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Learning from Angela Merkel

By Shlomo Maital

It was all over for Angela Merkel. She announced her retirement as head of the Christian Democrats, in Germany, and more or less disappeared as Chancellor.

   And then – came the pandemic.   Writing in the New York Times, Anna Sauerbrey * explains how Merkel is hugely popular, her party leads by far in the polls – and Germany has weathered the pandemic far better than the US, for instance, where President Trump, a born misogynist, persistently mocks “Angela”. [The New Yorker reported: The first Trump-Merkel encounter in the Oval Office began with almost comically awful optics: Merkel offered a ceremonial handshake for the cameras, which Trump seemed to rebuff. After the photographers left the room, Trump reportedly announced, “Angela, you owe me one trillion dollars.”].”.

Here is a selection from Sauerbrey’s piece: “Now, in early July 2020, Ms. Merkel is riding high. The country, with a notably low fatality rate and a high-functioning test and trace system, has contained the pandemic — a success many attribute to the chancellor. In a recent poll, 82 percent of Germans said that Ms. Merkel was doing her job “rather well.” And the Christian Democratic Union is once again far ahead of its challengers.”

   Please recall that Merkel is a highly trained scientist – a quantum chemist, someone who understands deeply both physics and chemistry. A perfect person to lead a nation through a crisis that demands deep scientific understanding.  

       Now, let’s assume that the United States has a President who is wise, open-minded, modest, humble, intelligent, and desperate to lead his country through the crisis in an admirable fashion.   The US and Germany have much in common. Both have a federal structure – the 50 states in the US, and the German federal states.   Both in Germany and the US, the state governments have major powers. The wise US President says, let’s find out why and how Germany is doing so well, and adapt its policies.

     Here, the similarity ends. In the US, Republican ‘red’ states [Florida, Arizona, Alabama, etc.] have opened prematurely, triggering a disastrous wave of new infections.  In Germany, Merkel’s knowledge and background gave her credibility, and she deftly coordinated policy, so that the German states followed her guidance carefully. No “Florida’s” or “Arizona’s” in Germany.

     The federal government in Germany manages and directs the test and trace system, with massive resources and trained personnel. A model of excellence.

     Not so in the US. And the US President? His shocking, racist speech at Mt. Rushmore barely mentioned the pandemic. Maybe, he thinks, if I ignore it – it will just go away.

     The people of Germany are fortunate to have Merkel in a strong leadership position during the pandemic.

     The hapless people of the United States are desperately unlucky to have Trump leading them, even though three million more people voted for his rival.  

* How Germany Fell Back in Love With Angela Merkel. New York Times, July 8, 2020.

Best-Practice Virus Management: Look to Germany

By Shlomo Maital

Angela Merkel

   Sometimes, something happens and – we know exactly why we were put on this earth. Take Angela Merkel. Americans would call her a ‘lame duck’ chancellor, as she has indicated she will not run for re-election as head of her party, and a successor was already chosen (and then, resigned, and a new successor emerged). But meanwhile, she is still Chancellor, leading Germany at a critical time – and guess what – she gets it. [She obtained a doctorate in quantum chemistry in 1986 and worked as a research scientist until 1989].   Listening to an ignorant, spiteful, uneducated draft-dodging American President who does NOT get, focused solely on his rapidly-decreasing chances for re-election, it is very painful, after hearing Merkel.

     In part because of Merkel’s leadership, and in part because Germany is a very well-run organized country strong in science and technology, Germany today is best-practice in emerging from the coronavirus lockdown. New York Times’ Berlin bureau chief Katrin Bennhold explains why:

   “….3,000 households [were] chosen at random in Munich for an ambitious study whose central aim is to understand how many people — even those with no symptoms — have already had the virus, a key variable to make decisions about public life in a pandemic. The study is part of an aggressive approach to combat the virus in a comprehensive way that has made Germany a leader among Western nations figuring out how to control the contagion while returning to something resembling normal life.”

