Following the money
I found the article compelling on several points and thought it made sense to see how some of the observations I made on Tuesday might play out in a case study. I suggested that the first role of the government is to follow the money, starting at the national borders.
Leonhardt offers another starting point in stating the German government has been “more ruthless about the wasteful parts of government” while making the observation that German economic growth “has not been concentrated among a small slice of the affluent.”
Tellingly, the German government looked expressly at their unemployment benefits systems that discouraged work. Specifically, the story Leonhardt portrays includes, “The able and healthy were matched with potential employers.” I generally dislike passive voice constructions, and here I have the honest question: matched by whom? And how? From the looks of the article, I would hazard a guess the government followed and tracked people into the job market because provisions were made to allow people to take work below their current benefits level without penalty. The time to gain skills in the workplace likely created a step-up effect where the previously unemployed could take on more responsibilities.
Additionally, the German government coordinated educational reforms, particularly geared around math, reading and science. The skills gained in these disciplines have immediate utility in a technologically orientated economy. [Some historians of ideas recognise that the US conceptions of technology build on a strong foundation of German philosophy and thought.] With the proper training, educated Germans could move into the economy more effectively, reducing the overall need for a later step-up effect.
Yet, then the article goes into the place where I think most Americans would want to turn a blind eye. Leonhardt claims that in a market economy, the central role of government is regulation.
Regulation has a rather nasty image, but I would like to offer a different starting point for thinking about regulation: the regulator worn by SCUBA divers. The regulator worn by SCUBA divers directs and controls the flow of air so the diver can breathe. If the air can’t flow, then we have a problem. Similarly, if money doesn’t flow, we have a problem. If money doesn’t flow, then we call that problem “poverty.”
In Germany, it seems as though regulation concerned principally the people at the bottom creating spaces for them to participate more fully in commerce. Preserving labour unions represented a big part of the government’s regulation, but actually making sure that the labour unions are functioning requires continuing to follow the money. The German government observes that wages for the middle class have risen in parallel with the wages of the top earners.
I’d also like to posit this observation: if the government places meaningful efforts to help its citizenry develop professional skills, then it makes sense that the government might want to ensure that its workers are able to move those professional skills across the borders in a global economy. After all, that’s where I contend that we start following the money anyway.