What is often overlooked is this: Germany was export-oriented before the Euro, during the transition and with the Euro. Germany was export-oriented before reunification, during reunification and after reunification.
The industry will adopt to those external factors: Germany was 'Exportweltmeister' with the super strong DM (which dominated European currencies) and it is a leading export nation with the Euro.
There are a lot more factors that support the German model. For example Germany is not a centralized economy (like the UK or France, which are grouped around London and Paris). Thus lots of federal states and cities have strong economies: Munich, Hamburg, Düsseldorf, Frankfurt, Berlin, ...
The extreme angle is the concept of 'unknown medium-sized world market leaders' - so-called hidden champions. Germany probably has almost 50% of all hidden champions world-wide:
Some members of my extended family own a company (actually a small family of companies) in that category, and of course it's in Swabia.
They are market leaders in some very high-margin things most people never think about, and interestingly they sell a lot in Asia, where one might expect them to be more vulnerable to competition. German Quality is a huge brand worldwide.
I also have a friend in Berlin who's sort of inheriting the family business, manufacturing something so random I always forget what it is. Involves rubber I think. High margins, privately-held family business, etc.
I really think a lot of these companies, if they were in the US, would either go public (the bigger ones) or be sold up to a bigger concern. But in Germany you'd have to pay a really big premium to get your hands on someone's multi-generational family business. As long as there are kids to inherit the factories then that's what they're gonna do.
Another way how this kind of company would likely fail to continually thrive in the US, even when it's not sold: those niche markets are so small that even when completely dominated the profits would be insufficient to get date-in-Hollywood rich or groom-yourself-for-presidency rich. So if you have bigger ambitions than the niche allows you'd hand over the reins to a "maintenance manager" and focus on something more promising. Those small niche specialist businesses reach excellence through a loyalty to whatever field that made them big that is fueled by limits to ambition. (I think I already posted this idea on some other HN that)
(and the businesses tend to be filled with a weirdly self-contradicting mix of nationalistic hybris and massive imposter syndrome)
Its the same throughout Europe, the fertility rates for native women are much lower than for migrant women. Countries with high migrant populations like Sweden, Germany, France, UK have misleading total fertility rate statistics.
You have old numbers. We have now 2020. German numbers include only people with German nationality. The concept of 'native' German mothers is bogus and was last used under Adolf Hitler.
There is also no reason why migrants or their children can't lead companies. See Steve Jobs, Sundar Pichai, Satya Nadella, ...
Was half way through your post when I was about to write my comment about hidden champions,glad you mentioned it. This is something that tends to be overlooked quite often. Very very few countries have a model like this.Take the UK, as an example.An average town or even small city rarely has anything that isn't just for local market. For a lot of companies it's kind of fine,as the market is big enough to earn comfy living for the owners, but that's it. The default in most countries is something like: " ok,I'll sell this in local area and maybe,just maybe,if I become super big,then we'll start exporting". It's shame really. I see this mentality in my own country, Lithuania,where an average purchasing power is relatively low and the market is super small(1/5 of London population) ,yet the default option is to start locally. Luckily the IT sector is different,where most businesses default to foreign markets.
There used to be tens of thousands. In 1979 there was a policy decision to end UK manufacturing and focus on the City and services. No end of highly successful UK export businesses disappeared. Many of them quietly a world leader. Many of them famous names that had existed for a century or two.
Sheffield was the steel city with all the production, infrastructure and suppliers to feed all the cutlers, precision instrument makers, tool makers, scissor makers and all the other specialisms surrounding tool steel and stainless steel. The Potteries, well you can probably guess that one. So it went on around the regions of each city and across the country.
I go beyond it being a shame, it's criminal, or bloody well should be. We have had no chance of balanced export books since 1980.
If you search around the web, there's a lot of archive sites showing what was lost -- though in truth it was far more an intentional destruction.
Can't agree. Mild steel and bulk wasn't the strategic industry it was once considered by every nation, and was going as it was predicated on price. That's probably fine unless there's a major war.
The hugely expensive deep specialisms, and really unusual steels and steel products that were made in just three or four places in the world, one of them Sheffield, need not. cough Iraqi supergun -- though Sheffield Forgemasters are actually one of the few still around, thanks to govt underwriting due to their nuclear capability. Funny that. Nor need the manufacturing of some of the world's finest precision tool and instrument makers. A tiny few survive, despite government best effort, not because. Most were eagerly snapped up by US, German, French or Japanese -- if they still exist at all, it's as name made elsewhere and a fattening of someone's portfolio. Of course many disappeared without trace, and of course a fair selection that weren't worth saving having got fat and lazy, or overly unionised.
While morons were cropping up on UK news throughout the eighties and nineties trying to persuade us that making anything was obsolete (and so frequently that it quickly got as overused, tedious and cliched as the recent Theresa May election slogan "strong and stable government"), Germany quietly got on with new services and manufacturing. Their mittelstand(sp?) and technical training regularly cropping up as something for the rest of Europe to envy. UK disassembled the last of the technical colleges, apprenticeships, and all the regional centres of knowledge and excellence. No matter how keen you're unlikely to pick manufacturing for your new UK business, as we are exceptional in the extent of our disassembly of the sector.
How did Sheffield's future as a centre of telephone call centres work out? Or Central Belt's reinvention as world centre of electronic and IT manufacture? How did the focus on the City work, when right after the "big bang" Wall Street went on a shopping spree of stupendous size leaving few native survivors?
It's absolutely baffling. I've been looking into it for cheeses and ales, so many UK producers flat out say "We only ship within the UK" even though the cost of shipping is covered by the buyer and it would cost nothing, not even extra paperwork, to ship to the EU (for now).
Bonded warehouses exist for a reason. Internationally shipping alcohol or (tobacco) is genuinely complicated even within the eu. Cheese probably just a perishable pain to post far.
I'm reminded of Trader Joe's -- a chain most people think of as a California-based chain of health food stores -- but has actually been owned by a media-shy German family for 40+ years.
Very good point! In this video [1], economist Richard Werner rants about the existing central banking influenced economies, but at around the 47th minute he mentions the roughly 1500 "champions" (USA has 300), and he argues that this is the case because of the small local community banks that are present all over the country.
There's also one glaring error in the text that can only be explained by hindsight wisdom:
>The Single Market launched just four months later, in January 1993, though something like it had been in the works for a while. But on that launch date was there anyone in Europe with any doubts about which nation — which “area” — was ascendant, economically speaking?
Germany in 1993 was in no shape or form to be the ascending economic superpower, in fact 1993 was a recession year: https://d3fy651gv2fhd3.cloudfront.net/embed/?s=wgdpgerm&v=20.... That of course is due to reunification which was extremely costly at the time and the implosion of the former socialist economy hindered growth massively.
Germany got extremely lucky with its timing - when the exchange rate for the DM to EUR conversion was fixed, the German economy was still in dire straits, so it was basically undervalued. But the German companies used the sudden strategic location of the country between east and west to massively invest in production capacities in the former eastern block to keep production costs low while selling to the industrialized neighbors in the west.
> You'll find many of these companies in rural regions.
In so much of the developed world we're becoming more and more politically split along urban/rural lines, is this the case in Germany is does their distributed industry even things out?
Growing larger cities is also a trend in Germany. Especially the young mobile population moves to cities to study at universities. Cities are also attractive for their infrastructure.
Small and medium sized towns often (not always) struggle with that and are looking into ways to become more attractive...
Just imagine, Adidas (sports, revenue 21 billion Euro), Puma (sports, 4.6 billion Euro revenue) and Schaeffler (14 billion Euro revenue, from manufacturing) have their home in Herzogenaurach, a small town in Bavaria with 23k population.
It has always been a struggle and after reunification federal focus has shifted, naturally thethe rural/urban imbalance took the backseat to the easy/west imbalance, city or not. But a lot of anti-centralistic intertia has remained, and a lot of the political fight against rural/urban split was on state level anyways. The split is growing in Germany just like everywhere else, but it probably hasn't proceeded as far yet.
> Germany was export-oriented before the Euro, during the transition and with the Euro. Germany was export-oriented before reunification, during reunification and after reunification.
Germany was export-oriented even before WW2. It's funny whenever you read about "How germany or japan became industrial powers after ww2". With many crediting the US or whatever aligns with their agenda. The truth is that both germany and japan were industrial powers before ww2 and they just reverted back to what they were after ww2.
> For example Germany is not a centralized economy (like the UK or France, which are grouped around London and Paris).
Germany is most definitely a centralized economy. Just because it doesn't have the dominant city center like London and Paris doesn't mean it isn't centralized. The reason why germany is a manufacturing power is because german federal government and the state decided to make germany export-oriented manufacturing power. While in the UK, they decided to become finance oriented and service oriented and shifted their manufacturing overseas. Which is smarter in the long run, only time will tell.
Not really. If you look at successful companies, they are all over the country - though not much yet in the former East Germany, for historical reasons.
> because german federal government and the state decided to make germany export-oriented manufacturing power
Germany has been manufacturing/trade oriented for centuries. The 'federal government' does not decide these things on their own just now. Germany does not work like that - there is no 'federal government' which decides the economic policy in a centralized manner, WITHOUT involvement of the Bundesländer and/or the companies/employees/...
> finance oriented and service oriented
Germany is also finance and service oriented, just to a slightly different degree and with slightly different domains. Even the manufacturing companies are often extremely service oriented. Selling not just products, but a lot of services around these products.
> While in the UK, they decided to become finance oriented and service oriented and shifted their manufacturing overseas.
> Just because it doesn't have the dominant city center like London and Paris doesn't mean it isn't centralized.
That's .. kind of the definition we were using? If it's centralized, in which city is it centralized?
The London dominance of the UK is almost debilitating; it's very hard to get any kind of policy discussion that sensibly includes even Birmingham or Manchester. Let alone all the Brexity post-industrial towns.
It's also not entirely true that the UK has lost "manufacturing" - we still make a lot of stuff in £ value terms, but it tends to be small production runs of expensive stuff. Scientific instruments, aerospace, weapons, pharmaceuticals. The industrial relations disaster of the 1970s caused a backlash against vast production lines - not very many of those left apart from Nissan.
As someone who lives and works in Germany I'm always surprised when I hear of the strength of the country. I've worked for several very large corporations here, financial and automotive, and how anything is achieved at all remains a complete mystery to me. It seems to me that all the success reported is directly in spite of their attitude towards technology and IT in general instead of because of it.
The culture here is to outsource everything besides PM, then every few years when the projects fail or are over budget (time or money) to replace the partner with someone new and lose all the domain knowledge those teams had and then they have to start again. I've seen millions of euros wasted in this manner, the only way it'll be fixed is when the current generation of management retire.
I'd be keen to know if anyone else working here has a similar experience, I've tried to 'fix' this culture several times and haven't succeeded yet.
Weirdly, in the last 6 months Azure seems to be making huge inroads, perhaps that'll help.
