Frank Steinmeier

Frank Steinmeier is the German Foreign Minister. We have a certain problem on our hands if this is the level of his understanding of matters economic:

Nevertheless, Germany stands to lose more than any other country from any protectionist-minded retreat from globalisation. In the first six months of 2007 alone, the value of German exports nearly passed €500bn.

Look, exports are a cost to an economy, not a benefit. The benefit from trade comes from the imports, not the exports. If we approach all of this globalisation stuff from the wrong end then of course we\’re going to mess it all up.

Imports are what we want, they\’re the things that make us richer. Exports are simply the costs that we bear in order to gain the imports.

4 comments on “Frank Steinmeier

  1. I believe there is some sort of genetic quirk that does not allow Germans to understand the relationship of exports to imports or the importance of domestic consumption. The only thing they more often crow about than being Fussballweltmeister (men or women) is being the Exportweltmeister in that the level of goods they export to those they import is higher than anyone else’s. At the same time they have one of the lowest percentages of people who own their own home in Europe and are forever developing ways to increase unemployment and choke off domestic consumption.
    For my part, I would rather drive a Porsche than build one.

  2. so any country with an excess of exports over imports is getting poorer??
    and those with a trade deficit are getting richer??
    got any examples??

    Tim adds: Depends upon how you define wealth, doesn’t it? If you define it as the level of consumption (well, obviously that’s not wealth, income perhaps) then rising consumption is indeed an increase in income. So, yes, a trade deficit is an increase in income.

  3. And let’s not forget that there’s another column on the books: capital account. Since everything has to sum to zero, countries running a trade deficit are also running a capital account surplus. This amounts to foreigners sending you money, which is generally held (at least by neoliberal economists) to be a good thing.

  4. This is silly nit-picking. If you are going to say that the 500bn euros Germany receives is a ‘cost to the economy’ then you presumably also think it is correct to say wages are a cost to a worker , and that a worker who earns $50,000 a year but spends $29,000 and saves $21,000 gains less from the labour market than one who earns $30,000 a year and spends it all.

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