I have an interesting anecdote to share, couple of years back I was working in an Indian branch of an MNC. The water from the tap on a wash basin had low pressure and it was frustrating to wash your hands but I guess we never complained because in India you just accept such minor inconvenience.
One day the VP from the American HQ came to the Indian office and yes he was German, during the intro meeting he talked about the low pressure from the tap. The tap was changed the next day.
I still remember that story because it taught me how Indians look at their surroundings and how a German looks at the same surroundings.
I am pretty sure that wiring your house is (rightly) illegal in many countries unless you are a licensed electrician, because of the fire Hazard and all.
I've been living in Australia the past year (which has a lot of Germans) and twice I helped someone change a flat tyre. Both times a German also came to assist, and both times it was an American who didnt know how to change a flat (there arent that many of them in Aus).
As an American with some German ancestry, I find this to be very embarrassing. (The Swedes in my family can all change a tire as well, including my sister, but the German side is embarrassed.)
Americans have become complacent and lazy, with no sense of "know how" or "make do." Hell, kids don't even know how to clean and cook a rabbit, let alone how to catch one with a snare. If the zombie apocalypse ever happened for real, The Walking Dead wouldn't last a full season. Everyone would starve to death.
You're saying that there are only 8 Germans alive who can do it.
and 6 of them have a 99.9% chance of dying within 10 years, given that they are 82+ years old. :)
On a serious note: A lot of immigrants make a lot of money (relatively speaking) right away since they are jack of all trades and are willing /have to learn. Things that a locksmith would charge you $150 and a plumber $200 and an electrician $xxx an immigrant can do all within an afternoon, all for living rent free as superintendent. Probably some rules and codes are bent but who's watching...
Germany might not have as much of a hunting culture as the US or Norway, but still a lot more so than Netherland. I would expect more Germans to know how to clean and cook a rabbit.
This certainly makes me think. I'm Dutch, and when I was a kid, I knew how to repair my bike. Today, I tend to hire others to fix everything. I wouldn't know how to replace a car tire (other than to try the obvious).
Saying Americans have become complacent and lazy because they don't know how to catch, clean, and cook a rabbit is like saying that Americans have become complacent and lazy because they don't know how to steer a covered wagon across the plains.
Yeah except being able to catch, clean and cook your food is still a valuable skill. However I would say there are more Americans who can do that than Germans... It's hard as hell to get a hunting license in Germany.
Is being able to catch, clean, and cook a wild animal really a valuable skill for most people in the western world? If you enjoy it, fine, but for most of us, the skills that earn us money are going to be much more valuable.
Not everything is about money. Hunting is a character-building expetience. I.E. I was taught to do it with certain respects paid to safety, the animal, and nature--so it teaches responsibility, respect, and other valuable qualities. It is also fun, stress-reducing, and especially if you like meat, very satisfying. Plus, you get good quality (free range, wild caught, organic I suppose) food.
Finally, if we experience some type of catastrophoc event: total war, nuclear winter, natural disaster, I will still be eating.
I suppose it's useful if you're really into wild camping. Realistically how often would the average person, even someone living in a rural state, need to catch, clean and cook their own food? How many decades has it been since a significant portion of the population has needed that skill? Probably several generations at least. I bet less than a fraction of a percent of the population lives in a situation such that they don't procure most of their food through purchases of the products of agriculture or animal husbandry. A town has to get very small and very remote before periodic trips to the grocery store become so onerous that it's actually more efficient to set snares or sit in a tree for days on end waiting for a deer to wander by.
I suspect that any scenario in which hunting/trapping becomes a valuable skill for a significant portion of the population is also a situation where knowing how to operate an animal drawn vehicle is also a useful skill.
Agreed. This whole "you might need it to survive" stuff is such a total fantasy, it's as realistic as "you might need to learn klingon to survive on a bird of prey some day".
This fiction about civilization collapsing, but then surviving on your wits and hunting skill, is the stuff of YA novels.
Coming back to this late. I guess my point about rabbits is that when I was a kid in the 60s in a rural place, it was a very common skill that kids were taught -- along with a bunch of other practical stuff. My generation generally did a poor job of passing along those skills. (My daughter can clean a fish, not a rabbit, but she's a vegan now haha.)
Everyone knowing how to skin a rabbit doesn't help if there aren't enough rabbits. A population of 320m Americans catching rabbits? A billion rabbits a week?
(The US currently consumes 8 billion chickens a year)
People go too far with generalizations. I teach my kids not to judge people by nationality, gender or race. My German wife doesn't know how to change tire. These are nice anecdotes though.