If you only work for very large corporations, you work for some of the most inefficient corporations. You get a higher salary for the resulting frustration. That's the deal.
If you want to work in an environment that works according to common sense and achieve something, take a pay cut and join a smaller company. Of course, you still have to do your research and choose wisely.
>then every few years when the projects fail or are over budget (time or money) to replace the partner ... and then they have to start again
i've also worked with Germans a lot, and what you said is one of the keys to their success. Everybody makes mistakes. Mistakes are given. Majority of IT everywhere is mistakes, failures and waste :) What Germans do, at least in my anecdotal experience, is that they [slowly, with time, yet unstoppable] do ultimately notice the mistakes/failures and really react to it with strong reaction like you described, like closing projects, replacing partners, etc. - basically cutting the bad pieces out, cutting losses without fear of sunken costs.
I can feel you. I had exactly the same feeling when working for a big german cooperation. However let me tell you that the grass is not necessarily greener elsewhere.
One thing you mention is domain knowledge. This actually also a big problem in the US tech companies. The people fluctuation is so high that after some years nobody might really know anymore how a certain component works. This is not that much of a problem in german companies.
Also the bigger german cooperations have I'm aware of had better planning, project management and QA than things projects I witnessed elsewhere (sample size is obviously limited). While that sounds like more bureaucratic effort, it still reduces the chaotic aspects in projects and improves the chance they will finish on time.
What you’re seeing are signs of a successful industry.
They have money to burn on irrelevant things. At the end of the day the IT system will typically not help your margin on a supply chain beyond a tiny amount.
The finance gig I had the IT systems were core business. At one point there I was in a meeting where I was the sole engineer and there were 14 project managers involved in my project. We all had a nice laugh about it but, again, this to me is a sign of a sort of sickness, not a sign of success.
The most un-understandable thing is that none of this export wealth reaches an individual, especially a guest worker, a foreigner. It's quite shocking to discover by a foreigner specialist lured to the country by the multitude of positive economic news. Cost-cutting and exorbitant charges and contributions everywhere. The entire export wealth is captured by the oligarch families and the highest level executive caste.
Someone with a regular job can not afford a house close to a major city any more and for sure can not afford any desirable German car. People dress cheaply, buy used cars and many live in frugal appartments, buy in stores that many American or Canadians would consider third world (never ever go buy stuff in an Aldi when you are used to Canadian standards...).
I personally shop in Lidl, not Aldi, but Lidl is often compared to Aldi, about as popular and occupies the same price segment. And I eat like a king from there! Excellent protected origin cheeses, meats, wines, organic products... Half the time I leave the Lidl I go with a shopping cart that would make an American foodie drool. My most recent purchase there included Manchego cheese from Spain (fantastic stuff!), French wine, Kalamata olives, Belgian beer, Belgian chocolate...
The Americans I've taken to the Lidl have all been impressed; they certainly did not say anything to the effect of it being 3rd world. Canadian supermarkets, on the other hand, I remember as having shockingly high prices (even after converting prices from Canadian peso) and far fewer fresh items than I was used to.
Furthermore, people with "regular jobs" in Germany generally live much richer lives than their American counterparts. Fancy/organic foods are far lower priced in Europe, 30€ with a low-cost airline will take you everywhere from the south of France to Spain or Italy, museums, music and events are cheaper, top universities are in reach for your children... And yes (gasp!) in many places you don't even need a car! I commute around 240km a day by train + a few minutes' bike :)
I'm American and I find Lidl to be absolutely ghetto; Aldi only marginally less so; but neither of them as scary as Netto! A lot of my friends shop at these places, because they're really cheap, and if you don't actually care who gets your money (or you can't afford to care) it's sorta like why not?
In their favor I will say that there is less choice of products than in, say, a Spar or Rewe (mid-market grocery chains) and thus shopping, especially for a family, can be both cheaper and more efficient. At least in Berlin there's also Edeka everywhere, which is sort of cheap-ish but not so soul-crushing.
I guess I'm pretty far off topic already, but I will add that I find it weird that there's no equivalent of Whole Foods in Germany. You have some chains of "Bioladen" like LPG (yuck) or BioCompany (pretty good IMO) -- but nobody's got that magic Whole Paycheck mix of yummy food, organic and also gourmet stuff, and that sort of vaguely aspirational shopping experience while also having a big fat parking lot.
Most americans are shopping at a grocery outlet, walmart, foodmaxx or a 7-11 equivalent buying hotdog meat and white bread, which is way worse than any Lidl. The furnishing might not be as fancy at Lidl compared to safeway, but what they sell is fairly decent quality.
I haven't been to Germany (outside Frankfurt airport), but on my Italian vacation last year, just going to a convenience store and picking up some bread, cheese, and fruit was cheap but WholeFoods-like quality or better. Same with their supermarkets, with regional products featured with government regulations controlling what can be labelled that way:
The point of Whole Foods (at least for those I know) isn't quality of produce. You can get similar quality produce by spending more at most other supermarkets. The point is the diversity of specialty items which I haven't really found an equivalent for in any chain store in Europe so far. I don't think that model would succeed in many European countries that are slower to adopt novel and/or imported food trends.
That's why you have several stores close to each other which can all stay in business. You start at Aldi and get the basics, go to Rewe for fancier things, stop by dm or Rossmann for the most fantastic selection of toiletries and hit the bakery on the way back. Or if you live in the city it's easy to take turns every few days instead of doing it all at once.
addendum: I really like the efficiency of Aldi/Lidl with respect to filling shelves. Why does someone have to touch all the pasta packages and arrange them when it's almost the same work for the customers to grab them right out of the box?
I feel that where all Aldi’s are relatively comparable, for Edeka it seems to depend a lot on the shop. Where I live there are two Edekas within a 3min drive, one is a bit more fancy than the average Aldi, however the other one has 50 different types of quinoa and people that make you sushi on demand. It is a totally different shopping experience.
I recall that my local Edeka, before Edeka got so big, gave a lot of room to the local managers, who were ex-rocker types who were really good at employing local young dudes who probably weren't all that employable elsewhere (and who did a fine job as it turned out).
Enough that I kind of assumed it was a franchise rather than just a chain, until they started buying up all the Kaisers.
So maybe that's part of their strategy, to give the managers more responsibility to differentiate their stores instead of making them all the same?
Look, I like I lot of things about Germany, but the supermarkets here are a joke. There's more product variety in a single Whole Foods in America than there is in the entire combined inventory of all German supermarkets.
Most processed foods (ready meals, frozen pizzas, etc) are also extremely low quality.
>Look, I like I lot of things about Germany, but the supermarkets here are a joke. There's more product variety in a single Whole Foods in America than there is in the entire combined inventory of all German supermarkets.
You've got to be kidding. German supermarkets are just small, because they don't have the cheap real-estate that suburban stores in the USA have, but the food is far higher-quality than in mainstream US stores. Comparing to Whole Foods is just idiotic; that's like comparing German cars to American cars and picking whatever passes for an economy car in Germany, and comparing that to the Tesla model S. Only a very, very tiny percentage of the American public shops at Whole Foods, or can even afford it. Most places don't even have them available.
>Most processed foods (ready meals, frozen pizzas, etc) are also extremely low quality.
Compared to what? Not stuff in American supermarkets.
The Aldi in the Americas (midwest) are not even remotely similar in quality to the Aldi's of Europe.
Walmart supercenters have much higher quality - every larger town has mainstream and cheap grocers substantially better than Aldi in every respect.
To me, Aldi for food is like Goodwill for clothes. I understand that some people hit hard times and have no other options, but my perception is that if you shop there it probably means that you are in serious financial trouble.
I personally don't like discounters (including Aldi), but a lot of people that are not in financial trouble go shopping there. Sometimes even well-off people. Germans can be very frugal, and this is especially true when it comes to food (although there are signs that this is starting to change).
It is fine to be frugal or go discount shopping - it is the quality of food at the American Aldi that felt me to like a really bad deal.
The chicken thighs say cost fifty cents (not sure of the price but utterly cheap), but once you cook it was almost inedible, a mixture of fat and big thick bones - felt like not even fit for human consumption.
That's because European Aldi's gets their chicken from Europe, while American Aldi's gets their chicken from America. They don't ship chicken across the Atlantic.
The root issue isn't Aldi's, it's the quality of food on the different continents. Food standards are much higher in Europe, so any grocery store is going to have generally better food than stores in America, unless you only shop at high-end places like Whole Foods and make sure to only buy good food there.
I don't follow. My point all along was that you can get much better quality (american) chicken at Walmart than at Aldi.
The only comparison to European Aldi's is to point out that in the US the food quality at Aldi is substantially worse than that of another typical local grocer, whereas in Europe it probably isn't
As a vegetarian, I can't really comment much on meat quality, but there were a number of scandals in Germany w.r.t. to meat (google "Pferdefleischskandal" if you know German). Again, though, this doesn't reflect on the wealth of Germans as much as on the relative importance of good food (especially compared to e.g. French or Italian people). I don't know if it's a result of my generation's parents or grandparents growing up in the aftermath of WW2, but "cheap food = good food" is an equation that many Germans would agree to (and which I personally find quite strange). I see a lot of people that always buy the cheapest food, but then they have an iPhone, a fancy car, a house, etc.
This is not to say that there isn't poverty in Germany. There definitely are a lot of people who are just getting by, especially after the Hartz reforms, although the social security net in Germany is still quite good. But it's not like nobody is well off.
> Most processed foods (ready meals, frozen pizzas, etc) are also extremely low quality.
Funny because processed/frozen food in the US, even from a expensive store like WF look and taste so disgusting to a french person (ever been to a Picard ?) that I've stopped eating any of them (which is great for my health I guess)
On the other hand you can buy good bread and a lot of other basic foods pretty cheap and in high quality. When I look at American stores there is an enormous variety of cheap crap and then some decent quality expensive items.
Aldi and LIDL (or any other chain with the same working-three-employees-to-the-bone and having and narrow set of products) are pretty ghetto compared to other EU supermarket chains with larger footprints and higher prices. Though there are things in Aldi I like (at least in my own country, I know there are two different Aldi structures going around).
And Germans definitely have a reputation for being cheap and careless with their appearance that's not quite just a cliché.
> Someone with a regular job can not afford a house close to a major city any more
Germany allows foreigners to purchase property, and as such prices in very desirable locations (Munich, Dusseldorf) have gone up. But not everywhere. Furthermore, it is really not necessary to own a house, as the rental market is well developed - many people choose to rent. Lastly, looking at The Economist data, affordability in Germany is better than, say, UK, Canada, and the US. [1]
> People dress cheaply, buy used cars and many live in frugal appartments
Yes, it is considered impolite to show off, and people don't really care about appearances, so they can be shabbily dressed. But then, they don't have to worry about healthcare, they travel quite a bit, and have time to read or follow their passions.
