
How Germany got it right on the economy - lotusleaf1987
http://www.washingtonpost.com/wp-dyn/content/article/2010/11/23/AR2010112306280.html
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wheaties
The problem with this article is that is glosses over one major problem: if
Germany's currency moved in accordance with its economy rather than the entire
European Union then its exports would be grossly overpriced and uncompetitive.
It's the formation of the EU and a single currency that has allowed it to
remain an exporting country rather. The article can not compare apples to
oranges and make sense.

~~~
brc
But you could make the same argument against any US state that remains cost
competitive due to the currency. And it also discounts the fact that Germany
did very well during the period when it did have it's own currency. As it is,
German economic performance does have an effect on the Euro, being the largest
member state.

~~~
_grrr
>But you could make the same argument against any US state that remains cost
competitive due to the currency

True, but, there is a policial union of states in the US that doesn't exist in
the EU. The EU is a monetary union without a political union, this means that
it's politically unpalatable to explicitly redistribute tax money from the
relatively rich to poor regions (Germany/France to Greece/Portugal) in the
same way as Washington or London might to W.Virginia or Newcastle.

~~~
Loic
Europe is redistributing enormous amount of money from rich to poor countries
within EU. Spain would still look like an underdeveloped country without the
massive injection of money coming from the EU. EU (the organisation), even
with problems here and there and the need to take a good diet, is working
wonderfully at equalizing the rich/poor countries. This is why most of the
countries do not want Turkey to be part of EU, under the EU rules, this would
mean an insane amount of money going to Turkey every year for maybe 30 years
or more.

With respect to the article itself, not everything is rosy in Germany, a large
part of the population is living out of the social help system (7.5 millions
people) and another large par is getting miserable wages, in the range of 4€/h
or less. So yes, the German economy is robust, but the social state is
struggling too.

~~~
_grrr
> Europe is redistributing enormous amount of money from rich to poor
> countries within EU

Yes, they are, but it's a political hot potato, arguably without mandate, and
I doubt that it's on the scale of national regional development funds.

Don't get me wrong, I am pro Europe, but I think politicians have done an
abysmal job of explaining the project to voters (esp in the UK).

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nickpinkston
While certainly Germany has done a lot right and deserve credit for their
current economic strength, we have to recognize that they've both chosen a
very different path: i.e. stability over growth, and also have a very
different culture than we Anglo-Saxons - which I would argue are quite inter-
related.

When it comes to quality manufactured goods, Germany is legendary and has
strongly biased its economy over the past 100 years to take advantage.

The US & Briton on the other hand, have always been first movers to adopt
breakthrough tech - often at the expense of quality, stability of investments,
etc, and are seemingly always better at the "soft" side of business: sales &
marketing.

The world needs both the Teutonic and Anglo-Saxon models, and seemingly they
both are still going to head down the same paths as before will little change
in overall direction - with the exception of America trying to get better
educated the Germans trying to become better sales/marketers.

~~~
forkandwait
Just as a plug for German innovation -- consider the 19th century: if you
include Austria/ Vienna, people who spoke German (and were often Jewish)
basically invented modern thought, ranging from mathematics to chemistry to
music to philosophy to psychology etc. England was great in applied physics
and math, France in dynamics and biology, but in theoretical math, music, and
philosophy Germany TOWERS above anyone in the 19th century.

It all went south with the Kaiser's attempt to imitate Napolean and then
National Socialism; but if Germany had avoided militarism and kept the Jews
they basically would own Europe by now (they sort of do even with the setbacks
of the first half of the twentieth century).