     Bennhold continues: “Other nations, including the United States, are still struggling to test for infections. But Germany is doing that and more. It is aiming to sample the entire population for antibodies in coming months, hoping to gain valuable insight into how deeply the virus has penetrated the society at large, how deadly it really is, and whether immunity might be developing   The government hopes to use the findings to unravel a riddle that will allow Germany to move securely into the next phase of the pandemic: Which of the far-reaching social and economic restrictions that have slowed the virus are most effective and which can be safely. The same questions are being asked around the world. Other countries like Iceland and South Korea have tested broadly for infections, or combined testing with digital tracking to undercut the spread of the virus.

   “Germany, which produces most of its own high-quality test kits, is already testing on a greater scale than most — 120,000 a day and growing in a nation of 83 million. Chancellor Angela Merkel, a trained scientist, said this week that the aim was nothing less than tracing “every infection chain.”   That high level of testing has helped her country slow the spread of the virus and keep the number of deaths relatively low. More people in Germany now recover from the virus every day than are infected by it. Every 10 people infected with the virus now pass it to seven others — a sharp decline in the infection rate for a virus that has spread exponentially.”

   “Nationally, the Robert Koch Institute, the government’s central scientific institution in the field of biomedicine, is testing 5,000 samples from blood banks across the country every two weeks and 2,000 people in four hot spots who are farther along in the cycle of the disease.   Its most ambitious project, aiming to test a nationwide random sample of 15,000 people across the country, is scheduled to begin next month.”

   “In the free world, Germany is the first country looking into the future,” said Prof. Michael Hoelscher, who heads up the Munich study, noting that a number of countries had already asked him for the protocol to be able to replicate it. “We are leading the thinking of what to do next.”   Mr. Hoelscher was co-author of what has become a widely influential research paper about how the virus can be transmitted before someone develops symptoms.   “There’s no doubt after reading this paper that asymptomatic transmission is occurring,” Dr. Anthony Fauci, director of the National Institute for Allergy and Infectious Diseases in the United States, told CNN on Feb. 1, three days after the paper was published. “This study lays the question to rest. Asymptomatic transmission is what has made containment so difficult because a large number of infections are not detected.”

 

Greece Collapses – Germany and the World Will Pay the Price

By Shlomo Maital

   Greek collapse

    Two trucks speed toward each other on a deserted highway. They are 50  kms. apart.  Each drives at 100 kms. an hour.   They have 15 minutes before they meet.  Plenty of time to slow down, stop, turn off the road. 

    Yet they still collide head on, with massive damage.   

    Then, the experts debate why this happened.

    This is the story of Greece.  Greece joined the EU in 1981.  It joined the Euro in 2000, in time to implement paper euros and coins when all of Europe did. 

   Here is what  former  European Central Bank Chief Economist Otmar Issing  said, in March 2011:   “Greece was only able to join the euro through deception [its budget deficit was far above permissible levels]  and the currency bloc’s leaders have been “too polite” ever since to deploy adequate sanctions that could have averted the region’s debt crisis.  When I worked for the ECB, I suffered every time countries didn’t meet the criteria…Greece cheated to get in, and it’s difficult to know how we should deal with cheaters. … Greece will probably be unable to honor its debts as it grapples with insolvency. The country’s repayment ability remains questionable even after the government endorsed an accelerated asset-sale plan and a package of budget cuts necessary to draw a fifth tranche of its bailout.”

    It was obvious in 2011, four years ago,  that Greece could not pay back all that it had borrowed.  Today its public debt is an unsustainable 177 percent of its GDP.  So it is obvious – much of the debt has to be wiped out, one way or another.

   Are Greece and its leaders to blame?  Sure.  But on the principle of “sunk costs”, the history is irrelevant. The question is, what to do today, to avoid the crash?  We’ve seen it coming for years, according to Issing.  Yet Europe and its blind leaders continued to torture Greece, imposing ever more severe austerity.  You cannot grow an economy by shrinking it.  And an economy can only pay back debt by growing.  Grade 5 kids know that.  But politicians and economists don’t.  You cannot have a single currency, the euro, without a single united banking system throughout the euro zone with one set of rules.  That never happened. It never will.  So the euro will become a permanent chronic ongoing crisis, and it has been for years. 