I'm a German, I spend a lot of time in the US. My US friends here seem to analyze what I do often based on my nationality ('Oh you cook, must be a German thing'). Analyzing/Interpreting people's behavior based on nationality must be an American thing.
Most cars (from my experience) in Germany have separate tyres for winter, so changing them is something you need to do twice a year. Back in New Zealand I drove for about 12 years and never had to change a tyre.
No need to change a tire in Germany (or elsewhere) either. There are plenty of shops that will happily do it for you. It's an easy thing to plan for.
Besides, the northern US has more extreme winter weather than Germany, so based on this, Americans should be better at changing their tires than Germans.
Or put differently: culture is a major driver. The culturally similar Austria and Switzerland, and to a certain extent the Scandinavian countries, have similar strengths.
Sure there are some contributing factors (eurozone monetary policy, labour laws), but thats really the core. I feel like the education system, world class science institutes (Fraunhofer, Max Planck and Helmholtz) and pragmatic vocational training are really just a result of that.
One time in an expensive hotel in Asia, there were a few times when things were simply wrong, even though we had a named person assigned to our group as a manager to call on.
I met with the German general manager and suggested that his systems for ensuring a quality experience were not correctly set up.
He sat up straight in his chair and told me that he would deal with all the issues we had. From then on we had no more problems with the account manager...
The audio software industry is quite big.
Most of the poplar DAWs are from Germany: Live, Cubase, Logic (at least before Apple bought it), Studio One, Samplitude and Bitwig. Many popular VST Plugins also come from German companies like Native Instruments, Celemony or U-He.
Some other famous software companies: Avira, Crytek, SAP, Suse and Nero.
Umpteen years ago, a woman of my acquaintance said that her bathtub had a very poor supply of hot water. I glanced behind it--it was freestanding--turned a knob till it stopped, and the hot water ran a lot better. To be sure, my last name reflects German ancestry, but so did hers.
This is a model I desperately hope returns in a big way around the world. The modern education-factory model is a post WW2 invention and the quicker we can EOL it the better.
We got so much from the older model and I dare say people lived better lives while studying.
I've often idly wondered if you could do Software Development as an apprenticeship. Use industry tools in your work day, and theoretical computer science at night schools/block courses.
You could. The majority of software development isn't science it's craftsmanship and often good business skills make more value than something like calculus or linear algebra.
Not for people inventing new stuff or pushing boundaries, but for the horde of developers who are copy pasting, google programming and writing classic ASP every day.
I did the Portuguese apprenticeship program back in the late 80's/early 90's, as I wasn't sure to be able to qualify for the university on my first round and wanted to have already some kind of degree, to pay bills until the next attempt.
Those three years of apprentice were great and I learned a lot, but at the university I got to learn how little did I knew, even if those of us coming from informatics apprenticeships knew more than the majority coming from classical high-school programs.
Well, nothing beats learning how to make informative decisions in your field, which is something you'll have a much easier time picking up at a university than on your own. Though with all the free video lectures online, the gap is slowly disappearing.
Almost all the practical stuff I use for actual development has been learned outside of CS though. So you could easily have a talented CS degree with middlemanegement skills run an apprenticeship and teach someone how to be a great developer.
You probably couldn't build an entire company around people who cant decipher the shit from the quality stuff though. But a degree isn't a certainty in that department. I've interviewed CS majors who couldn't explain ACID, hadn't heard of SOLID and who also thought the singleton pattern was absolutely vital.
There is a whole movement around this called Software Craftsmanship. There are a lot of companies involved and typically they are using the apprenticeship model to bring on new employees and grow the company. The one I'm most familiar with is 8th Light which started in Chicago but is now in Los Angeles, London, and New York City too.
Their approach is more spend 5-9 months having the apprentice do mostly directed self-study, then a kind of final project and other work and, if they pass, an offer of employment. It's a really interesting model that seems to have worked well for them -- they attract developers from both traditional backgrounds and non-traditional.
Here in the UK I just completed mine and to be honest it was not worth it at all. It was essentially used as an excuse to pay me below minim wage, and now that i've finished, they hired me at minimum wage. I could make more money at McDonalds. In the end, I'm going to university anyway
Not so much the apprenticeship, but my formal education was in a trade school in Australia (TAFE, back when it was funded properly, my 2 years cost about $2K). It was a lot more hands on and less theory than comp sci, which meant the graduates could actually code. Even a lot of the theory we did cover was done through hands on activities, like creating our own databases so we had to know how things were stored and indexed efficiently. The only major areas left out that are of use in the real world were the lower level stuff (c/asm) unix tools, which would have served us better than learning how to mail merge in the early "computing" courses.
