[jacquesm]

> while refusing to allow equivalent imports

That very much is in citation needed territory, please give at least one example of how Germany is refusing intra-European imports in any category. Free trade is one of the cornerstones of the EU, Germany imposing a tariff or blockading goods produced elsewhere in Europe would make some pretty fat headlines.

[bildung]

> > while refusing to allow equivalent imports

> That very much is in citation needed territory, please give at least one example of how Germany is refusing intra-European imports in any category.

(Not GP.) You are of course right that Germany has not created import tariffs or other direct and illegal options. OTOH the German government has implemented numerous actions that indirectly had wage-suppressing effects (which per definition lowers imports and raises exports) in the last decade - to a degree that even the IMF(!) felt the urge to demanded actions for more domestic demand on multiple occasions [1][2].

The one notable exception is the implementation of a minimum wage law in 2015.

[1] 2012: http://bigstory.ap.org/article/imf-urges-germany-spur-domest... [2] 2014: http://www.bloomberg.com/news/articles/2014-05-19/imf-urges-...

edit: here's a graph comparing income-adjusted wage development of the developed countries: http://nrt.revues.org/docannexe/image/1382/img-2.jpg

[rwissmann]

Germany had anemic economic growth about 15-20 years ago. After hard political fighting these sort of reforms were enacted.

Competition is global. Greece is not just not competitive with Germany, but also with China, the US, Japan, Australia, ... . That is the real problem.

[jahewson]

Except that Greece isn't in a currency union with those other countries. If Greece had their own weak currency then it would make their exports cheaper, which might make them better off (except that leaving the Euro would trigger a financial collapse). China has been trying to keep the Yen cheap against the dollar for this reason, if your goods are cheap then ohers will buy more of them or prefer you over another producer.

[rrggrr]

Refusing isn't the right word. From my experience there are fewer categories of products where a German consumers gets value add from purchasing non-German products (B2C or B2B) as compared to, say, Greece. First how much could Germany import from Greece at the outset. And, not specific to Greece, there is a general aversion to buying the lowest cost product just to save money; and there is a general preference for predictability, longevity and quality. Others may have the opposite experience, but for me German demand for domestically made products is a sensible and a cultural "refusal" and not an institutional one.

[nhaehnle]

TheOtherHobbes used a bit of an ellipsis here. There is no outright refusal of imports by law, but there is a refusal to allow the kind of economic conditions (such as wage increases in line with productivity increases) that would lead to a balance of imports and exports.

As for citations, a recent comparison of the relevant metric, the relative unit labor cost: http://krugman.blogs.nytimes.com/2015/01/29/i-do-not-think-t...

It is evident that of all Eurozone states, Germany is the one that deviates the most from a policy of stability. Unfortunately, the deviation is in a direction that ends up with Germany in a position of power.

[mafribe]

Germany deviates from the European norm by having products on offer that are globally competitive. What a crime. Let's make Europe more stable by turning every country into Greece!

[nhaehnle]

Competitiveness is a matter not just of value, but also of price, which is largely a matter of how much you pay your employees. Germany achieves its competitiveness by paying employees badly. That is a not a virtue, it's a vice.

That's the key here, and again I encourage you to read and contemplate the post that I linked to, since it clarifies the issue.

[mafribe]

Krugman's article like everything he writes is not insightful. Wages are no per-se too high or too low, but rather relative to wage levels of competitors and desirability of produced goods. Germany competes in a global market and in that global market Germany is a high-wage country. When it had higher averages wages, Germany lost its competitive edge.

Here are more interesting questions: which are the average wages paid in Greece appropriate for the product Greece seeks to sell? Which products from Greece do you buy on a regular basis? Greek smartphones? Greek cars? Greek chemical products?

[nhaehnle]

Please, actually read the article. The numbers in the last diagram are relative unit labor costs. In other words, they are labor costs divided by the (market) value of the produced goods. This division incorporates everything you claim to be missing, which is why I feel confident in the claim that you either haven't read or haven't understood the article.

[NotableAlamode]

Krugman claims "Germany, [...] has had much too little wage growth" and offers no argument whatsoever to support this claim. It's pure stipulation!

Indeed, if he were to take his own figures seriously, he would have to argue that e.g. Portugal too does not have enough wage growth vis-a-vis Greece and Italy. But he keeps bashing Germany, as Krugman always does.

Anyway, why should relative unit labour cost be the only relevant measure? Other factors are also important, for example the cost of capital. The more advanced an economy is, the more important cost of capital. Since Greece does not produce capital intensive goods, it should have higher relative unit labor costs. Krugman should know these things ...