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Old October 3 2012, 08:41 PM   #25
Location: Europa
Re: Happy Unity Day!

horatio83 wrote: View Post
FPAlpha wrote: View Post
horatio83 wrote: View Post
Germany committed the same error as Russia, it sold East German public assets too quickly which lead to massive corruption, West German industries wanting to crush potential competition in the East and so on.
The rule is simple, regulate before you privatize and in the current austerity climate in which the mantra is 'sell government assets to reduce public debt' it is as actual as it has been two decades ago.

My country would have been better off if it had decided to not merge so quickly and remain separated. I do like the holiday though.
No it wouldn't. GDR's economy was in shambles and was barely able to adequately support its population much less keep up with world economics.. the industry was falling apart and outdated, no state of the art industry to speak of and there were shortages often enough due to mismanagement. Additionally i don't think West German companies were scared of East Germanies industry at all.. they simply saw an opportunity to invest and so they did. It was maybe a harsh lesson for East Germany how capitalism works but change can be painful too.

What would have happened if Germany didn't unite for another 10-20 years? The GDR couldn't modernize on its own because they lacked funds and it may have led to widespread riots and flight from the East to West Germany only hastening the implosion of the GDR.

Once merged the relocation to the West still happened but Germany took it upon itself to rebuild an entire nation which is no small feat and put quite a heavy strain on an otherwise prosperous Germany. Many mistakes were made but there was no blueprint on how to do things, no prior experience.. it was basically improvise as you go along.

It's not finished by far (if it ever can be called finished) and East Germany still has many problems (including new ones that were the result of mismanaged projects) but i think it was the only way how that could have been done.
When the public assets of the former GDR have been privatized it was an utterly corrupt process. Not as horrible as in Russia but still pretty bad. The corruption usually took the form of too small prices being payed for the property, i.e. buyers and the public agency (ironically called Treuhandanstalt, trust agency) conspired against the interests of the public (to get most money from privatization).
Furthermore there were some decent companies who could have survived but their Western competition wanted to crush them and of course they had the usual influence upon the government.

What should have happened? Simply a slower process. Install some protectionist measures in order to save those companies who can be saved, regulate capital markets to allow an inflow of capital but not an outflow and labour markets should of course be totally open as people wanted to unite with their relatives.
The artificially imposed exchange rate of 1:1 was of course also totally nonsensical.

China did not listen to the neoliberal nonsense of the West, slower transformed from socialism to capitalism and that's why the country is on a better path than Russia (of course I am not sanctioning authoritarianism or sweat shop labour).
Du bist echt ein wahrer Quell von Spass und Freude.
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