> buy in stores that many American or Canadians would consider third world
Aldi sells good food at excellent prices, by foregoing the eye candy and marketing found elsewhere.
Indeed, expats are lured here thinking Germany is the Promised Land but realize too late that they can't afford to buy a family worthy home on your average white collar wage and due to how German corporate politics work, most of the non-natives are locked out of the lucrative careers even when speaking the language.
Like someone said, Germany is a rich country of poor people.
> Indeed, expats are lured here thinking Germany is the Promised Land
Hardly any German person would claim to (or even lure) expats that Germany is the Promised land. The only reason I can think of any expat thinking about Germany as the Promised Land is self-delusion.
I noticed this sentiment among Romanians and I hypothesize that it's related to the fact their aristocracy (ie. rich and affluent) used to be predominantly German speaking and of German origin. In many other post-Communist countries Germany is perceived much more critically.
Interesting. I live in a "third world" country (Argentina, one of the worst-performing economies in the world) and just had an interview with a German company (a large SaaS in Berlin) offering relocation to me and my family.
Not sure what to do, I have a shit boring remote email marketing job for a US company. But with my small US salary, I live quite well here (own a big house w/ 1000 sqrt. m. garden in a nice small town, good car, no commute, kids go to private German school, good weather, ..).
Not sure if our quality of life in Berlin (me being a data scientist) will be better as our quality of life here in the third world (me doing monkey work but in a cheap country).
I'm german. In 2004/05 I was in argentina a whole year as an exchange studen. Last year I visited my guest family again.
Let me tell you that argentinians are very good in talking argentina way worse than it is. I also travel quite a bit, argentina is _far_ from being third world.
In Berlin you will only be able to afford a smallish rented flat with a typical IT salary... used cars in good condition on the other hand are quite cheap - but won't be of any use in berlin traffic. As an argentinian you probably won't like the weather here.
There definitely are upsides and downsides to both countries.
Awesome thanks! I live in a small city near Cordoba surrounded by mountains, lakes and rivers, and don't like big cities like Buenos Aires or Rosario. How much do you think is needed for renting a medium comfortable appartment or house in Berlin? In a not expensive neighborhood, but neither a bad one.
I live in Braunschweig myself, but you can check rent prices for Berlin for example here:
https://www.immowelt.de/immobilienpreise/berlin/mietspiegel
so now probably about 12€/m² - obviously more expensive in better locations.
What I heard from friends the market in Berlin is a bit difficult so really get that relocation service if you plan on moving to Berlin.
Those prices typically include tax.
Salary numbers on the other hand are before tax.
You can roughly estimate your income tax with simple online tools:
https://www.brutto-netto-rechner.info/
(ya hablas aleman?)
It's way higher than e.g. USA, probably similiar to Argentina.
I think i spend about one week near Cordoba in 2004 but I don't quite remember...
My guest family back then lived in Ushuaia (very very beautiful landscape!) where I spend most of the time, but also a while with their extended family in Rosario. Last year I revisited Ushuaia again but spend most of the time in Tigre where my guest family lives now.
Feel free to contact me by pm or mail (kiney at-sign kiney.de)
From someone living and working in Germany - when enumerating your quality of life, you are living a good life! This is nothing you could get in Germany.
You would exchange living in a sunny country, where you own a house and your kids are able to go to a private school with cold and rainy weather (besides summer but summer is short), renting a much smaller apartment compared to your house and a shitty public educational system (because you probably couldn't afford a private school here) in which your kids would experience low educational standards.
Anyway, schooling systems are quite different between ARG and DEU, in Argentina private schools are quite common and the quality of these is quite bad when compared with German Gymnasiums. I know that private schools in Germany are quite uncommon. I attended a Gymnasium in Germany for some months when I was a teenager many many years ago (I'm nearing my 40s) and found the quality of german public schools way better when compared with Argentinian schools (private or public ones). At least Gymnasiums, not sure about Gesamtschules and Realshules.
Even though most schools are public, quality very much depends on location. Germany is federal and education is responsibility of the "Länder" (like provincia).
In Argentina i visited a private school which was more or less comparable to the my school in germany (Gymnasium "part" of a Gesamtschule in Niedersachsen). Not sure about the quality in Berlin which is notoriously broke.
Berlin schools, even Gymnasien, have a bad reputation due to Berlin's failed economic policy, which resulted in a lack of equipment and missing teachers. To get into a Gymnasium with a very good reputation processes are highly competitive.
If you are interested, I would be happy to answer your questions and share some information about living in Berlin - rent, taxes, kids, salaries. You can ping me via email dmitry.makesense at gmail
I suspect something similar happens across the border in Switzerland. I visited the French part of it a couple of times about 3 years ago and I was surprised how crowded the second-hand clothes stores in downtown Lausanne were (and the fact that there were any SH stores in that area at all). Also, looking at the prices in there and unless there’s some hidden UBI system up and running of which I’m unaware of I can’t imagine how come a low-middle class Swiss family can afford to live there. I do understand that wages correlate somehow with the cost of living, but I imagine that if you happen to fall between the cracks (you’re unemployed or you have landed a bad-paying job) then things are not that easy.
Many in Germany, Austria and Switzerland (I'm sure other countries too, just no personal knowledge) buy more and more second hand clothing because of the envirnmental impact the fashion industy makes. I do the same. There's some quality stuff to be had, in amazaing condition.
I pretty much only buy second-hand now and it's got nothing to do with not being able to buy new. But for the price of some fast-fashion plastic crap you can get something made with actual quality fabric, by Europeans who get fair wages.
As far as I'm aware the country with the biggest second-hand culture in clothing is Japan, and they're not nearly living in poverty.
> most of the non-natives are locked out of the lucrative careers even when speaking the language
How is this not institutional racism? Or something that leads to inequality because of one’s ethnicity? Imagine if a person of African or Asian descent, who tries to rise up in German society, and get one of these jobs. Is the response: “Well, tough luck buddy, you shouldn’t have come to Germany to begin with.”
Doesn’t Germany pride themselves on being equal opportunity and democratically elected?
Or is that all a facade, and the Germans never really believed in that bullshit anyways. And it was all about putting the Germans first, before all others.
Aldi is not a "shopping experience", it's a place to get decent stuff cheap. It always amuses me when that somehow offends people's high end consumer (or whatever) sensibilities.
Aldi is not the same everywhere. The company split into two in 1960 (https://en.wikipedia.org/wiki/Aldi), and standards differ between the two.
Aldi Süd has a much more pleasant store environment, in my experience. Aldi Nord is the variant present in the Netherlands.
>Internationally, Aldi Nord operates in Denmark, France, the Benelux countries, Portugal, Spain and Poland, while Aldi Süd operates in Ireland, Great Britain, Hungary, Switzerland, Australia, China, Italy, Austria and Slovenia.
To increase confusion in Germany you have to largely differ between Alid North (cold, sterile atmosphere) and Aldi South (a tad more of buying experience).
I have to follow this sentiment, the food in Aldi & Lidl is perfect, actually in my country their fresh produce is always more fresh than larger chains.. Always.
Aldi and Lidl save a lot of cost in the distribution chain by carrying dramatically fewer product lines/SKUs compared to the traditional stores. That means bigger volume discounts for them as a purchaser, less food being thrown away inedible, more ability to focus purchases in a particular subsector on higher margin lines and some efficiency gains at the till, which enables them to maintain a reputation for reasonably good quality. It's quite an interesting business model.
Aldi has steadily improved its look. It looks quite different today. It's still got a hard-discount reputation, but it's by no means stigmatizing to go shopping there. Many well-off or even rich people shop there.
But thank god it still kept the good barcode scanner. I've just been to another (higher-end) store, Edeka, and the cashier tried to scan the potatoes twice over the band, then again with the handheld scanner, then typed the EAN in, all without success. Then she typed in the price directly, which she got from a crumpled-up note in her pocket. The same again with another article.
Aldi cashiers never have to scan twice, it always works. Because Aldi actually cares about speed and reliability of scanning, their barcodes are large, black on white, not small black-ish on transparent (and whatever color the article has inside the wrapping).
(I still rarely go to Aldi, although I realize I'm sounding like a fan right now)
We had an Aldi open fairly recently close to where we live in the UK and I'd say it is pretty good, maybe not the absolute best quality but our nearest Waitrose is much further away.
As a german living in Canada I find grocery shopping there a lot more frustrating. Stores like Iga, Safeway and Whole Foods are quite expensive - even when compared to one of the expensive german shops (Rewe, Edeka). And the price fluctuations are wild: Something which might cost 8$ in one week might be 4$ in the next one - or at the Shoppers around the corner. Aldi is great! Good prices for decent quality. I would definitely prefer it to a Canadian Walmart.
Its great being in an egalitarian country there is less poverty but middle classes have much less money than America, someone has to pay for it and it isnt the billionaires.
It's interesting to me how people view Europe as more equal than the US.
Not that the US is a bastion of fairness, but there seems to be a teeny-tiny miniscule amount of meritocracy in the labor force. This doesn't really seem to exist in most of Europe.
The top 10% of earners don't make much more than the bottom 10%. Meanwhile, aristocrats are richer than the median by more than in the US.
Quintiles are pointless. The top 20% isn't much different than the bottom 20%. The middle 80% is pretty much middle class -- especially in the EU, where there's slightly less poverty (actually in the US the poverty rate is lower than the EU, but the "technical" poverty rate isn't very helpful -- there's differences in access to healthcare and education, not to mention costs of living).
The difference in quintiles is mostly age (especially wealth, but also income). The top 10%, 5%, and 1% are more interesting to look at. These are almost entirely laborers (in the US). In the EU, the top 5% is dominated by aristocrats.
WRT to the income chart, the top 1% is mostly laborers (in the US) but is completely skewed by the top 0.001%. It's easy to mislead with that.
Also, I think people are equally concerned with income inequality and wealth inequality. This is only half the picture. In the US, laborers can and do accumulate large sums of wealth. This doesn't happen in the EU.
Some things that I'd be interested to know -- in the US, 50% of people spend one year in the top 10%. I'd love to know what that is in the EU. I'd also like to see 5% and 1%. I'd love to see what percentage of people in the top 10%, 5%, 1% , and 0.1% were born there.
Who cares about the top 20% vs the bottom 20%? It's the difference in between being a waitress and being an electrician. Almost anyone could do any of those things.
The bottom 10% is interesting -- those people are literally poor. How many of them are poor simple because they were born there? The bottom 20%, not so much. A lot of people work low-paying service jobs because they're more interesting than mid-paying desk jobs and less risky than high-paying blue-collar jobs.
The top 5% is interesting -- especially in the US -- because anyone can, theoretically, work their way there (obviously, it's a lot of luck, but it is still mostly laborers, and the difference in wealth/income is considerable).
While you are right with that the wealth does not reach most Germans, there are no oligarch families here. Just normal capitalism with a mixed ownership (e.g. US pension funds etc).
