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Article: West Germany's "wel-failure" was to pump up its low-wage neighbor., THE WORLDPAPER
- Article from:
- World Paper (USA)
- Article date:
- February 1, 2001
- Author:
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Ruediger Dornbusch
World Paper (USA)
02-01-2001
Today in East Germany wages are higher than in the United States with
productivity levels that are perhaps half.
As a result, everybody's unemployed, but since they're well paid they
may have gotten accustomed to it and be happy. There's a huge amount of
transfers on the order of 33 percent of East German GDP. Being subsidized
by 30 percent is pretty hefty for a whole country.
Such financing will have to continue. I think it's a failure in the
East, and it's being perceived increasingly as a failure in the West.
The first view of why it had to fail is the usual one for
postcommunist societies: There are no market institutions, and without
them it ...
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