Germany's choice on rule-set reset: play down or play up

"East Germany Swallows Billions, and Still Stagnates," by Mark Landler, New York Times, 21 July, p. A11.

Former West Germany has spent a trillion and a half on former East Germany and the latter has little development to show for it. What's the problem? Frankly, the West has asked the East to play down to its own restrictive economic rule set instead of asking the country as a whole to play up to the far more open Core economic rule-set.

Here's the key excerpt:

George Milbradt, the prime minister of Saxony, said that Bavaria was able to reverse an exodus of people during the depressed 1950's by turning Munich into a center for the automotive and computer industries. Mr. Milbradt said the east can prosper only if it shakes off Germany's stifling labor regulations. That would drive down wages here and make the region competitive with its eastern neighbors. The trouble, he concedes, is that this would require the government to overhaul not just its policy toward the east, but its entire economic program.

Milbradt goes on to say that Germany is a "sick man" who knows what the cure must be, but who fears it more than the disease.