Good article, but the model is too simple. UK used to produce more cars than Germany, but it's the opposite now. Why? They haven't shared the same currency. German cars were better.
> And it means those same workers in Spain are less equipped to compete for Manufacturing jobs — because Elon Musk has to pay them in German Euros instead of cheap Spanish Peseta. If you’ve got to pay everyone in German Euros, you might as well get the most productive workers for your “buck”, right?
If that was the reason then he should move his factory 50+ miles East. Why the factory is near the Berlin? Network effects. They have the logistic, supply chain and talent. Even electric car project, created by Polish government is designed and build in Germany.
That point also ignores the fact that spanish workers are indeed cheaper than german workers. You can't focus on the unit of measure (the currency) while ignoring the accompanying number...
Also a lot of the industrial capacity in Germany is very obviously significantly older than the Euro. In fact the strength/weakness of the currency is not one-sided. A stronger currency (like the Deutsche Mark before the Euro) incentivized German firms to innovate rapidly to stay competitive even in the face of a more valuable currency, and that is something that can also be seen in the labour productivity statistics. German workers are about 30% more productive than their peers in the UK.
German exports are also not particularly cost-sensitive because so many hidden champions in Germany deliver specialised industrial goods that are hard to replace (as the saying goes Germany makes "the thing that goes into the thing that goes into the thing"), which reduces the impact of currencly fluctuations.
If by productive means lying about car emissions to cheat authorities, yeah, Wolkswagen and Audi and whatever are really efficient cars made by really productive german workers.
Maybe we could move this conversation to adult zone and non-cartoonist levels beyond "spanish cheap drunk workers living in the beach" and "german saint teetotalers workers"?
Thinking that a spanish engineer is less educated than a german engineer is hilarious (yeah, we take siestas under a cactus with a big hat all day in between last party and next party). University titles in all EU are equivalent for the same grades.
Productivity can be measured for example by GDP per hours worked, and Germany's productivy is very clearly above Spain's.
These are facts, which do not demean Spanish engineers, so no need to be defensive here. You are just taking one incident and using it to brush over economic facts.
Economic facts that don't mean what you think they mean.
Lack of productivity has nothing to do with individual performance, but with automation, industrial capital, organization and regulation.
Spain suffers from an antiquated labour regulation, including perverse incentives. As an example, many companies refrain from growing over certain size because it triggers a nightmare of regulation and expenses.
Also there are other barriers... I could write about that for hours, but it's sad and I'm tired.
Reading people repeating again and again the same stupid fairy tales about the lazy southern europeans and the diligent northern europeans is frankly annoying. For example the author says that:
> "I don’t think they have siestas in Germany…"
A wild siesta cliché suddenly appears.
You are really funny. For your information, workers in Spain don't have "siestas" since XIX siecle, we have electricity and cars also. I can understand how for many young europeans the entire experience of Spain can fit in a blurry weekend in Magaluf, a bleeding nose and maybe a broken arm after jumping to a pool, but the country is a little more than that.
This. I stopped reading when the author claimed the UK was the biggest exporter in 1993 and now it's not - well, duh: this country doesn't export low-margin widgets anymore, because it makes more money into high-margin services. A lot of those services are sold to... Germany.
This! Germany's manufacturing supremacy can't last forever with lower cost countries catching up fast. UK realized earlier it can't be competitive in manufacturing anymore. Knowledge work is the future in the West, not volume manufacturing.
The number of "Hidden Champions" (SMEs most often in manufacturing of high tech machinery & components which are world leaders by market share in their respective niche) in Germany speaks to the contrary. Same situation in Japan.
Indeed, I myself worked for one such niche high tech machinery German company. The problem is, due to the thin margins in these hardware gigs, the salaries are piss poor compared to the skills needed (M.Sc. and up) as even making iOS Apps paid better. Only the execs and the couple of grey beards who were with the company since its inception were well paid, everyone else not so much.
That's the reason youngsters aren't gravitating towards these gigs anymore and prefer to be web devs instead. The margins are higher and the entry bar lower.
I'm not saying they'll go bust tomorrow, not at all, I'm just saying they don't have an easy future ahead, due to low margins and unattractive career paths for youngsters, especially once their patents expire and China will be able to make the same stuff at half price. That's why the UK's decision to focus on services/consulting is a better long term bet IMHO.
China probably has more people at every level of education than Germany, they're just more sparsely distributed. So the one person with really in-depth manufacturing knowledge spends their time supervising a bunch of greenhorns who barely know how to operate the machines, making lots of cheap crap. But they're learning something new every day and may eventually become skilled enough to cost-effectively manufacture high-quality goods instead. Of course at that point they won't be happy with rock-bottom wages anymore, so it's not clear that prices will drop much.
So, you can buy good quality springs from China and Russia. Yet German suppliers are preferred, because they have better quality guarantees/control, I guess.
You realize that it's insanely easy for "knowledge work" to be replicated? Much more so than any manufacturing. China already does it.
What does that leave European and American companies with? Quality. It can apply to tangible and intangible goods equally well.
Knowledge work isn’t something people in the West are uniquely qualified to do, and so much of this work has already left or in the process of doing so.
It will be interesting for my children when either automation or outsourcing has removed the last rung for a typical middle class lifestyle.
„ France and the UK were opposed to German reunification, and attempted to influence the Soviet Union to stop it.[8] However, in late 1989 France extracted German commitment to the Monetary Union in return for support for German reunification.[9]“
Yeah, France wanted to use the Euro currency to reign in the German economy. Funny how that ended up backfiring decades later with Germany running the show.
As they say in Germany: "Bedenke wohl, worum du bittest. Es könnte dir gewährt werden." ("Consider well what you ask for. It could be granted to you.").
We can look today at Germany as a mature, stable partner in the world but at the time, the argument that there might just be 'something in the soil' of the primary belligerent of the last 2 world wars was not entirely insane. Gratifyingly the world saw that the nation's contrition was sincere and we enjoy the fruits of its labour today.
Theres a reason the Politics is becoming extreme, the largest economy is simply neglecting its citizens and simply saving a lot.
Edit: not trying to troll. Many are thankful, but many are worried aswell. I/we dont consider it difficult to understand. Work hard, save, dont go to wars, its a simple equation, but its not all rosey, and things arent perfect. Many claim this prosperity to be illusory, and fear a harsh crises ahead.
Seeing their elites enjoying themselves on the southern French coast, Italian and Spanish islands, Caribbeans, and wherever else the last thing that comes to mind is that they're "saving a lot". It's more like they decide on whose cost the "saving a lot" will happen - employed taxpayer.
It's been observed that the German word for austerity - Sparpolitik - is quite a euphemism, and does a lot of work convincing people that it's a good idea to "save" money like this.
Yes, the income tax is close to 50% for almost everyone, and yet the capital gains tax is just as low as in the US. Less progressive. Arguably MORE favorable to the wealthy (since the rich have a more significant tax discount in the EU than the US). And yet workers there think it's more equal. I guess they have a point. It's more equal amongst laborers. Only because no laborers make a decent wage, and minimum wage is slightly better there.
Imagine a government who could be financially prudent..
Sorry but this is not why 'Politics is becoming extreme'.
The same way that not every citizen pays much attention to national debt until their on the hook for the bailout.
Less drama is better. Strong and steady economy and forward planning.
I would take that over : "Hey lets just spend money we don't have, we'll tax is later or inflation or screw it, worst case, another bailout."
The proof is in the last financial crisis. Germany was able to buy up because they didn't spend like drunken sailors in a brothel during the, (identified by them and france) financial bubble.
Funny that.
I suspect the reason Politics is leaning more Fascist recently, is due to a bit of anger posts like yours that reflect nothing in reality.
Are you here actually struggeling to find a kita place for your kid, or seeing how refugees just get dumped into ghettos ?
Because if you arent ... well then.
There’s honestly something very fundamentally wrong. And its very irresponsible and honestly nigh defamatory by trying to blame the larger mood on “posts such as mine”, hell im not even a conservatist, actually a moderate leftist that thinks those cries for attention ought to br heard and adressed. Posts like mine arent making the AFD the third strongest party, theyre riding the anger, rather. I will honestly not make statements about you, because im not here to inflame things, but do consider your finger pointing in this case, its unsavory, even if im off base and you know better, there’s a better way to put it.
There is something very very wrong, absolutely, but the fiscal conservatism is not to blame. At all, if anything it facilitates long term stability(relative stability).
I get so frustrated when somone with conviction says : "oh the problem is the government is throwing its citizens into incredible debt, which leads to inflation and other issues."
And then say : "Oh the government is not spending enough on the needey. And its causing societal issues."
I'm not here to finger point or inflame. But it's just as irresponsible to pin it all on the government looking after its nations fiscal stability.
My argument is actually that the government should develop the infrastructure, and promote more health, social and educational programs -
I see how the local municipalities are over worked and understaffed ... its been years now like this! Its not the needy i mean, jordan peterson says when the middle class gets a cold, the lower class gets a pneumonia ... and the AFD is the pneumonia, in my opinion.
I didn't mean to sound as i did that i want the govt. to spend on the needy, i want them to build more, very few countries have so much, yet develop so slowly. Look the netherlands ... denmark too! Not thet they dont have problems too, but i think they do more as social states. Granted, they dont have the baggage germany has.
Im actually curious, what’s your take? How could things be improved? An honest question
Not a word about the fact that Germany simply produces desirable products? Somehow that has to factor in. Financial policy and the education system favors a conservative manufacturing sector that incrementally improves upon what Germany has done for decades.
While I got my ME degree in Germany my dad, who is a solid state physicist, spent all his energy trying to accelerate the development of a German electronics sector. He was always ranting about the hurdles thrown up by politics in Germany, "We'll just continue building cars and machines for the next 100 years." Well, sounds like it's still working although the end of the cold war and the common market has distorted things in Germany's favor, an effect that probably won't last.
> the common market has distorted things in Germany's favor, an effect that probably won't last.
Quite by design. Having the whole Europe on Germany's monetary policy (i.e. Eurozone with EUR interest rates) while not sharing any other policy is heavily in Germany's favour and one of the main reasons the European debt crisis happened.
Not to say that being a well governed country with good policy and a culture that is conducive to high productivity and good quality did not help - it definitely did. And I'm not trying to redirect blame for the Eurozone crisis - Greece has mainly itself to blame.
That's a very simplistic view and doesn't at all cover the whole picture. The union benefits all countries in varying ways (eg without the union Italian and Spanish and French banks would long have gone bankrupt). At the same time it also has negative effects. But you have the same issue internally inside any larger country.
Excerpt: "French banks were not immune but proved relatively resilient to the global financial crisis reflecting
their business and supervision features".
A quick Google suggests 'cajas' is closer to a credit union, though I'd love to hear more about the difference between a 'cajas' and a bank and the cultural expectations for both. (I would have been surprised if that happened to a US credit union.)
