On the imports side, the picture was even stronger – good for Germany and its European trading partners whose economies benefit in the German slipstream. Imports soared 31.7pc to 72.4bn euros, the Destatis statistics office said, the all-time record since figures were first compiled in 1950.
Don't overreact to one report, of course, but that is better than virtually everyone was expecting. The standard line had been that Germany's export prowess, combined with a longer-term move toward a near-balanced budget, was sucking air out of the global economy.
Talk about selective reporting.
From the same report “The June trade surplus of 14.1 billion euros ($18.7bn) was up 44 per cent from May as exports rocketed 28.5pc from a year earlier to 86.5bn euros, close to a record high set in October 2008.”
If trade as a whole goes up, its a good thing, but…it WAS selective reporting to leave out the rise in the trade surplus when dealing with the “standard line” that “Germany’s export prowess, combined with a longer-term move toward a near-balanced budget, was sucking air out of the global economy.” A rise in overall trade may be a good sign, but a rise in Germany’s surplus means a rise in the deficit of a German trading partner, just as the “standard line” suggest.
“Someone” was right to criticize. Your response to “Someone” was flimsy.
It’s already well-known that German exports are rising and I took that knowledge for granted, though I was clear to, in my text, *reference Germany’s export prowess*. That’s very different from selective omission. Furthermore that’s good news and it’s a big part of what is driving the rise in imports. Putting it in would *strengthen* my core point, not weaken it.
The critics often make the mistake of confusing the net measured trade balance with the net effect of Germany on other countries. To show this more clearly, imagine the Germans boost their imports by a factor of one hundred, but the German surplus goes up a slight bit because exports have gone up a lot too. That’s still way better for Germany’s trading partners, even though the German trade surplus has increased.
“The practice here seems, quite often, to be to err on the side of making a “winning” argument, rather than on providing a fair treatment of the subject.”
By “here” do you mean, as in, “here on planet earth?”
Note: I am not arguing that a trade surplus is necessarily a bad thing (I currently work in Germany and come from another country that traditionally runs a high surplus).
Maybe I’m just missing Tyler’s argument but the full story certainly would not alleviate my concern if I actually believed what you refer to as standard line.
It would, however, potentially alleviate my concerns if I I thought there was too little trade overall since the crisis (which is closer to my position).
Shouldn’t Germany buy more for them, not us because it’s better to have poor goods than defaulted IOUs?
‘Since Germany’s trade partners are not growing rapidly, it is fair to question whether Germany’s export growth is good for Germany’s trade partners.’
Let’s see – Germany exports fire fighting equipment to country A. Country A sells immense amounts of raw materials to Germany. Country A’s sales of raw materials has been flat for the past year, but country A has discovered a massive need for fire fighting equipment, likely to last over weeks, if not decades in the case of the peat fires.
I fail to see how Germany’s increased exports in equipment and expertise is hurting Country A. Either now, or in the foreseeable future. Many Americans seems to think exports and imports are about consumption, and of course, that can certainly be true. But much of what Germany exports is the sort of machinery and technology which really doesn’t fit well into the category of ‘consumption’ – maglev trains and wind turbines to China, mining equipment to Chile, high quality piping to Russia, and buses to Saudia Arabia.
(And to my shock, I have noticed – thanks metafilter – that many generally well informed Americans have no idea of how extensive the fires in Russia currently are, and how likely they are to grow in extent over the next several weeks, especially the peat fires.)
A very good link is from Wikipedia – http://en.wikipedia.org/wiki/2010_Russian_wildfires
These are not North American or Australian style wildfires, by the way – and yet, the effect in terms of smoke and CO (reported extensively in German media, and due in major part to the burning peat) has been very noticeable within Russia.
‘not-scott, the simple math of GDP says when I run a bigger surplus, somebody else soaks up the deficit…’
Which implies a zero sum game, or the use of ‘accounting entities.’ And yet, to use a simple example again, when a company in country A sells the necessary electrical infrastructure to allow companies in country B to take advantage of that reliable electrical infrastructure, even if the exports to country A only increase a third, the simple math is far too simple.
Again, there is a difference between exporting or importing for consumption, and exports which are used to actually increase economic activity as a whole, leading to the sort of activity which many measures fail to capture well – much of Germany’s prowess in export comes from medical equipment, machine tools, or Anlagenbau (a word which can not be translated well into English at all – call it the building of industrial facilities such a water treatment plant, or a hospital’s X-ray wing, or plant to convert sewage into methane, or a factory which produces roofing, etc.)
I most certainly do not intend to defend how Prof. Cowen argues, but trade has many aspects beyond simple production/consumption. Something, unfortunately, that most Americans by now are unaware of – and which the German owners and managers of exporting companies are intimately familar with by profiting from it. We used to be a major competitor to Germany in the past in such areas as machine tools – we aren’t anymore.
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