~~~
binomial
To say that Germans _"invented modern thought"_ is pushing it. Perhaps you can
qualify that with an appropriate definition of "modern thought". The first few
disciplines were around long before the 19th century.

~~~
paganel
> To say that Germans "invented modern thought" is pushing it

Kant was German. As was Hegel. And Marx. Maybe it's just me, but I'd say that
the history (including that of intellectual thought) of the last 200 years
would be completely different if it weren't for these 3 guys.

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DanielN
I'm not sure I understand the impetus for articles like this. It's the same as
the articles arguing why Taiwan's education system is better than the US' or
arguing that Canada's healthcare system is better.

Certainly it is valuable and important to understand foreign policy systems
and lessons can be learned from these observations. But it is equally
important to remember that they are foreign systems. I am yet to be presented
with an example of a foreign system that would directly transport to the US
and be equally successful.

The US has problems in healthcare, in education and possibly in its economic
systems, but non of it is a result (at least in my opinion) of picking the
wrong policy system. Largely the policy systems countries choose are based on
the demographic, values, economic values, etc. Germany's economic systems work
for Germany because they are build for Germany.

I recognize that this article is not directly making the argument that the US
should convert to a German style trade and employment system, but it implied
multiple times. I would appreciate articles like this much more if they
focused more on exploring the system for itself and less time comparing it to
the system in the US.

Having said all that, Germany's co-determination system, as described in the
article, is an interesting concept. I guess the down side would be a fear of
causing separation between the interests of labor leaders and labor workers.

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Stormbringer
I find it interesting that over the last hundred years or so, especially in
the US, the 'hidden cause' of financial upheavals is usually legal - often
something as simple and innocuous as changes to the rules for how
savings/superannuation are taxed.

When you think about this it makes sense, the rich pay attention to these
changes, and move their money accordingly. It's like trying to stabilise a
rowboat, you notice that the starboard is a little low, so you order everyone
to rush to the port side...

Another interesting parallel is between Apple and Germany. Apple's detractors
have been screaming at them for over a decade about how they are going to lose
because they don't have market share. Meanwhile, the computer manufacturers
who pursue market share at the expense of profitability go bankrupt in droves
("we're making a loss on each unit, but we'll make it up in volume").

Disclaimer: I'm not German, but I do drive a German car :D

~~~
arethuza
I too favor German cars - although I did have a BMW that was manufactured in
the US and I wasn't too impressed with it.

Having said that, I wouldn't mind owning the product of a certain Italian
VW/Audi brand...

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Bertrood
Gordon Gekko, in the original Wallstreet said greed is good for all
stakeholder interests because it eliminates wastes.

Shareholder vs. Stakeholder (employees, customers, community,and investors as
opposed to just investors) is an important consideration for CEOs. Wallstreet
makes it difficult for companies to plan longterm, and many companies speak of
the importance of the CUSTOMER (and the community), but mean INVESTOR.

CEO Entreprenuers get the chance to choose for themselves, stakeholders vs
just shareholders. The work of some German companies over the last two decades
is an encouraging example.

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forkandwait
I think one of the interesting things about Germany, Japan, and China is that
they are NOT strictly capitalist countries, and they do NOT follow Chicago
style economic models (which, ahem, seem to be inaccurate when one attempts to
verify them empirically). I think a little bit of socialism is necessary to
keep a thriving _industry_ (not finance) driven economy going. Trade barriers,
spending on long term public education and welfare and infrastructure, long
term economic planning not based on this quarters dividends, a dash of
regulation to curb the worst abusers, some subsidies to beef up struggling
sectors that contribute the greater good, an efficient and highly monitored
bureaucracy, and zero tolerance for anti-social behavior (whether by the
powerful or the proletariat); these are what made the USA an industrial
economy from 1776 to about 1976, and they are still a recipe for success.

~~~
jacoblyles
There's an awful lot of assumptions to unpack in this comment so I'm not going
to address everything. But can we all agree that a country which had GSEs
pouring $500 billion into the mortgage market and a decade's worth of
government holding short term interest rates at 0% isn't some kind of laissez-
fare paradise?

You had "Chicago style" economists yelling at the government to dismantle
Fanny and Freddie for years before the collapse, those shining examples of
government long-term economic planning. For decades free market economists
advocated replacing the Federal Reserves short-term focus on quarterly GDP
with a mandate to maintain long-term price stability. Oh, and they have been
railing against both parties for racking up such a huge public debt.

Then when the shit hits the fan, all people remember is a caricature of
"Chicago-style" economists, not what they actually said and did.

The narrative that the United States lost its way through too much
deregulation and free market fundamentalism is cheap rhetoric that doesn't
become any more true the more often it is repeated. It is symptomatic of too
much education by the way of opinion articles.

~~~
forkandwait
You might be right if you said that my argument was too simplistic... but I
think there is plenty of "cheap rhetoric" on your side as well, and the ad
hominem attack ("too much education by way of reading opinion articles" is
pretty slimy, if you ask me. I could easily have said "too much watching of
Fox News"....

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te_chris
An excellent article that clearly illustrates how, if you properly educate and
invest in your population and provide a societal structure that allows these
people to have a say, then, instead of society imploding, it actually
flourishes. Not that anyone in western govt's are listening...

~~~
wazoox
Germany has other serious problems though, demography particularly.

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Benjo
Okay fine, but the article doesn't really tell us anything about _why_ Germany
is able to base their economy on export and manufacturing. Is it simply a
matter of political will? What do worker wages and income distribution look
like? How about education? Without examining these elements, the implication
that other economies should be more like Germany seems pointless.

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melling
Weren't the problems with the American economy foretold before the financial
crisis? We haven't even hit the big problems. You can only borrow for so long
and kick the can down the road.

<http://www.imdb.com/title/tt0963807>

