While Germany has seen an economic upswing in the last two years a lot of the proposed reforms have been toned down. Longtime readers of this blog will be familiar with Germany's demographic outlook but there a number of issues including social, labour, business, and market reform that still need to be resolved. One of the most prominent critics in Germany is Prof. Hans Werner Sinn, also president of the German Economic IFO institute. Back in 2004 Sinn wrote a book giving an historic overview of how Germany's wirtschaftwunder came to be and how Germany came into the positon it is now in, "Ist Deutschland noch zu retten?" Which, to the dismay of others, took a hard and critical look at Germany's economic problems and what solutions are possible. As they say: "die wahrheit tut weh".
Prof. Sinn has now published an updated english edition available from MIT Press: "Can Germany Be Saved?-The Malaise of the World's First Welfare State". This book is meant for Germany but a lot of the lessons apply to other countries as well. Germany will be the first country to face these challenges but not the last.
What has happened to the German economic miracle? Rebuilding from the rubble and ruin of two world wars, Germany in the second half of the twentieth century recaptured its economic strength. High-quality German-made products ranging from precision tools to automobiles again conquered world markets, and the country experienced stratospheric growth and virtually full employment. Germany (or West Germany, until 1989) returned to its position as the economic powerhouse of Europe and became the world's third-largest economy after the United States and Japan. But in recent years growth has slowed, unemployment has soared, and the economic unification of eastern and western Germany has been mishandled. Europe's largest economy is now outperformed by many of its European neighbors in per capita terms. In Can Germany Be Saved?, Hans-Werner Sinn, one of Germany's leading economists, takes a frank look at his country's economic problems and proposes welfare- and tax-reform measures aimed at returning Germany to its former vigor and vitality.