From what I've heard Germany has a similar trade school path for software development.
Basically the three last years of high-school are mixed with some apprenticeship, both theoretical and practical, with some kind of training at the end, sadly usually not remunerated.
Students can still apply to the university if they want to, they just need to meet the requested scores and do the exams like everyone else.
At the university level you can take the usual 5 year university degree oriented to "learn to learn", or a more skill oriented one just 3 years long.
With Bologna those 5 year degrees became a classical 3 + 2 master, but still kept their "learn to learn" spirit. At least on the good universities, the majority being public ones.
I don't think software is much different from anything else in this respect. You could learn any job assuming you're fairly intelligent and being taught by somebody decent. In not sure why we churn out degrees now instead of apprenticeships. I assume it's an equilibrium where The quality of people coming out of school is "good enough" that it saves the company money on training.
If you look at it as a way of companies forcing people to pay for their own training, the proper way to bring apprenticeships back is to make college more selective or expensive. This would increase upward mobility for those that can't afford school by forcing companies to train their employees again. However it would probably be seen as an attack on the poor and minorities for making college more exclusive.
Put differently, the increased accessibility of college has killed informal forms of education. To undo this would mean making college elitist again because the widespread nature of college education is what causes companies to hire only graduates.
Another factor in the downfall of apprenticeships is the inability to weed out people unlikely to succeed because of discrimination laws. In the past it was common to get engineering apprenticeships off the street IF you could pass a series of tests. IQ especially has a strong correlation to job success, and only taking say the top 10% of scores made apprenticeships much more likely to succeed (and less expensive for the company). These tests were found to be biased against minorities and women so disappeared in the 60's, around the same time college education became popular among the middle class.
Correlation isn't causation of course, so I can only speculate on these being driving forces behind the end of job training. Looking back at Germany, an interesting twist is that education is free but the acceptance rate low. Basically college in Germany is elitist, and if my theory holds water this would lead to more on the job training.
Another somewhat depressing thing to keep in mind is that HN is a bubble. You need to be fairly smart to be an effective engineer. Most are significantly smarter than the average person, and by popular accounts an odd bunch. It might seem reasonable to people like us to teach people to code by osmosis but to most people programming is incomprehensible and unenjoyable. I saw this first hand in primary school where software programming was an elective. There were 30 or so students in the class and only three of us had any idea what we were doing and interest in writing code.
This is the case in France. I had three apprentices (huge software company) and one of them was hired afterwards.
This is extremely useful (for both sides).
A large number of apprenticeships in Germany are in the metal and electronics industry. Check out the list [0] (in German). In fact, most jobs listed there are performed in factories, with desk-jobs being second.
> The high taxes on assets in France and the inheritance tax in the U.S. prevent the accumulation of capital necessary for the formation of a strong mid-sized sector.
I am surprised by this assertion. Allegedly family-managed firms can make long term decisions, but those observations are always subject to survivorship bias. At best I would think this issue marginal. (There's also a bias in the statement, as inheritance tax in the US is quite low and kicks in at a pretty high level).
I would think if anything the ability to inherit reduces the likihood of outside ideas.
(And anyway, in a republic, inheritance is abhorrent. We don't need another aristocracy.)
You don't have to hedge, that comment about inheritance tax is literally ridiculous and completely unsupported. The idea that the US has a problem with too little accumulation of intergenerational wealth is patent nonsense.
The idea that the US has a problem with too little accumulation of intergenerational wealth is patent nonsense.
This is different from parent leaving you stock and bonds.
Father dies, leaves company that makes engines to son and $50 million in cash because he has invested most in his company. IRS+State: son, you owe us half+ of what your father left you, or $1.1 Billion. If he borrows half of company's worth that's not going to be a healthy company anymore. So he sells it and selling is not always the best thing for employees.
Edited: If I was made King, I'd look to lower the inheritance to children to say 10% and abolish trusts that fund generations of lazy, spoiled brats living from their great-great-grandfather's money.
> "Father dies, leaves company that makes engines to son and $50 million in cash because he has invested most in his company. IRS+State: son, you owe us half+ of what your father left you, or $1.1 Billion. If he borrows half of company's worth that's not going to be a healthy company anymore. So he sells it and selling is not always the best thing for employees."
Isn't the most obvious way fix to that, to give the government part ownership of the company, but leave control in the hands of the heir? If the heir does well, the company continues as usual, and in case of mismanagement, the government could replace the CEO and the company survives under new leadership.
Maybe have some arrangement that allows the heir to buy the government shares back.