> I'd love to hear more about the difference between a 'cajas' and a bank
I think that Credit Union would made a good definition of a caja de ahorros [1], More or less equivalent. We could say that some spanish credit unions poorly managed by politicians were rescued with the money from all spaniard's taxes, but not the banks (and not all credit unions).
[1] 'a Cajas' does not exist. The singular is 'Caja'
Economics in a nutshell: "There must be a single number that explains all of this!" It can't possibly be that Germany actually built its exports based on quality. That can't be replicated by tweaking some tax laws.
A few years back I worked for a large engineering services company (that nobody has ever heard of) and one of the senior managers from Germany described the quality of Mercedes-Benz cars as a "national disgrace" - he was genuinely upset about it.
For what it’s worth early 2000s Mercedes Benz models are not known for their reliability, and some of them were pretty prone to rust. Of course, Mercedes models built until the early-to-mid 1990s are a whole different thing.
Why is this downmodded? It's true, at least in America: the people who buy these cars new don't care if they still work 10 years later, because they don't keep them that long. The people who buy cars intending to keep them a long time don't buy expensive luxury cars here.
1. Most people want cars to run 10+ years, even in America (I live in California). Capital, environmental implications, not many new features etc. are valid reasons.
2. Higher quality cars are better to ride in 5 years than lesser quality cars. I would rather drive first 5 years of a car than the only 5 years of a car.
None of that applies to Merc buyers. These cars use an unusually high amount of plastic parts in critical areas that reliable vehicles don't ever attempt. Modern Mercedes is not the same as it was 30 years ago. Quality has been sacrificed on the altar of profit.
Exactly. I change cars every three years now. The last one I changed after 2 years. I really don't care how reliable they are after 5 years as long as they are comfortable, frugal and safe during my ownership. Technology today just moves too fast to see myself driving 50+ miles a day in a 5+ years old car.
I'm genuinely curious what sort of technical innovations of recent cars you feel make something like a 2012 Lexus IS-F an unreasonable automotive experience by comparison, let alone a used Mercedes S65 AMG.
Interesting, I call that stuff "nannies for people with poor situational awareness". I suppose they have utility as the size of the vehicle you drive increases (would have loved it when I drove a fuel truck in the Army[1]). In a mid-size sedan or smaller, with an attentive driver, they seem like a waste of resources to me. Side effects of living in a bubble of car modders and street racers, who almost never buy anything brand-new anyway.
I wonder how blind spot accidents in the US are affected by driver education? I'd love to see a comparison of data between the US, Germany, and Japan on incident rates of such accidents...
Well these new systems actually saved me at least once (probably more but it didn't feel as dangerous). It happened when van drove in front of me when I was in a runabout. Automatic brakes reacted immediately and halted the car.
Interesting that you call this stuff like you do. All these systems actually prevented many accidents around the world as cars are getting more and more safe all around.
As for blind spot system. I use it just as another data-point when driving around M25(London). Of course I look at the mirrors and those are perfectly aligned so I have no blind spots but when I look at the mirrors and see no blind spot warning I am sure all is good and I move to the other lane.
Well, yeah, it's widely accepted that the W124 was the last "quality" (i.e. long-lasting) car made by Mercedes. They switched to a more planned obsolescence production in the early 90's.
Many other euro companies export based on quality. I know this at least in Spain.
In Spain many companies just export with generic names, as it's believed that people associates spanish products with low quality, and this has been apparently confirmed with by Real Instituto Elcano surveys.
Sounds like Catalonia would be better off separating from Spain since then they could establish their own reputation instead of being dragged down by the rest of the country's poor reputation.
Catalonian reputation is heavily, and I'm saying heavily, based in the fact that 1) It played with different (more favourable) rules than other areas, and 2) it attracted talent and workers from all coins of Spain in the past. People from Madrid, Sevilla, Leon, Vigo and Granada is often what would be seen by strangers as "Catalonian talent", for no reason.
And I would add that the so called, "Catalonian reputation" has entered in a sinking phase in the last years. Madrid GDP is increasing faster (Madrid alone surpassed the GDP of the entire four Catalonian provinces in 2018 and this was not common in the past) and thousands of companies are slowly losing interest in the area tired from its permanent state of conflict.
Japan produces quality products. That even the revered companies here in the states e.g Apple via Jobs had to emulate them ? so yeah it ain't all about quality. Currency games have a strong role to play.
Japan is very successful if you look at their trade statistics and their products are often held in high esteem in regards to quality.
But the currency obviously helps Germany. Still, there are a lot of niche products where companies with around 300 employees can call themselves global market leaders. It is not just cars, although it is the largest industry and there are quite a few manufacturers.
A relative uses a particular medial device with parts that wear out. She purchases the regular replacement bits off Amazon which are made in China and only last 30 to 60 days. When she can afford it, she buys from the OEM's online store which has parts that are made in Germany or The Netherlands. They fit better, work better, and last up to six months.
The difference is the Chinese parts cost $10, while the European-made parts cost $25.
Speaking generally (not about this unnamed medical device):
Poor people can scrape up $15 if it means the difference between 6mo and 2mo. Sure there's some times when the purchase falls on a week between paydays and you buy the cheap (cheap up front, more expensive on a per day basis) version but the next time (or maybe the time after that) the purchase will need to be made at a more convenient time and you will have the extra $15 to spend on the one that has a lower overall cost.
Having experience with the $25 model is the barrier to entry, not the $15 difference in cost. It's not hard to justify $15 when the overall cost is lower and the expense is less than monthly. It's very hard to justify the $15 when you don't yet know if the product will last long enough to make the overall cost lower. And lets be honest here, products where +X% the cost gets you >X% the utility are microscopically rare compared to products where that is not the case.
They're poor, not stupid. They can do basic math and determine which product satisfies their needs more cheaply on an ongoing basis. For low dollar amounts
He does talk about Germany's 200 year manufacturing excellence. That doesn't explain why in 1992 Germany had a massive trade deficit and UK had an equally large trade surplus, or how they've been able to avoid the fate of Japan.
These were the years shortly after reunfication in 1990. The reunfication hit West-Germany during a econonmic boom, so the economy was already producing at capacity and the additional demand shock from East-Germany could not be covered by West-German production. As a result imports raised and exports products were diverted to East-Germany at the same time and for a short time the trade balance became negative and some of the trade balances of Germany's neighbours temporarily improved due to higher demand from East-Germany.
BTW: It is a misconception that a trade deficit and a poor economy are related.
Japans economy was much more government managed than completely free at that time. Specifically the Japans Ministry of International Trade and Industry ("MITI") was steering the economy, mainly be using a control called "windows guidance". By given "window guidance" the commercial banks the Bank of Japan controlled which segment of economy was allowed to get what amount of credit. This turned out to be highly competitve compared to the western model of a completely free market economy.
This system was later abandoned due to pressure of the US to make the banking system and the BoJ "independent". The result from this operation was that the commercial banks diverted more credit away from real investment to financial markets and assets investments, which in turn resulted in an unsustainable real estate boom in Japan.
From of this real estate boom Japan never recovered when the bubble burst.
BTW: The Bank of China uses nowadays window guidance as a system to steer the economy - and seems to be pretty successfull with it.
I think the current bleak estimates for Japan are quite exaggerated. Just recently economists proclaimed that their latest success must be a statistical fluke. Just look at the living conditions there... To be honest, I believe a lot of economists are a bit of the wrong side from time to time. Maybe analysts face a bleak economic future and got something mixed up?
> Not a word about the fact that Germany simply produces desirable products?
I dont think that's relevant though. Desirable products mean more countries buy your product, means the value of your currency changes, means your products are effectively "more expensive". Sharing a currency with other countries dilutes that effect, just like any prosperous region within a country sharing a currency with poorer regions.
I'm not an economist so I cant say how valid any of the points ARE, but from the logic presented I didnt think this was an attack on the quality of German products.
Nope, tradable goods don't just become "more expensive" because of currency shifts. The prices of tradables are set in a global market and tied together by cross-trading (arbitrage) considerations. What happens when supplying a desirable product is that the industry seeks to expand and that might increase costs overall. The Dutch Disease is an extreme version of this, in which having a single dominating industry sector leads to e.g. bad governance, etc. But these are real effects that are unrelated to currency shifts.
It sounds like you might be talking about commodities, but that's not every market. For goods manufactured and largely consumed in one country, currency shifts do quite mechanically make foreign prices cheaper or more expensive, assuming they are still sold for the same price domestically.
(Though, the price might not change right away depending on long-term contracts and whether the manufacturer decides to take profits or accept a lower profit margin.)
The important question is: Does Narnia have the money, or is it willing to spend, double the amount on your product? Maybe they will just buy half, because their budget is fixed. That's the point you are missing.
....I fail to understand the relevance of what you're saying.
A desirable good is still less value/money if the money cost increases. That's what we've been discussing in this thread. Now you're changing other variables?
You were making a point about what happens if the exchange rate changes and everything else stays the same. That's not particularly relevant to the real world because if the exchange rate of a freely traded currency significantly changes, then all the other relevant factors also are very much not the same; it has a lot of interlinked consequences, and it can't happen without a significant economic reason pushing for that change (artificially fixed currencies have their own intricacies).
The direct, immediate price effect is exactly as you describe but at least in the medium term it's also affected to a significant (and perhaps even larger) extent by (a) the major macroeconomic factors that caused the Narnian gold pieces to devaluate w.r.t USD; (b) the changes to the income and global purchasing power of Narnian people caused by that devaluation; (c) the long-term changes to the widget trade and competition; and a bunch of other ripple effects; so the effective price to them won't double; it might increase somewhat (but much less than double), and it might even decrease within a reasonable time if that devaluation fixes some underlying structural economic problem and thus their income; It's quite likely that the devaluation was caused by systematic factors that screwed (temporarily) their productivity and income; so large changes in exchange rate don't happen just because.
He was at the Max Planck Institute at the time but on a lot of state and federal commissions to figure out how to get German industry on a fast track to compete with silicon valley.
German products arent as high quality ad they used to be and most if them are pretty stale in terms of innovation. Sure they change the shape of cars and add new leds and interior eye candy but that is not progress. Imo german cars are low quality and lack diversity, and same goes for most machinery made in that country. US, Japanese, South Korean or other EU made products can be of similar or higher quality. Germany has such an economic power because the EU is heavily biased towards its needs. Just have a walk around east Europe and you will see how it has become junkyard for german cars. Suddenly the environment doesnt matter. Furthermore Germany is pretty socialist, both corporate and personal and has plenty of ways to subsidise industries and prevent too much innovation from rocking the boat.
I cannot agree with this assessment, because you're talking about a key industry from the 80s. Germany's strengths is not just in cars, but also in tangible b2b products that require a high degree of know-how and engineering. Southern Germany is plastered with such companies, they deliver products to the rest of the world you and I haven't even heard of unless you're working in some specific business. These companies are very competitive and innovative.
