Lifting the Heavy Hand of Government: Lessons for West Germany from the American Experience

Abstract

There is an economic strategy for expanding economic output without accelerating inflation. In the United States, it is called deregulation. Seen in a broader light, the American economic experience illuminates the proper, limited role of government in major industrialized economies. The history of modern nations in general demonstrates that capitalistic economies perform better than communist or socialist societies. And they provide their citizens with more personal freedom.

Successful economies rely on a strong business sector, competition, decision making in the marketplace, and decentralization of power. Government itself needs a strong private enterprise system—to finance the public sector and to serve as a counterweight in avoiding the dangers of a totalitarian society.

Maintaining a competitive economy does not come easily. The typical cases of monopoly arise from the actions of government. Nor are government enterprises subject to the discipline of the marketplace. In the United States in recent years, curbing the use of the government’s power to create private monopolies—deregulation—has resulted in a more efficient economic system.

In contrast, the most cursory examination of the economic structure of the Federal Republic of Germany reveals the heavy hand of government, especially in labor-management relations. It would seem that opportunities for deregulation abound.