If course the government should take good care of their share and not sell it off to the highest bidder. Unfortunately under the neoliberal doctrine that's been plaguing European politics these last couple of decades, many European governments would try to privatize and sell their shares as fast as possible, putting these companies at risk.
I find it funny just how much public mindshare the Estate Tax gets in the US: "only the largest 0.2% of estates in the US will have to pay any estate tax"
The estate tax is there to stop (or at least slow) the systemic rise of a new monied aristocracy. In any case, if you want to leave loads of money to your kids, the answer is "don't wait until you die", because you can give them a huge chunk each year before seeing that tax.
> I'd look to lower the inheritance to children to say 10% and abolish trusts that fund generations of lazy, spoiled brats living from their great-great-grandfather's money.
How would giving them the money directly instead of via a trust fund stop that behaviour?
> Father dies, leaves company that makes engines to son and $50 million in cash because he has invested most in his company. IRS+State: son, you owe us half+ of what your father left you, or $1.1 Billion. If he borrows half of company's worth that's not going to be a healthy company anymore. So he sells it and selling is not always the best thing for employees.
That's not going to happen because those shares are going to be held by an immortal trust fund that never has to pay inheritance taxes. The trustafarian son will not have to borrow or sell a damn thing.
The problem with your proposal is that if you slash the inheritance tax, you don't need a trust to pass the wealth down across generations. The whole point of a trust is to avoid multiple halvings. By lowering the inheritance tax to 10%, the money makes it several generations down before even getting halved once.
Or within two-three generations they might lose it all, or one of them pulls a Bill Gates and leave most to charity.
Personally I think that you earned your money, paid taxes on it and your kids shouldn't be being more than half (at least on paper, before scores of lawyers and accountants devise shelters.)
Your own kids are different, now as you go down the family free... Soon enough or maybe even now, the Kennedys, can marry each other in the church and without any genetic penalty. So Joe's money could be funding both sides of the family...
> I'd look to lower the inheritance to children to say 10% and abolish trusts that fund generations of lazy, spoiled brats living from their great-great-grandfather's money.
Exactly, these leeches have to be stopped.
And the money could be instead put to some good common like free college, health care leveling the playing field for everyone.
Out of curiosity - let's say I was rich and wanted to set up a trust fund for my children so they could live like spoiled brats their entire lives. Why, especially in the "land of the free" would people want to stop me from doing so? I mean, it's my choice what I do with my money(that was legally earned and that I paid taxes on), is it not?
This is purely theoretical, as I am neither rich nor have children, but I take some issue with people saying that kids living off trust funds are "leeches" - it was their parents choice to spend money this way, so what is wrong with that?
Nobody wants to stop you from doing it. They want your kids to pay taxes on it. That's different.
If I go to work this year and get $100,000 for doing stuff, nobody seems confused that I have to give a massive chunk of that to the government.
So if you don't go to work this year but get $100,000 from your parents, you shouldn't act confused that people expect to cough up your share as well.
When families transfer money to the next generation it changes hands. The way we finance our society, generally, is that when money changes hands a substantial portion of it is remitted in tax.
So you already paid taxes on it, sure, but that's irrelevant, your kids didn't. When you give money to your nanny or your driver they have to pay taxes. When you buy dinner at a restaurant the chef has to pay taxes. So when you give it to your kids they should pay taxes on it too.
Because when people get money they have to pay taxes on it. That's how taxes work.
The real question is why the rich kids think that the specific way they get their money is special and shouldn't be taxed.
> And anyway, in a republic, inheritance is abhorrent. We don't need another aristocracy
In the modern age, making decisions based on feelings rather than statistical evidence is abhorrent. $10 million dollars is peanuts for a successful business and if the majority of the wealth is tied up in a business what you are in effect doing is destroying a productive asset of the US economy for short term gain.
Rather than using your misguided moralisms to decide policy we should use evidence to decide on the policy that results in the best outcomes.
And so only the rich inherit... as over time banks and other businesses figure out how to take away all the income from the middle class. then the higher business class which has huge amounts of capital moves it overseas to generate greater returns. the country hollows out. Something very similar happens in third world countries. To do any sort of real business you need capital. If you don't have it you are in no position to actually do any sort of real business or even try.
> The high taxes on assets in France and the inheritance tax in the U.S. prevent the accumulation of capital necessary for the formation of a strong mid-sized sector.
How can you write stuff like that and stay serious?
I wondered about that too. I find it hard to believe that Germany has no inheritance tax, and capital seems to accummulate extremely well in the US (far too much, I would argue). And the existence of corporations make inheritance irrelevant to the accummulation of capital for businesses.
It's the strange writing style of self-righteous ideologues who have to cram something irrelevant about their ideology in everything they write.
