320 Politikwissenschaft
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The authors agree with Flassbeck’s claim that growth generates employment. However, they do not agree with Flassbeck’s conviction that growth is to be increased by demand management. In their comment, they explain why deficit spending and expansionary monetary policy are inappropriate substitutes for a sound structural policy.
The author agrees with Flassbeck that growth is important, particularly as a condition to solve existing structural problems of the labour market. Yet, in his opinion the central question is how to get higher growth rates. Straubhaar’s answer is different from Flassbeck’s: a ‘no’ to more public deficits, more regulations and more state activities; and, a ‘yes’ to more market, more flexibility, more mobility.
The author argues that growth determines employment and not the other way around. He opposes the widespread view among German economists that more employment generated by wage cuts or increased labour market flexibility will stimulate growth. For him, this view relies on theoretical prejudices that have to be rejected in light of some recent, simple evidence. The fact that all cyclical rebounds during the 1990s have been cut short by restrictive monetary policy explains the inability of the German labour market to regain full employment.