The NYT really wants Germany to weaken its welfare state and is very upset that the German people don’t share its view. That is what readers would conclude from an article commenting on Chancellor Angela Merkel’s two years in office. At one point the article asserts that “At heart, local analysts said, the German people did not really want aggressive reforms. They were more than content to let the state care for them, from kindergarten all the way to retirement.” It then supports this statement with a quote from Reinhard Schlinkert, the chairman of a polling firm in Bonn: “Maybe people in her own party don’t like it, but it’s a reality that when we ask, the majority really wants to have a socialistic way of life here in Germany. They have not been trained for the last 20 or 30 years to take responsibility for their own lives.” It then tells readers that “Some economists worry that the relatively modest labor market changes have fallen far short of what the German economy needs to assure its long-term competitiveness, and that the government might be well advised to use this time of prosperity to tackle the tough issues. Instead, the long-awaited recovery has led to relief and perhaps even a little complacency.” While this no doubt true, it’s also true that many economists don’t see Germany as facing intractable economic problems. These economists point out that Germany is actually running a substantial current account surplus, which means that it is lending money to the rest of the world. By contrast, the United States has a current account deficit of more than 5 percent of GDP, which means that it is borrowing money from the rest of the world. The position of the United States is clearly unsustainable, as nearly all economists would agree. The article also misleads readers on the extent of Germany’s unemployment rate. It reports that the rate has fallen to 9 percent, implying Germany still has very high unemployment. In fact, this is the official German measure of unemployment, which counts part-time workers as being unemployed. The OECD measure for German unemployment (which uses essentially the same methodology as the U.S.) is 6.4 percent. Since unemployment is still concentrated in the areas that were formerly East Germany, the unemployment rate in the areas that were formerly West Germany would be approximately the same as in the United States. There is no legitimate reason for using the official German unemployment rate, which is not comparable to the U.S. rate, without explaining the distinction to readers. This is especially inappropriate since the OECD rate is so readily available.
--Dean Baker