    Yesterday German Chancellor Angela Merkel said, “if the euro fails, Europe fails.”  Really?   What has Chancellor Merkel done to recognize reality – Greece cannot, cannot, pay back its debt?    She should have said, “The euro has failed, because I have failed, and I therefore tender my resignation.  I failed to explain to the German voters, that even if we wipe out a quarter of Greek’s debts, Germany still has gained immensely”. 

     Who has been the big winner from Greece’s suffering?  Germany.

     Why? Because Greece has dragged down the external value of the euro, and the cheap euro makes German exports more competitive.  If Germany under Merkel would give Greece 3 percent of all it has gained from the Greece-driven euro decline, the crisis would be over. 

      Some 37 % of Germany’s GDP comprise exports, or nearly $1.5 trillion (in 2014),   just slightly behind that of the U.S., whose population is three times bigger.  Even China exports only 23 % of its GDP.   How strong will German exports be, when Greece leaves the euro, restores the drachma, bankrupts its citizens and its banks, crashes world financial markets,  bashes the world economy —  and then the euro soars,  throwing Germany’s export-driven economy into recession?

     Two trucks speeding toward each other for years.   Could the crash have bene prevented?  Sure,  with common sense. 

     Was it?

     No.   History will be unforgiving to the hypocritical blind leaders who caused this.

Benchmarking Germany: Job Creation a la Merkel

By Shlomo Maital

job creation

proporiton with jobs

change in proportion of people ages 15-64 with jobs, since 2007

Floyd Norris’ “Off the Charts” feature in the New York Times finds clever ways to present complex data in clear, meaningful visual ways. In his latest effort, today (April 19-20), he charts the “proportion of people with jobs”, by age group, dating from 2007.

This is a much better statistic than the unemployment rate, because when the poll person knocks on your door and asks you, “are you working now?”, if you say “no”, the next question is, “have you been actively seeking work in the past 2 weeks?” If the answer is no again, you are not unemployed, because, you are not even in the labor force. So “proportion of people with jobs” is a good statistic to track.

   Norris’ charts show that both America and the EU (excluding Germany) are abysmal; nearly 5 per cent fewer people aged 15-64 have jobs today than in 2007, and this is after the two biggest economies in the world have ‘recovered’.   Britain is nearly back to what it was in 2007; the Conservative government under Cameron is taking credit for this, giving credit to its austerity program.  I think the job recovery was in spite of austerity, not because of it.  Britain’s pound sterling has dropped a lot, helping its exports, like Germany. 

   But the stellar performer is Germany! Germany has 4 percentage points MORE people working, ages 15-64, than in 2007.    

     Why?

     I have some explanations. Germany has benefited from the plummeting euro, and boosted its exports. Germany has succeeded in boosting exports to China. Germany maintained wage restraint and restrained social benefits, and its unions have been highly responsible.   Germany avoided shedding excess labor during the downturn and hence preserved the high skills of veteran workers, often the first to be dumped.

     But this is not my point. When job creation is the #1 key issue almost everywhere, and when one country outperforms all the rest by a huge margin, should the decision-makers not be beating a path to its door to find out the secret?   I see no evidence this is happening.

     Obama – Send your civil servants to Berlin. Tell them to stay there until they come home with a strong plan to boost job creation, and reduce the huge numbers of discouraged workers, who do not appear in unemployment stats and hence who are invisible. Tell them to get to the bottom of Germany’s success.   And while they’re there, ask them to discover why Chanceller Angela Merkel is an effective competent leader, while you, Obama, seem unable to organize a paper bag (or a simple website).

Blog entries written by Prof. Shlomo Maital

Shlomo Maital
July 2020
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