Made in Germany

The EU is at it again, still trying to manage economies, and this time they’re taking on the German powerhouse whose piggy bank they want to raid directly to bail out the rest of Continental Europe.

Spiegel International Online reports

Whether it’s attached to a car, a dish washer or a pepper grinder, the “Made in Germany” label is key to selling products made in the country. But if the European Union has its way, goods carrying the tag will soon have to comply with higher standards….

EU Commissioner Algirdas Semeta plans to restrict the sought-after “Made in Germany” label to products where at least 45 percent of the value content comes from Germany. Until now, EU rules defined the country of origin as the place where “the last substantial, economically justified processing” took place.

Spiegel reports further that a part of the beef is that, under the current regulatory régime,  products could be produced almost entirely outside of Germany (for instance), and only the finishing touches applied in the domestic factory.  This is an exaggeration, or it would be in a truly open, information-flowing free market—something that’s been anathema to the Europeans for decades, and which lack underlies the current European economic malaise.

In the modern globally integrated economy, “Made in Germany/France/United States/etc” has been a bit of a misnomer for a long time: “Assembled in…” would be more accurate.  German—and American—automobiles, for instance, are built up from parts made in a number of foreign locations where labor is cheaper and necessary supplies, especially commodity supplies (iron, plastics, and so on), are nearer by and so cheaper to obtain.  Then the parts are shipped for final assembly in Germany or the US.  To do the whole thing overseas, only applying the last coat of paint in the domestic factory, and claiming that to be domestically made would, at best, irritate an informed market’s public, and it would eliminate the value of any “Made in” claim.  Businessmen aren’t smarter than their customers, nor need they be better informed.

Moreover, in the near term, and in perpetuity, bureaucratic imperatives involved in the record keeping needed at all “production stages to establish where most of the value of the product was created,” assuming “most of the value” could be defined adequately, will only increase production costs—and so costs to the consumer who’s being “protected” by this foolishness.

EU leadership is both exposing its jealousy of German success and demonstrating once again how the euro zone is too fractionated to support a common currency and how the EU itself is too fractionated to support the tighter integration that many want and that the Brits have correctly eschewed.  And the European political class is demonstrating once again its contempt for the intelligence and wisdom of the common man whom it purports to represent.

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