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Thu. June 20, 2019
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Depends on Whose ‘Locusts’ they Are
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It’s a topsy-turvy world in Berlin, where the Social Democrats—known for likening private investment funds to locusts, branding the modern financial world as "Casino Capitalism", and finding no more damning an insult in their vocabulary than "neo-liberal" (that is, 'in favor of free markets')—have suggested a groundbreakingly sensible economic policy: relaxing work restrictions for job seekers from the eastern EU members. Meanwhile the CDU, purportedly the reasonable pro-market party, urges just the opposite. The stage for this tragicomedy is set by the law prohibiting the free movement of workers from new EU member states until at least 2009. In itself a disgraceful admission of the two-class society in the EU, this could be called a necessary evil in the cause of overcoming xenophobic, anti-expansion fears of people and politicians. Yet the German economy, enjoying reasonably good times and easing (though still high) unemployment, is in dire need of skilled workers. Lacking Germans to do the jobs necessary, businesses call loudly for migrant workers to fill the slots. The ministry of labor, in Social Democratic hands in Merkel's grand coalition, now wants to review and likely relax this barrier. That irks most party members, whose fear of foreigners is cloaked in socially-acceptable protectionist rhetoric with only a whiff of racism. Social Democrats, for example, say they won't have foreigners coming to Germany to take German jobs as long as there are still Germans unemployed. Admittedly, the idea that more work done in Germany is a boon to the economy, no matter who does the job, is a foreign concept not just to Social Democrats, but to most Germans. Three grave misconceptions underpin the economic thinking in Germany and perhaps most of western continental Europe. One is viewing economics as comparable with pre-modern physics: "The more transactions are conducted, the more money is lost." This accounts for the pleasantly high German savings rate—but that every increase in economic activity boosts the whole economy is simply unacceptable voodoo-talk to most. Another key misperception is that there is only a finite amount of work, so that anyone who works an extra load takes work away from another. (Germany taxes second jobs to the hilt to discourage such greedy egoists who “steal” from others by working beyond their fair share.) Finally it is clear to many Germans that trading with poor countries or weak partners inherently constitutes exploitation. Buying raw materials, for example (for profit, no less—how heartless), is highly immoral. Meanwhile the really immoral thing, agricultural protectionism, is ignored: a different story, altogether. It's an unhealthy cocktail of Keynesian thinking, a zero-sum view of the economy, and blissful ignorance. Maybe the utter lack of economic competence among the Social Democratic leadership is no surprise. But that the head of the CDU parliamentary group, Volker Kauder, now tells Germany's largest newspaper, Bild, that we mustn't open the "floodgates for Romanians and Bulgarians who want to work here for close to nothing," and that he therefore proposes to keep these eager workers (or un-German job-destroyers) out of the Federal Republic, comes as more than a surprise. Not even populist calming measures like misguided "living wage laws," now all the rage, can justify such talk. Kauder not only gambles away his party’s economic credentials, he stokes the flames of a new brand of economic racism. That the Federal Labor Agency's head, Frank-Jürgen Weise chimes in that with still-high unemployment, the idea of "welcoming additional competition" (for those scarce German jobs) "bothers him" is hardly surprising: The idea of competition seems to bother many a European. And quite a few back in the States, as well. Jens F. Laurson is Editor-at-Large of the International Affairs Forum. George A. Pieler is a senior fellow with the Institute for Policy Innovation. Image credit: Photo by flickr user Dimitry B.

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