If you have a problem with a product and call them about it, sometimes you can talk to the people who designed and built it, it's quite nice. They will also work with you to build similar things not yet in their catalogue if you need them (sometimes inventing new processes on the way), even if you don't need a lot.
No pun intended, dude, but I think you speak mambo jumbo... :D
"German products arent as high quality ad they used to be and most if them are pretty stale in terms of innovation."
Germany just surpassed again South Korea as the most innovative country. News are just three days old. Where do you base your own assessment? Did your BMW break down?
Disclaimer: I'm from Germany and work in the automotive industry
I think he is partially right, at least when you define innovation as being mainly of digital nature. There have been lots of improvements on the mechanical side, cars have become a lot more efficient, and quieter (or louder if you prefer). But when it comes to making the cars smarter or even electric, there hasn't been a whole lot of innovation. Since connect everything is the major trend right now, people often consider innovation as being mainly digital. While digital technologies are a major infuence nowadays, the mechanical side should not be forgotten.
But the German automakers seem to really struggle with software becoming a major influence in peoples car-buying decision. BMW started with its "Conntected Drive" services, but since then, they haven't made a whole lot of progress, just a lot of completely unrealistic concept cars. The same is for Mercedes, they started their MBUX project a few years ago and at first, it really looked promising. Now, when I'm sitting in my friends MBUX Mercedes, its just a infotainment system as stupid as any other one. Volkswagen made big promises with its upcoming VW I.D platform and IMHO, this is the biggest single step a German automaker took since I'm alive.
I think that this was not exclusive from germany. It was a global change of paradigm
Every single big car brand experienced a period of very confused years (bordering panic for some of them) between 2000 and 2005 IMHO when faced the truth that the old trustable mechanics must either be replaced by mechatronica in a rush, or be overcomed and left behind by the new competitors.
Some so-so models were hurriedly launched in those years as result. Some of those soon started suffering lots of random errors and must be recalled and eventually replaced.
Cars now are computers with tires, all coated in plastic. Metal is ethernal, electronics not so much. Do not expect this soft and delicate matherials to last much more than your computer.
My VW just broke down. Manufactured in Frankfurt, and shipped to the US. It has known defects that were recently settled as part of a class action lawsuit, so this isn't just anecdotal.
The Fine German engineering required the removal of the front bumper to replace a headlight bulb (just the bulb, not the entire assembly). What kind of idiot designs a car that way? The fuel injectors on the 2.0t engine routinely clog up with low mileage, requiring either expensive cleaning, or more expensive replacement.
The suspension has a design flaw that results in tires cupping after only 2-3k miles. Tire rotation does nothing to solve the problem; purchasing expensive tires doesn't alleviate the issue, they just wear out as fast, costing $$. VW has known about this issue since this model was released but denies responsibility.
The number of recalls this car has had in a short 8 years is a joke. The number of repairs it has required outside of recalls in 8 short years is a joke. The VW that built the Bug, the Bus, the Rabbit/Golf, Sciracco and Jetta, that VW has died. Now VW is just trying to push up market and failing.
I've owned a VW for the entirety of my driving life. This will be the last one I buy since VW (at least in the US) doesn't give a shit about quality.
Disclaimer: I'm from Lithuania, little eastern Europe country.
There has been a lot of talk about eastern Europe being a junkyard for german cars (or old european cars in general) in recents times, not the least locally, especially by politicians trying to justify weird decisions. Most of the time one vital factor remains overlooked, people don't have money for anything else here. German cars are valued by most the people, whether that is deserved or not is a different question. There are plenty of mechanic shops for repairing those cars and cars itself are cheap. Public transport is mostly horrible, so a car is a must for most people. If a family has a budget of ~€1500 per month, how can you realistically choose anything else but an old imported car from western Europe (majority from germany).
There's a lot of controversy about eastern Europe becoming a junkyard for old German cars because those cars produce lots of pollution that affects the health of everyone in the country, which is the whole reason Germany and the other rich European countries don't want them anymore. Also, to add insult to injury, not only is the EU not allowing countries to block imports of those old polluting cars, they simultaneously expect all EU countries to meet stringent limits on how much of the pollutants they pump out is present in the air of their cities.
Well, it's a junkyard of German cars because they just last longer and are cheap to fix (parts are from in Germany/EU, too). Japanese cars are second, simply because the number of German cars is so high.
I wonder how that plot would look like if they separated individual US states and also considered trade between them. I'd guess the big three (California, Texas, New York) would dominate quite a bit there as well.
New York, big three? Florida passed New York in population in 2014: https://www.orlandosentinel.com/news/breaking-news/os-florid... .
Census figures released Tuesday show Florida passed New York as the nation's third largest state with an estimated population of 19.9 million. New York, now fourth, has 19.7 million.
And if you looked at each of the regions at the top, you'll likely also discover large differences between close-by areas. The geographical distribution of economic activity seems to follow a kind of fractal structure.
> The geographical distribution of economic activity seems to follow a kind of fractal structure.
Nah, it's more the result of WW2 and everything that happened after.
North Rhine-Westphalia was lucky to have lots of heavy industry which really helped the country after WW2, almost everything in terms of mining and heavy industriy and so on happened there. So although NRW was hit probably the most by allied bombs, the natural "richness" with minerals helped to get on top again.
BW and BY were "lucky" to have been under control of the USA (which probably took their image of Germany with them from what they experienced in BY) and French, which were probably somewhat more of "laisez-faire" than the Russians.
Well, we all know what happened with the Eastern parts of Germany...
Florida may have a larger population, but they're not nearly as productive, probably because FL is a popular place for retirees to move to. Retired people don't contribute much to GDP.
"Briefly stated, the Gell-Mann Amnesia effect is as follows. You open the newspaper to an article on some subject you know well. In Murray's case, physics. In mine, show business. You read the article and see the journalist has absolutely no understanding of either the facts or the issues. Often, the article is so wrong it actually presents the story backward—reversing cause and effect. I call these the "wet streets cause rain" stories. Paper's full of them. In any case, you read with exasperation or amusement the multiple errors in a story, and then turn the page to national or international affairs, and read as if the rest of the newspaper was somehow more accurate about Palestine than the baloney you just read. You turn the page, and forget what you know.”
If Germany's military is top 10, I'll be a monkey's uncle. They have horrible availability rates for their ships and aircraft. On paper it might seem impressive, but in terms of power, it's arguably not even third in Europe. I'd rank France and Poland higher in conventional military power.
What does this game look like with a fixed money supply and no trade or movement restrictions? My naive Econ 101 guess is that wealthier nations would export more, not less, and higher value goods. Why does inflation work to produce a trade surplus? It seems that the only reason is decreasing internally-sourced costs like labor, but this just props up obsolete value chains instead of promoting capital innovation. Does this work long-term? Also, in a game with one inflator, how does that turn everybody else into a leisure services economy without a whole bunch of inflationary distributive spending on their part as well? It would seem that the fixed-supply result would look like deflation plus capital excess, which is perfect for investment in new industries. It seems to me that maybe Germany is in roughly this situation whereas the US/Japan/etc can manage money supply according to political will, so a larger portion of productivity is diverted to leisure services and structural inefficiency. Also, is Chinese currency manipulation an economic success story? What would we see with a free market fixed currency in China?
According to American Society of Mechanical Engineers one reason Germany has kept is industrial base are the Fraunhofer Institutes you will find all over the country right next to universities doing essentially free R&D in almost every area of technology for companies that might otherwise not be able to afford them. (I had a student assistant job at one such institute when I was an MSc student in Germany)
Interesting that the labor culture in Germany relative to the rest of the EU is not mentioned at all. Germany is one of the strongest nations to be an industrial worker and has various laws that are pretty unique to the nation, such as co-determination, I believe this has acted as a defense vs. outsourcing (and when they do outsource, they go to high cost places such as the US) and has kept it's manufacturing base strong.
There is strong pragmatic cooperation between manufacturers. You get free samples and if some parts don't meet specifications there is a shared effort from both supplier and consumer to fix the problem in the process instead of suing each other. Would be too expensive without real results anyway.
Hours worked are pretty low compared to other European states even if you factor in a large part time component. I don't think increasing hours would increase productivity anymore.
There is also a darker side of course with a lot of minimum wage jobs or people working long hours while still being dependent on the state. Even for employees of the same company the income can be quite unequal. Compare development or engineering with production or logistics for example.
Yes and no. German companies are outsourcing like crazy, but they have the whole central/eastern european countries as outsourcing destinations. Low wages, high level of education, short distances, EU membership make them really attractive.
A lot of very basic, work-intensive or energy-intensive work has left Germany over the last 30y, but the companies make a killing of value-added manufacturing.
Also, not least due to unification, till a couple of years ago, German wages were very stagnant, so it wasn't that great a country for industrial workers, paywise.
Germany isn't Germany any more. It is a component of the Eurozone - which is a unified currency area - like the USA, or the UK.
What Germany does is 'vendor finance' other parts of the Eurozone. The Greek government buys German battleships and the savings the Germans are famous for buy the paper the Greek government issues to close the circle. Then they blame Greece for going into debt once the ponzi scheme reaches its limit.
You get the same effect with London to the wider South East of England, arguably England to Scotland and no doubt several areas in the USA where outside of the area, but within the currency zone, is encouraged to borrow to buy the output of the area.
China's mercantile currency lock does much the same thing.
The eternal problem is that exporting is giving away the output of your people in return for a shiny bauble. If you don't then exchange that shiny bauble for the output of some other people, what was the point of doing all that work in the first place?
You may as well have used your productivity to have Friday off instead and gone fishing.
> The eternal problem is that exporting is giving away the output of your people in return for a shiny bauble
That's an important point!
In the case of China, I'd guess that it was a strategic decision to do so.
Being in debt with others gives others political power over you - at least as long as you are not stronger (ultimately, in a physical sense) than them. I guess China wanted to avoid that as long as it wasn't strong enough. Now that China is getting stronger and stronger, they are starting to invest that accumulated capital in order to gain political power over other, weaker nations. That's btw. a hot topic even on Germany, if it's ok to let the Chinese buy local companies and other assets.
In the case of Germany, I don't really understand why it went that way. The surplus seems to have become some kind of fetish.
During the Greek crisis, the risks of such imbalances became visible.
The big risk for Germany is imo that a major country like France or Italy will tip over politically, leading to the destruction of the Euro. There's no playbook for how to handle that and I guess it would be a messy and ugly political process which may render quite some of those collected "shiny baubles" worthless.
With European history in mind, I don't think taking that risk is worth it.
Related : cars selled by european companies will have to average 95gCO2e/km. But this limit is raised for heavy cars, which Germany sell a lot more than others. France's environment minister is angry.
The legislation has been tailored for the EU's biggest industry.
