David Leonhardt has an interesting column comparing the performance of the US and German economies.
Germany has been a frequent cudgel in recent fights over the American economy. When Germany has grown faster than the United States, stimulus skeptics like to point across the Atlantic Ocean and say that austerity works. When it has grown more slowly, people who think the American stimulus made a big difference — including me — return the favor.
But the full story is more interesting than any caricature. In the last decade, Germany has succeeded in some important ways that the United States has not. The lessons aren’t simply liberal or conservative. They are both.
And yet another lesson is that statistics must be viewed with caution. For example:
The results are intriguing. After performing worse than the American economy for years, the German economy has grown faster since the middle of last decade. (It did better than our economy before the crisis and has endured the crisis about equally.) Just as important, most Germans have fared much better than most Americans, because the bounty of their growth has not been concentrated among a small slice of the affluent.
Inflation-adjusted average hourly pay has risen almost 30 percent since 1985 in Germany, the kind of gains American workers have not enjoyed since the ’50s and ’60s. In this country, hourly pay has risen a scant 6 percent since 1985.
Interesting, but! Mr. Leonhardt is kind enough to link to the relevant graph at his blog. A quick glance indicates that 1985 is an odd starting point: the US was just a few years from the stock market crash and the S&L debacle, while Germany was about to reunify.
My eyeballometric estimate is that if he had chosen 1996 as the starting point (fifteen years ago, so we get a bit of the Clinton boom but also the Bush Dark Ages), he would have determined that US average hourly pay had risen by 10% (from an indexed level of 95 to 105), while it had risen by only 7% in Germany (122 to 130 on his index). Put another way, most of the German wage surge was from 1985 to 1995, so any lessons about income inequality ought to be drawn from that period.
I should note that I have no idea whether these indices reflect take home pay or total compenation, including health care. And Mr. Leonhardt's entire discussion of immigration policy in the two countries is this:
I’m not saying that the United States should want to become Germany. Americans remain considerably richer. We have the innovative companies — Wal-Mart, Google, Apple, Facebook, Twitter — that make other countries swoon. We remain the world’s immigration Mecca.
Economists have estimated that if the US was a bit less of a Mecca, especially for unskilled workers, then hourly earnings would be higher. Even Paul Krugman has stared at that implication of the liberal embrace of open borders for the poor.