I once read a book on mental heath by a professional academic who threw in something about how some irrelevant conclusion in the mental health field showed government was inherently wrong.
I was surprised the article didn't mention the euro, specifically how Germany gets to denominate its goods in a cheap currency that doesn't fully reflect its strong fiscal policies.
This is a huge thing - Germany couldn't run its huge trade surplus without its currency appreciating and reducing its competitiveness otherwise. It's a pretty bad deal for the consumption-based Eurozone economies though - they have to internally devalue instead of just being able to devalue their exchange rate.
It's one of the major problems with the Euro... It was a terrible idea from the start, and situations like Greece were foreseen by economists like the great Wynne Godley decades ago (see Maastricht and All That, London Review of Books, Oct 1992). Unfortunately the mainstream of economics still doesn't have a developed enough understanding of monetary systems to have worked that out yet...
> Germany couldn't run its huge trade surplus without its currency appreciating
The Euro policy is not German monetary policy. Germany has always asked for a harder currency policy.
Germany also had a huge trade surplus long before the Euro. The economic numbers were going down after a the reunification and its problems (collapse of the East German economy). Germany is now back to the same success West Germany had before the reunification. Now with a larger market (the EU integration now is deeper and with more countries), simplified exports to the larger market (mostly) with a common currency, a much better access to east Europe as an emerging market, ...
Right, the Euro took away other countries ability to manipulate their currencies and forced them to play fair in the trade game where Germany is king. Besides they also have a free market (EU) to sell to, while outsiders have to pay tariffs.
As for the other countries, all they can do is cut down importing I guess?
The article asks why there are so many successful mid-size companies in Germany, and it lists reasons such as continuity of leadership, scientific competencies, system of apprenticeships and others.
I don't see how this answers the question in the title. How does the school of mathematics of the University of Goettingen help make German factory workers competitive with Chinese ones? Why aren't these companies moving their production to cheaper markets like companies elsewhere do?
The main point of the article appears to be that peripheral EU countries did not benefit as much from the internal open market as Germany due to weak ‘civil service’ and oligarchic structures which predated the EU and caused a misappropriation of EU funds intended to improve competitiveness. It then somehow seems to conclude that this was all Germany’s fault instead of being the fault of the people in those peripheral countries with ‘economic implosion, rising inequality and widespread corruption’.
The article does mention wage suppression in the beginning but does not give a good argument why the wage suppression as observed in Germany since the early 2000's is a bad thing -- if wages are inflated and you need to compete with China for manufacturing, then you can either scrap your manufacturing or suppress wages, there’s not that much of an alternative there.
My sibling comment arguing that the largest low-wage sector in the EU is somehow inherently bad is also misguided: if the alternative is much higher unemployment, low-wage jobs are still preferable to no jobs, especially if they come with the usual social security mechanism, as is increasingly the case again.
exactly. This is something i'll never understand how people fail to consider. It seems they think that the wages can be magically high and the economy can go with it 'if we just were willing to want better things'. The fact is if you ask those workers what do they prefer: a good enough pay for a secure job or a Better pay for a job that might move tomorrow to a cheaper country? What will they choose? It seems people of different countries have answered this differently and we see different results.
No, the magic Better pay and still secure job does no exist outside of naive communist Ideas.
Now you have to show that the 'hidden champions' the author talks about are using 'wage suppression'.
Actually the midsize manufacturing companies offer long-term employment, fair wages, jobs in rural areas, jobs which require high-qualifications, ...
These people who are working in these midsize manufacturing companies are in high demand and that they have low wages or participate in low-wage jobs is completely wrong.
We are talking about companies like the manufacturing company bought by Tesla.
To add to less talked about downsides of the "German boom": Wage suppression has caused the fact that Germany has the largest low-wage sector in Europe.
> The share of low-wage workers (less than 2/3 of the median hourly wage) rose from 17.7% in 1995 to 23.1% of all workers in 2010. The number of low-wage workers increased from 5.6 million in 1995 to 7.9 million in 2010.
Another article, from Süddeutscher Zeitung, in German:
That's easy, since Germany is also the largest country in Europe (not counting Russia), has the largest number of employees, has a lot of people from East Europe coming for work, ... The alternative would be to move many of these jobs outside of Germany, which sits right next to a lot low-wage countries.
The low-wage sector was also expanded, because politics wanted to reduce long-term unemployment and thought that a low-wage job with some social security is better than not working.
We should also remember that Germany with now 80+ million people has taken in 20 million people from East Germany (with its economy mostly collapsing) and many of them have still a harder time to find jobs, which has a lot of reasons. One of the reasons is exactly that this eastern part of Germany now lacks this large based of mid-sized companies who are competitive.
