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Ferdinando Giugliano

Germany's Economy Needs More Investment

Despite a boom, more spending would make up for years of wage restraint.
Time for a wage increase?

Time for a wage increase?

Photographer: Patrik Stollarz/AFP/Getty Images

Few countries attract as much disdain from economists as Germany. Berlin is accused of running an excessively prudent budget and German companies of paying their workers too little: This stinginess -- so the accusation goes -- has contributed to global instability by making it harder for Germany’s euro-zone partners to climb their way out of the crisis.

The criticisms, which go back about a decade, seem harder to sustain now: German wages are rising again, and while the government is running a surplus, it is more difficult to make the case for greater spending during an economic expansion. The problem is that Germany needs to make up now for what it failed to do in the past: Wages must not only increase, but compensate for years of excessive moderation.