Class War: Low Wages and Beggar Thy Neighbor

Yves Smith posts a video by Dr. Heiner Flassbeck (in German) about Class War: Low Wages and Beggar Thy Neighbor.

The interesting point raised by Dr. Flassbeck is that he blames the current European crisis on class warfare: the clash between workers and Capital.

He says that the manisfestation of this is that Germany manipulated the Euro for its own benefit by getting employers to collude with the unions to keep real wages down. This enabled Germany to keep inflation below the target set for the Euro of 2% pa. This allowed German firms to achieve an export miracle at the expense of domestic demand.

The root cause is the victory of Capital over Labour in Germany. The domestic demand has not kept up thereby allowing Germany to run a very current account surplus with other members of the Eurozone. So Greece is unable to pay off its debts by selling things to the Germans because the latter have less real money to consume things with.

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