020, totaling 187,174 cases, was actually lower than in the first half of 2019 (221,841 cases), although this included COVID-related SARI cases. The number of intensive care and ventilator cases was also lower in the first half of 2020 than in 2019, according to this analysis.

Mortality statistics paint a similar picture. According to a special analysis by the Federal Statistical Office, 484,429 people died in Germany in the first half of 2020, compared with 479,415 in the first half of 2019, 501,391 in 2018, 488,147 in 2017 and 461,055 in 2016. Accordingly, in both 2017 and 2018, there were more deaths in the first half of the year than in 2020.

The scare projections that significantly influenced the lockdown decision in the spring were also based on misconceptions about the lethality of the virus (known as infection fatality rate or IFR) and about an existing or lack of basic immunity to the virus in the population.

According to a meta-study by medical scientist and statistician John Ioannidis, one of the most cited scientists in the world, published in October in a WHO bulletin, the median lethality rate is 0.27%, corrected to 0.23%, which is no higher than in moderate influenza epidemics."^[5]

References

[1] â https://youtu.be/3BU3MudND8Q

[2] â Germanyâs slipped into recession and everyone should be worried, BY JOHANNA TREECK, MAY 26, 2023. Politico.

[3] â https://en.wikipedia.org/wiki/List_of_countries_by_largest_historical_GDP

[4] â https://www.zerohedge.com/economics/china-outraged-after-largest-german-newspaper-accuses-beijing-starting-coronavirus

[5] â http://enformtk.u-aizu.ac.jp/howard/weimar_ruling/

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Economic history of post-World War II Germany

Contents

Crash of 2008

Coronavirus response

Further reading

Economics and society

Politics

References