Yeah, what's that all about? Surely the entire point is to incentivise people to _not_ buy heavy cars, since the lowest emission models (aside from electric cars) are smaller?
Except that the EU is an union of unequal countries, so if Germany (which is one of the most powerful, if not the most powerful country in EU) want to keep an industrial edge via a special case in law, they're going to get it.
There are several countries in the EU that likes and produces big an heavy cars, Germany is not alone, my guess from this post is that France primarily produce smaller cars. To make any difference we should make it easy and cheap to buy fast electric bicycles since they have a lifecycle emission that is about one tenth of cars (Blondel, Mispelon, and Ferguson 2011). At the moment customs for chinese electric bicycles are really high in EU.
I think the markets intersects a lot, at least if you are to trust what the polls made on people who just bought e-bikes, a lot of them used them to replace cars mainly for everyday work and shopping which is HUGE. Research show that more than half of the car users here live 50 min from their work by bike.
If we spent money on infrastructure for bikes my travel time by bike could be 10 minutes shorter, that would the 50 min area above even bigger.
It's also that Germany has a reputation for being the eco-friendly country, while in fact not really caring about its climate impact from some very important domains : high-carbon electricity, heavy polluting industry.
Renewables up 6% in two years, more than compensating for the shut down nuclear power sources. Fossils are shifting to natural gas which (so I've heard) is supposed to be the least bad of them (and fossils' grand total is also going down).
It's not all roses, given our inept politicians, but it's far from horrible.
The financial side of things is probably the bigger driver - the German government is notoriously unwilling to issue debt, so domestic German savers have a huge shortfall in safe assets that they must purchase abroad to acquire. These foreign financial assets, on net, can only be bought by sales receipts of exports.
I blame the lax bankruptcy laws in United States (in comparison to Germany). I think it creates a safety net that is too comfortable that the business can (a) give up too early or (b) use this as a pump & dump scheme where the owners walk away with money they had siphoned off early.
Compared to German insolvency procedures [1]
> The aim of insolvency proceedings is not to protect the cor-porate debtor from its creditors, but to maximize the insol-vency dividend payable to the creditors. To achieve this aim, proceedings may be directed either at a liquidation of the company’s business or at a reorganization of the company it-self by means of a plan of restructuring (Insolvenzplan). In the event of a liquidation, the company’s business operations may be sold as a going concern to an investor or the business may be wound up and the individual assets sold.
>There's nothing I enjoy more than the plight of the German Saver, who's obsession with "fiscal responsibility" has led to shitty austerity politics all across the EU (to be fair some other northern European countries like Netherlands also share the same view) and depressed growth for the poorer southern European countries.
Germany has benefited most of all from the unfinished project of the EU. Without becoming a federal union like the US, but having a common currency, Germany's exports have been artificially cheaper and thus more competitive for over 20 years.
>This is the natural outcome from the obsession with running fiscal surpluses. Now Germany is on the brink of recession and they're finally starting to make some noises about fiscal spending, but the politics will likely limit it to modest deficits than anything transformational. Enjoy the negative rates.
The common currency (Eurozone) is deeply flawed and it only allows a rich country like Germany to win at the expense of poorer countries like Greece or Portugal. I find it insane that EU politics have never really dealt with this. I find it absolutely insane that after the 2011 sovereign debt crisis, Germany somehow managed to escape with keeping the Eurozone intact and having the poor countries impose austerity instead.
There absolutely needs to be a political revolution in the Eurozone countries. Either complete the EU project by becoming a United States of Europe, and receive all the equalizing payments of healthcare, social security, and common military spending at the federal level, or get rid of the common currency. It's just hurting the poorest people in the Eurozone to keep the current arrangement.
You might be under the impression "well Germany might be parasitic vis a vis other Eurozone countries, but at least it's good for working Germans", but you'd be wrong.
The US today has a tight labor market which will eventually drive wages up if it persists long enough. Germany on the other hand has similar employment statistics but they did it with the Hartz reforms [2]. The unemployment stats look great because you can get a shitty low wage job [3].
Germany has kept the wages of workers depressed in order to be an export powerhouse. It's parasitic on other Eurozone neighbors but also on German workers. The people who have benefited the most from this arrangement are the German capital class. The shareholders and managerial class of German industry, whether it's giants like Volkswagen or even the small Mittelstand companies. German workers should have gotten wealthier over time which would have made Germany similar to the US in being driven by domestic consumption. That in turn would have made other EU members better off because those wealthier Germans would have been able to consume more of their goods and services. It's truly baffling how even German workers have put up with this. They're losing to the benefit of German capital.
You can't complete the "EU project". Politically and economically, it is just very obvious that states want different things from Brussels (btw, the people who go to Brussels are generally very different from national politicians...they are globalists, most citizens in Europe are not)...that is why it hasn't happened already.
You also raise very good points, that most people forget, about how Germany got here: they got here by squeezing the poor and transferring wealth to billionaires (there is a reason German billionaires are low-key). Another important feature is banking: that is how the wealth transfer occurred, and German banks are in a terrible state (they seem to get involved in literally every financial crisis: CDOs, lending to shipping companies, lending to Turkey, lending to Greece...it is unbelivable). That is why the German model doesn't work (Japan copied the German model, and their banks self-destructed eventually...it doesn't work).
One cool stat that demonstrates this is that Germans have slightly lower net financial assets than Greeks. Yes. The richest country in Europe has citizens that are poorer than the "basket case".
What is also forgotten is that two decades ago, it was Germany that was the basket case (the OP also inaccurately says that Germany was a powerhouse in the early 1990s...nope, it was a basket case then too because it had to integrate East Germany). The Euro has benefited one nation above all others (and Netherlands...although their success is partly due to becoming a tax haven) and imposed massive costs on others (Italy, in particular, has had nearly three decades of austerity between the ERM and the Euro...it is madness).
That's a pretty good overview of a good amount of things, Germany exports a lot of things, including their own problems imo. Germany has not held their own when it comes to demand growth. People seem to love Germany's fiscal discipline, but they don't realize that they pursue it to detrimental extent, if not for their own sake, than that of their neighbors. The schwarze null is kind of a cynical joke at this point.
The problem with being like, a systemic export nation, is that your shifting burden to someone else. It sounds okay on paper, but what you see is that can hide a lot of your own issues. If you aren't getting better, your sustained welfare is vampiric, it's coming from your counterparts.
And like you are saying, a personal pet peeve of mine is the outsized amount of private companies. Look at any global etfs, Germany is behind the UK, France, Switzerland (lot of multinationals tbf) and Canada (though not European). That's mainly the work large amounts of private companies. I'm sympathetic to the fact that its their companies, they don't have to sell them. But when it creates a fairly significant skew in sort of a capital picture, you can end up with stuff like this, where your capital class is even more walled off than elsewhere, since you can't build equity in a large portion of their economy even if you wanted to.
Thank you for taking the time and contributing a well-explained and argued line of argumentation.
Yes, Germany is wealth because others (the southern countries) have to compete because of the union currency. I always thought people of the southern countries (i know people from spain and greece) would rage more vigrously against that. Interestingly rage is only mildly and not a big thing. Maybe it's the selction bias bubble I am living in, I don't know.
Keeping the wages of workers down is good for workers' incomes if the alternative is high structural unemployment as seen in other Eurozone countries that are not so well managed. The fact that the supply of ready and willing labor has yet to be exhausted (which would ultimately boost wages and plausibly final consumption) is neither here nor there.
>The US today has a tight labor market which will eventually drive wages up if it persists long enough. Germany on the other hand has similar employment statistics but they did it with the Hartz reforms [2]. The unemployment stats look great because you can get a shitty low wage job [3].
Meh, that flies in the face of facts. Real wages in Germany had been depressed for long, not least due to unification, but are picking up: https://d3fy651gv2fhd3.cloudfront.net/charts/germany-wage-gr... and there's not reason to believe that is going to stop anytime soon.
>The people who have benefited the most from this arrangement are the German capital class.
It's not necessarily Germans who own the companies. This article from 2014 shows: [1]
>>Who owns the DAX, Germany’s pre-eminent equity index?
>>Not many Germans, it turns out. According to fresh research from the Bundesbank, the share of domestic ownership of the index—which comprises the 30 largest public companies in traded in the equities markets—fell from 44.1% in 2005 to 36.3% in 2014. Meanwhile, the foreign ownership share rose from 55.9% to 63.7%.
That only explains a small portion of the problems. The reality is that there are governments in the EU that are even more incompetent than Germany's and it hurts them more than some little currency problem. Austerity isn't solution but telling them to stop spending their money carelessly is a step in the right direction.
The U.S. labor market isn’t that tight for non-supervisory roles and wages aren’t going to grow beyond inflation under current policies. We’ve been in a ten year expansion with no wage growth to speak for.
A pretty grandiose claim. Reading the essay, the "understanding" seems little more than the fairly mainstream narrative that the Euro is too weak for Germany and too strong for the EU peripheral. Am I missing something?
I particularly liked the insight that currency stability may be desirable for the most successful economies but undesirable for the least successful.
Being in the cryptocurrency space, I can see how this also plays out on a much smaller scale as well. When your community is made up of nobodies, one of the few advantages that you have is that your cryptocurrency has more upside potential than established players. This can offset the significant downside of not having a reputation.
Because before 1993, you're not comparing apples to apples: "Germany" was two separate countries, and reunification affected the economics on both sides of the border.
It's true that the recession makes this a particularly favorable starting point for Germany, but it'd be misleading to compare Germany's economy today to the economy of West Germany of the 1980s (as many comparisons do) and ignore that half of modern-day Germany was the DDR at that point.
There were two major events that make the starting point a lot lower: Recession shortly before and German reunification with its significant economic distortions.
That’s why it’s easy to deceive by starting charts a certain date. When you look at the 1980s there was also a big increase. The y axis is linear so the newer increases look much more dramatic. When you look at the chart from 1950 you see a long term upwards trend with some setbacks.
so the point is that Germany takes over euro-denominated industrial export to itself and leaves other EU countries figure out themselves whatever they wanna do to survive.
Paul Krugman often rails against German industrial policy vis-a-vis the EU and hits a lot of the same notes in this article. On the other hand, most of the EU countries seem to accept this status quo and many of their citizens end up immigrating to Germany directly or benefiting from the massive EU subsidy regime funded by Germany so there are various forms of wealth re-distribution within the union.
> funded by Germany so there are various forms of wealth re-distribution within the union.
This "re-distribution" feeds an enormous compliance sector in the receiving countries. An useless sector chocking domestic innovation and allowing the politicians to trumpet successes in "receiving the EU grants".
Krugman's rants are mostly for a US audience and he needs a villain to sell his narrative. Additionally, he hates that Germany doesn't follow his model and still is prospering. And he is a pompous ass who puts ideology before facts, as seen in his rift with Estonia.
Britain already used its own currency, so they didn't have the same sort of 'Greece and Spain suffering to subsidize German exports' effect going on. So I don't think this particular issue will be different from before Brexit.