(1) My comment was an addendum to the post which (partly) explained to another post(er) why German companies aren't moving their production to cheaper markets. I remind you of this because the author of the article and many people here have a rosy view of the economic situation in Germany. Seeing only the "positives" and blending out the "negatives" because they don't fit the official narrative isn't helpful for our discussion.
(2) Germany is the biggest country in EU (EU != Europe), has the largest workforce and, thus, the largest low-wage sector. Yes, that is correct. But it is not "easy", as this Eurostat graph shows:
You see Germany in the company with such economic powerhouses as Estonia, Poland, Lithuania, Romania, Latvia - all of them having a bit worse PERCENTAGE of low-wage workers than Germany. This is not someone's perception, or some narrative, these are hard numbers.
(3) You obviously didn't read the articles I've posted. Especially that from Nachdenkseiten as it lists many other issues not widely spoken about in the mainstream media - neither in Germany nor in other countries. It is an analysis from Prof. Dr. Gerhard Bosch (Geschäftsführender Direktor Institut Arbeit und Qualifikation Universität Duisburg-Essen). While we discuss the article published oh hbr.org, which talks about the causes for the success of the German economy, Mr. Bosch mentions the elephant in the room:
> German economic policy continues to be characterised by its excessive focus on exports. As a way of dealing with the euro crisis, the German federal government advises other countries to introduce their own labour market reforms on the model of the Hartz Acts. This policy, however, cannot be applied at will to other countries, since only by abolishing the laws of mathematics would be it possible for all countries to have export surpluses.
Meaning: German model doesn't work for others. And, it only works for Germany because others take a hit while Germany "takes" a surplus.
Yes, German economy/society has it's qualities. But would it be such a "success" without major influence in EU institutions, in ECB, without Euro, with other countries having their currencies (which they can devalue to make their good cheaper and imported - German - goods more expensive), with customs on its goods, with fairer wages in Germany? I highly doubt it.
> why German companies aren't moving their production to cheaper markets
German companies ARE moving their production to cheaper markets. They have been doing this for decades and they are doing it today. At the same time the market has expanded and changed. Thus new jobs are created, even a few are coming back. If we talk about manufacturing, which was the original topic, you can see multiple trends (examples in parentheses): exports of jobs (ship yards), back-import of jobs (automated manufacturing), disappearing jobs (nuclear industry), creation of new jobs (renewable energy), ...
> economic powerhouses
East Germany is our own 'economic powerhouse'. Twenty million people with a much different job market, compared to West Germany.
> You obviously didn't read the articles I've posted.
None of that is new. If you read German mainstream media, that stuff has been discussed for a long time. FAZ, Handelsblatt, etc. have published a lot of these arguments. It's just that for each economist arguing that way, we can find another one, which argues against it. The media published this discussion. You just have to read it.
> abolishing the laws of mathematics
That's a very simplified argument, with a very limited view what actually happens.
> But would it be such a "success" without major influence in EU institutions, in ECB, without Euro, with other countries having their currencies (which they can devalue to make their good cheaper and imported - German - goods more expensive), with customs on its goods, with fairer wages in Germany? I highly doubt it.
Germany has influence not because the ECB or the Euro. It has influence because it is the largest european country, it sits in the middle of europe. ECB policy has NOT following German demands. The Euro was not a German invention. But that European monetary systems have been influenced by Germany because of its economic power has always been true.
If you look back, Germany has export oriented with large surplus for decades. Without the Euro, with the European Monetary System, with the Euro.
The german economy will simply adapt to the changing conditions: weak currency, hard currency. The industry will react, but it will always be export oriented. Generally the economists prefer a harder currency, which actually will not have a specially negative effect on the export industry. With the super-hard Deutsche Mark, the export industry was doing just fine.
I'm not an economy expert, but I'd say that the jobs that can be done with 'cheap labour' have already been moved to other countries long ago (at latest in the 90's after the reunification).
If you look at a typical German 'Mittelstand company', many look more like high-tec laboratories than typical factories from the inside, lots of robots, high automation, the people working there need to know the technology inside out, troubleshoot and fix problems quickly. That's difficult to get from a manufacturer on the other side of the globe who needs to juggle many different clients from all over the world.
And many German workers still have a certain loyalty to their company, since the company owner isn't some international celebrity CEO installed to squeeze the last bit of money out for 'shareholder value'.
"How does the school of mathematics of the University of Goettingen help make German factory workers competitive with Chinese ones?"
The search for precision and applied scientific discovery. [0] Enlightenment drives every aspect of German manufacturing. Factory workers are in an environment that makes things driven by these processes.