ETA: It will matter if the City continues to dominate European financial transactions, because it is the tremendous amount of money that goes to the City which keeps the Pound priced above the levels that are good for manufacturing exports. If the multinationals all move to Hamburg or wherever, the Pound (probably) loses in value and British manufactured goods become more competitive on the global market. In theory. Possibly. Who knows?
Yes the whole QE of the EURO by the ECB has been most dramatic and artificially kept the EURO competitive for the export market over the import market.
That's one ticking time-bomb that they keep resetting with new QE initiatives, that will have to end soon and suspect BREXIT will offer a wonderful scapegoat opportunity that may well be availed.
Also worth noting that negative interest rates seem to be the new tool that will replace/augment QE. Which may just work, though once again, perpetuating a mindset that borrowing over saving mentality in a way that whole generations will become saving avert. More so if/when negative interest rates take traction.
Their goods would also be subject to EU tariffs depending on how trade talks go and the EU accounts for ~50% of UK trade iirc. So it's still very up in the air.
Yes. I am not an economist, and even if I were, there are so many moving parts to Brexit I could not begin to calculate which ones are the most important.
But I do believe that financial exports (which is what the US and UK have specialized in since the Reagan/Thatcher era) create Dutch Disease just like natural resource extraction does, making the currency too valuable for high employment sectors and concentrating profits in low-employment sectors.
Maybe there's a simpler explanation, in Germany businesses are run quite conservatively in comparison. Nice for stability but probably bad for innovation.
By the way, Germany is one of the top 5 exporting countries since decades, so this has little to do with the Euro:
As an Austrian sharing some history with Germany and always looking suspiciously what is going on there, I have been multiple times astonished by my fellow neighbors:
Productivity: They work hard, a lot and deliver.
Education: above average and leaning towards being curious
Conservativism: depends on county but is a thing
Innovation: despite conservtivism inmovation is high
Collaboration and criticism: Even though you might be in strong disagree with someone arguments count and once you quickly talked out the differences, intense collaboration towards goal achievemt is obvious.
I worked for 10+ years in continuing education and had students of all age and all infustrial sectors and these have been common shared characterstics.
Favorable characterstics towards success I would say.
In part, it has to do with the fact that many items made in Germany are of high quality. Most goods that are sold in U.S. for instance, are made in China. Often times these goods simply fall apart (dishwashers, washing machines), are defective, or have toxic odors (like full-color books). Not so for things made in the U.S. or Europe, and it just so happens that there are a great many things that Germany makes now, where they are the only high-quality source.
Brits never experienced the tangible benefits of EU membership because they actively excluded themselves from both Schengen and the Euro. It's not really surprising that many reject something that is only an abstract macroeconomic set of rules to them.
Contrast this with public opinion in Germany back before the common currency: most German EU supporters were openly afraid that the Euro could seriously endanger their economy, but they considered it well worth the risk just for complementing the convenience of open borders with an end to the hassle of dealing with foreign currencies.
To anyone with a bit of critical thinking ability, macroeconomic decisions are close to a coin toss: both sides have good arguments and nobody has convincing data to back up their claim (if there was there wouldn't be a decision to be made).
Quest over! If you're actually interested in understanding the reasons for Brexit and you should before making such comments, try this https://briefingsforbrexit.com. Not recommended for those with a short attention span.
"Briefings for Brexit is a small group of volunteers, mainly academics, who set up the website in 2017 in order to provide reasoned factual material to help to inform the national debate on Brexit. Most of its members did not previously know each other. The two co-editors are Graham Gudgin and Robert Tombs, both of Cambridge University. Its contributors come from a range of academic disciplines and universities, and cover the whole political spectrum: their names can be found on our website. The group has no links with any political party. Neither of the editors receives any payment, not do any of the contributors. The newsletter editor, a student, receives a small payment. Briefings for Brexit is entirely funded by well-wishers."
Cool, how would I go about donating £10 to them? Would you say that this kind of small donation makes up the majority of their funding? Who are the large backers?
So this is totally above board, unaligned and not paid for! /s
Maybe, if it is rational to loose ones status as Europe‘s financial hub which was one of the key drivers in the past for the high pound exchange value.
I stopped reading after the 10th historical inaccuracy. This is why economics/economic history is hard folks (not just the actual economics but creating something readable...this is basically unreadable). Germany, in particular, requires a fairly deep understanding of economics.
It has the highest wealth inequality in Europe though (iirc, it is as high or higher than the US). In absolute terms, Germany's average net financial wealth per capita is slightly less than Greece...and in Germany, they have a substantial number of billionaires (usually very old money that got rich through govt aid/subsidised loans...or, unf, something much worse) which they don't in Greece.
Btw, the IMF actually produced a special report on inequality in Germany. It is a very serious problem and probably more serious than in the US (a trade surplus is just an excess of savings over investment: Germany industrialised through subsidised loans to politically connected companies, this meant very low interest rates...they are basically China, btw China copied Japan's model and Japan copied Germany...insolvent banks, very high inefficient saving rates, very low wealth, very weak savings system, low wages, very concentrated/vulnerable economically, non-functioning capital markets...it goes on and on).
Why this time we succeed and conquered our old enemies using capitalism, money and demand for precise machines that save time instead of wasting everything to fight with everyone around.
You started a flamewar and then perpetuated it; that's not cool here. Please keep nationalistic and/or ideological rants off HN. They're driven by emotions that aren't compatible with the curiosity this site exists for. Also, they're predictable, which makes them tedious.
Germany is a very new country (1871) and still comprised of markedly different regions. the French German axis has increasingly dominated the EU and driven a strong export culture. As globalization has hit a plateau Germany are now in a tricky position.
Many are loathe to admit it but the 'desirable products' Germany produces have a very distinctive Germanic flavor which people identify strongly with the idea of Germany and its people. Consider Jaguar, a car firm strongly identified with Britain and now owned by Indian Tata Steel. They were selling well in China as a 'British' global brand, but when they built Chinese factories sales fell off a cliff, partially due to Chinese people not wanting to buy a 'British' car owned by Indians and built locally.
Consider how BMW bought the Mini brand and marketed the car as 'British', with styling cues from Issigonis's original quintessentially English mini. BMW literally plastered Union Jack flags all over it despite it being a German car with a French engine. Buyers care deeply about places and their peoples. Unique identity. Who wants to fly 5000 miles and get off the plane in exactly the same place they just left culturally? The bland out and erradication of cultures is a disaster on multiple levels, not least ability to market differentiation
> Germany is a very new country (1871) and still comprised of markedly different regions.
Interestingly, this is apparent in the genetics of Germans. You can distinguish, say, Frenchmen from non-Frenchmen fairly easily -- they form a natural cluster. Germans don't form a German cluster; they break down into three clusters focused in the north, south, and east. Northern Germans may look more like Danes than they do like Eastern Germans.
Fair point. My take from UK history lessons last century was that the 1871 'German' entity was in hindsight a very early example of centralization of smaller nation states rebranded as'Germany'. There are arguably traces of this logic in the formation of the original EEC which gradually expanded into the vast and homogenizing EU entities today.
Globalization is arguably a stratospheric layer above the EU, US, China etc etc that is rendering the old nation state paradigms of less and less importance, something I don't like...
I'm a Californian, transplanted to the Midwest 25 years ago, and the idea that Americans are homogenized is hogwash. Sure we all have mostly the same strip malls/nationwide businesses, but the difference between the states is still pretty high. My town even has a "Germans from Russia" museum that chronicles their unique history. The same with the Nordic and Scandinavian influences in the Dakotas. Many have similarities, but also wide differences.
Germany has integrated immigrants from all over Europe and beyond, a large Turkish community, Italians, Syrians, and from many other European and non-European countries, so it is in fact heading towards more diversity instead of more homogeneity.
What you could say is that this trend is counter-acted by stronger, general cultural unification trend due to mass media (the Internet, mostly) and the influence of large, multi-national corporations. That trend is global, though, and has nothing to do with Germany in particular.
That Germany is a very young country is also obviously true, as it was united only in 1871. The fact that Germany as a nation played no substantial role in world politics earlier, but only varying fractions who were often opposed to each other and had many wars among each other, was in the end one of the many catalysts of WW1 and WW2. But that's another story, of course.
I agree with you if what you want to say is that the fact that Germany is very young has no particular bearing on its current economy. I don't see the connection either. But the rest of your post is moot.
In France it's largely Islam and north-African immigrants.
It managed to completely shatter the secular and assimilation/integration model that had worked for at least a century.
But to answer more generally the loss of character does not have to come from a single place. In cities like London or Sydney you can see that the loss of character comes from 50 different countries.
Don’t hide behind the G word. You’ve already alluded to it in your other posts. Come on out and say it if you truly believe in speaking freely. We want to see the ugliness in full view.
> If one pollutes water with oil, the oil is also polluted with water, and neither are good for anything as both have had their valuable characteristics compromised.
> the Native French have been essentially eradicated
How are they misrepresenting when they are actual, literal quotes? The posts are viewable by the way, no one is being suppressed here.
> Hacker News is usually great for reasoned argument and debate.
Not for the kind of racist xenophobic "ideas" that the world has long moved on from. Perhaps the post being downvoted and flagged would have been a cue.
>Not for the kind of racist xenophobic "ideas" that the world has long moved on from.
This is factually incorrect. The election of Trump in the US and the rise of far-right political parties in the EU disproves this notion. If anything, xenophobia is on the rise in western nations. The world has most definitely not "moved on".
Never mentions hidden champions[1], never mentions the high level of training and morale and hence productivity for the German worker, never mentions German dedication to quality, never mentions the social capital of corporations which are hundreds of years old, never mentions the fact that MBA quarterly profit maximization uber alles bullshit never caught on in Germany, never mentions the Landesbanks.... I submit this article as evidence that economists don't understand any economy.
If you'd bothered to read you'd realise that the author isn't an economist, and that he does talk about Germany's manufacturing excellence. That doesn't explain why in 1992 Germany had a massive trade deficit and UK had an equally large trade surplus, or how they've been able to avoid the fate of Japan.
The industry will adopt to those external factors: Germany was 'Exportweltmeister' with the super strong DM (which dominated European currencies) and it is a leading export nation with the Euro.
There are a lot more factors that support the German model. For example Germany is not a centralized economy (like the UK or France, which are grouped around London and Paris). Thus lots of federal states and cities have strong economies: Munich, Hamburg, Düsseldorf, Frankfurt, Berlin, ...
The extreme angle is the concept of 'unknown medium-sized world market leaders' - so-called hidden champions. Germany probably has almost 50% of all hidden champions world-wide:
https://www.forbes.com/sites/rainerzitelmann/2019/07/15/the-...
You'll find many of these companies in rural regions.
Many of these companies are export-oriented, based on a long tradition and they don't care what the current currency in Germany is.