This is an extreme example. It also highlights why Chinese/German manufacturing is different. One is aiming at mass market, low cost. The other high cost but desirable. The low cost German manufactured cars are measurably better than the Chinese.
I mentioned R8 specifically (hand built), what's the A4 problem? How does this compare to Chinese cars (Great-Wall, Cherry) Especially where extensive asbestos is still used in brakes?
The HBR article cites the high inheritance tax in the U.S. as reason for the low number of middle class jobs. But, to the contrary, today the inheritance tax in the U.S. is lower than in Germany.
I'm not sure that's right, the German max rate is lower, though it might kick in at a lower level.
Regardless of the rate, there are big exemptions for the transfer of businesses in Germany that definitely give the the advantage in that specific case.
Indeed, that doesn't seem to be a very plausible contribution to the success of the Mittelstand. In the US, inheritances large enough to capitalize a mid-sized company are usually protected from inheritance taxes through a number of "tax-efficient structures".
I didn't really understand that point? Is the claim that if there was no inheritance tax, a family would accumulate enough money to start a mid-sized business? Or is the ownership of a business taxed upon death?
An inheritance can include a company, if privately held. That company has a value, and that's taxed through inheritance tax.
The problem is that a company of value $x rarely has liquid assets of $x*$taxrate, so inheriting a company can mean personal ruin.
On the _other_ hand, not accounting for companies in inheritance tax means that every family ever will shift all its possessions into a company.
Roughly speaking, Germany solved this by creating a set of exceptions for value "in a company", as long as it continues to be held for a given number of years (otherwise, since it was sold, it's considered a liquid asset and thus fully taxable).
On the _other_ hand, not accounting for companies in inheritance tax means that every family ever will shift all its possessions into a company.
No taxes if a company has an employee that makes at least x00% of minimum wage for every, say $500K of worth. So your parents leave you a company that has a $20mm value and you have 40 employees that average $35,000 a year, you pay no inheritance taxes. Of course you need you'd to set a reasonable timeable to discourage cheating, otherwise they'd sell /fire 50% as soon as the x year timeline expires.
You could make the argument that the Mittelstand has profited from Germany's controlling stake and dominance in the EU. One of the big arguments for non German businesses seeking to leave the EU have been perceptions of unfair EU bureaucratic advantage to German businesses at the expense of other member states.
Having said that they have a very good national business model and an excellent culture around vocational training and expertise building.
Yes. They are insulated by EU trade tariffs on goods external to the EU. Combine that with the most efficient factories in the EU. They get to provide things that can still beat China after considering the tariffs.
In other words, trade barriers strengthened the middle class.
Tariffs on the EU strengthened manufacturing employment in Germany, but many other EU countries don't seem to have much manufacturing and are poorer than Germany, yet still pay those tariffs. That's consistent with the idea that tariffs provide substantial help to a lucky few while levying costs on everyone else.
Seems like a net good, I'd rather a strong middle class due to decent trade policies than a "free" market causing severe wealth stratification with the bulk of the populace being poor.
I don't find the arguments presented in the article for "why" to be very convincing.
- The most important difference is the continuity of the leadership. The leaders of the Hidden Champions stay at the helm for an average of 20 years
ok yes, could be
- the German history of many small independent states (until 1918 Germany consisted of 23 monarchies and three republics), which forced entrepreneurs to internationalize early on in a company’s development if they wanted to keep growing
there must be lots of countries where this is the case
- Scientific competencies also play an important role
there must be lots of countries where this is the case
- the unique German dual system of apprenticeship, which combines practical and theoretical training in non-academic trades.
ok yes, could be important
- Tax advantages are another reason.
skeptical
- the international openness of a society is an essential factor in the globalized world of the future. Germany is far ahead of other large countries with regard to mental internationalization
skeptical that this vague claim is true, let alone an important factor
e.g. "in companies with over 2000 workers just under half the seats on a supervisory board are selected by the workers"
seems like shareholders have less power and employees have more, under the German system, and it seems fairly logical that this could lead to long-lasting companies producing high-quality products
I'd like to think it's because WW2 changed us, for the better. We just want to build great things now and help everyone and not only ourselves. We respect others, independent of race or nationality, and it think we're much less superficial than some other countries are. But that holds true for most European countries so IDK, maybe I'm simplifying it too much right now. It just feels that way to me.
German culture is older than ww1/2. The german respect for labour predates the 20th century. So too in japan. Some like to think of modern japan and germany as only a product of post-ww2 development programs, but that denies the long history of these great nations. That they were able to participate in ww1/2 demonstrates thier success prior to that conflict. (Imho ww1 and ww2 should be read as one historical narrative.)
I would add differences in domestic consumers preferences. Americans are now addicted to cheap-quality goods. I passed through the gift shop inside Empire Sate Building in NY yesterday and 98% of the gifts are asian imported plastic trinkets branded with Empire State and USA logos. Contrasts that to when I visited the museums in Berlin where the shops mainly focused on selling locally produced crafts.
Germany had a strong Mittelstand (and was indeed struggling with an uncomfortably strong Deutsche Mark) long before the Euro.
I suspect it would have worked out.
Because German engineering is world-renowned. This much has been known for a good long while. You can take a German bearing of 'low quality' vs. a Chinese bearing of 'high quality' and easily tell that the German bearing is far superior.
It only makes sense such engineering capability would result in a lot of manufacturing work in the middle-class range.
Doctors, programmers, chefs are significantly imported from other countries... particularly India and China.
Over 50% of the doctors and specialists visited by myself and friends were Indians. Also, over 50% of the highly skilled software personnel and upper management I worked with were Indians.
* However, none of the lawyers were imported. The position coveted by the US is simply lawyer. A friend of mine had a father who was educated as a lawyer in the country he immigrated from and is one of the poorest person I know. Shame, had they been educated as a doctor or software engineer, then they and their adult-son would not have found poverty as quickly if at all.
"The myth suggests that these German brands produce unreliable vehicles, but actual long-term dependability results do not lie. Lately, German makes have been producing reliable vehicles, and the belief that they are unreliable should remain as nothing more than a myth."
Data from the UK seems to suggest it's not as clear as that. Depends on the make, even cats from the same group VAG vary heavily. Skoda and VW seem good and Audi poor.
You can also get real high quality bearings made in China, but they will not be as cheap, and you will have to verify that you are getting what you asked for.
Until this year, China was unable to manufacture ballpoint pens.
"It was a years-long effort that cost millions of dollars and required the leadership of a state-run corporate colossus. It was front-page news, widely discussed on talk shows and celebrated on social media."
...
"China doesn't possess the advanced alloys and machines necessary to make a high-quality pen ball and socket."
One thing that confuses me is how China doesn't possess the advanced alloys for ballpoint pen nibs? It's just an osmium alloy, not that difficult to do. They've got osmium out the yin-yang (no pun intended) and should have had alloys of that long, long ago.
Therein lies another problem - verification. Quite often, the Chinese simply do not listen to what you tell them (or just can't understand it even when broken down into simple specifications. I've run into this with many Chinese LED manufacturers) and quite often you end up with a product you didn't ask for. I've never had that problem ordering anything from Germany.
Maybe the globalized world at any one time can only sustain one Germany with it's hidden champions. But ofcourse it's easier and well paying to travel around the world and tell everyone they can be like Germany too.
The world can sustain more than one because it already does. Switzerland has a very similar structure and is as successful, if not even more successful. It also shows that Germany doesn't just succeed because of a cheap exchange rate, since most products hidden champions produce aren't that price sensitive.
The world could probably sustain even more companies that focus on long term growth and quality instead of quick products. But that's not how you become famous. You become famous by making a quick app used by millions that you can IPO a few years later. So that's what many people in the world try to achieve. Not building a small company over decades that specializes in something which most people don't even know exists.
As a German I of course (quite irrationally) like the praise for "my" country (I actually feel I'm human, and being German is just birth luck, especially since I benefited enormously from the reunification).
On the other hand, OP has a point. This is once more an example of what works for anyone vs. what works for everyone. The countries you name all are very small. Imagine Asia getting even better (they probably will), and imagine African countries getting their act together (as unlikely though it may be). Who would buy all those machines and parts?
Also, another great potential for future trouble is that an oversized part of our economy is bound to making cars. The "Zulieferers" (component suppliers) are much larger than the actual car makers, and they are all "Mittelstand". If they have to find new customers some day... electrical cares require a lot less expertise and less parts I'm told, plus ever more "growth", meaning ever more cars, isn't such a promising model (looking at Asian city traffic...).
It's strange that they credit a holdover from the Holy Roman Empire days as being one of the reasons, but ignore the privatization of East German industry and the massive infrastructure investment after reunification.
probably meant: G "has one of the biggest low income employment sector"
- less than 1/3 of median income
- < 20% of all employees (Dec 2016) with decreasing tendency
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One day the VP from the American HQ came to the Indian office and yes he was German, during the intro meeting he talked about the low pressure from the tap. The tap was changed the next day.
I still remember that story because it taught me how Indians look at their surroundings and how a German looks at the same surroundings.