Skip to comments.How Germany got it right on the economy
Posted on 11/24/2010 7:18:50 AM PST by SeekAndFind
It may be turkey week in America, but it's goose month in Germany. In many restaurants, you can get goose in your salad and goose in your soup to go with your goose entrÃ©e. Diners fairly honk their way through November.
But then, Germans have something to honk about. Germany's economy is the strongest in the world. Its trade balance - the value of its exports over its imports - is second only to China's, which is all the more remarkable since Germany is home to just 82 million people. Its 7.5 percent unemployment rate - two percentage points below ours - is lower than at any time since right after reunification. Growth is robust, and real wages are rising.
It's quite a turnabout for an economy that American and British bankers and economists derided for years as the sick man of Europe. German banks, they insisted, were too cautious and locally focused, while the German economy needed to slim down its manufacturing sector and beef up finance.
Wisely, the Germans declined the advice. Manufacturing still accounts for nearly a quarter of the German economy; it is just 11 percent of the British and U.S. economies (one reason the United States and Britain are struggling to boost their exports). Nor have German firms been slashing wages and off-shoring - the American way of keeping competitive - to maintain profits.
One key to Germany's miracle is the mittelstand, as the family-owned small and mid-size manufacturing firms that dominate the economy are known. Last week, I visited AWS Achslagerwerk, a factory of one such firm, in the farmlands of Saxony-Anhalt, about two hours west of Berlin. As in many such companies, this factory turns out specialized products: axle-box housings for Chinese and German high-speed trains, machine tools requiring climate-controlled precision measurement.
(Excerpt) Read more at washingtonpost.com ...
MORE HERE :
German Ifo gauge soars, ignores Irish debt woes
Business sentiment indicates German recovery picking up steam
Renewed sovereign-debt problems in Ireland had little impact on business sentiment in Germany, with the Ifo Institutes closely-watched business-climate index soaring to the highest levels since the nation was reunified.
The Munich-based Ifo Institute on Wednesday said its November business-climate index rose to 109.3 from a revised 107.7 in October.
The October index was revised from an initial reading of 107.6. Economists had forecast a 107.6 reading for November.
The upswing in the German economy is gaining more and more strength, said Ifo Institute President Hans-Werner Sinn.
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Of course they did, Germany kicks butt. After they flushed the libtards things turned around.
Of course I’m German by heritage so I’m biased.
Good for them, this is good news.
Americans and Brits and other developed nations better start reversing the nitwit advice (and profiteering) that led to their current problems and look to Germany's example.
usually these stories head off down the Leftist track on how the Germans have very high rates of unionization and labor activists sitting on corporate boards.
I just proudly regained my German citizenship this year.
I now hold dual citizenship - USA and Germany.
This way I can jump from the pan into the fire and vice versa - lol. My name is Pete too. My apologies to you, Peter, for being the sole Freeper in Vermont.
RE: Who is allowing this heresy to be printed in the Washington Post?
Occasionally, the WaPo allows sensible conservatives to submit columns to publish ( I have read people like Milton Friedman, Condoleeza Rice, etc at the WaPo).
They do this in order to appear : “Fair and Balanced” ( with apologies to Fox News ).
Welkome! Actually I’m in (M)assachusetts. I regularly fly the German flag much to the shock of some native Germans who have stopped as they drove by and asked me about it.
Grandfather and great Grandfather fought in WW2 and WW1 respectively.
Germany does have a demographic problem like the rest of Europe.
The Germans are not reproducing at the replacement rate needed to sustain their current population level.
The article does report that fact, and approvingly quotes a labor leader who explains how the unions participate in direction of the firm.
The labor leader says that the unions have a strong stake in vocational education, among other things.
Although we look askance at union power, rightly so considering our experience in the US, UK, France, Spain, Italy and so on and so on, it could be that the social cohesion and overall attitude of the German people are able to make a net positive thing of it.
Meanwhile in the USA anyone can get a free goose - just go out to your local airport.
Hold on, now .... You can't blame those guys for the decisions American corporations made, to send manufacturing elsewhere. Nor would one normally lump the "Free Trade" crowd together with the "economic nitwits."
Americans have given away our manufacturing base without much prompting from the economic nitwits.
There are a lot of reasons for those decisions -- many of which seem to make a great deal of sense so long as you don't look at the big picture.
Small high-precision machine shop firms dot the Black Forest, just like their cousins nearby in central Switzerland.
Harry Lime: “What did we ever get from the Swiss? The cuckoo clock!”
Well, yeah, Harry. That, and precision machining technology.
Unfortunately, an article which praises a nation that has kept much of its manufacturing base, and that maintains a trade surplus, cannot be classified as conservative. People advocating those goals are automatically labeled as "protectionists" and "isolationists".
And Milton Friedman is famous for absurd (in the opinion of many) explanations of why trade deficits are just fine. "You have a trade deficit with your grocer".)
What Germany is practicing is a significant degree of economic nationalism, a terrible taboo among the American elite of both parties, and also many "conservatives".
I consider the economic nitwits to be all those who constantly spew nonsense about free trade (that doesn't exist) and free trade agreements they say will open new markets for US products, but mostly open up more cheap labor for US jobs to move to, while removing tariffs for the export of the products back to the US.
They sung the praises of opening new markets for US products during the NAFTA debate, and that agreement turned a billion dollar trade surplus with Mexico into an $80 billion deficit.
And, also, many of our trade agreements do have a (usually unstated) political goal, for which the economic consequences to the US are glossed over, or outright lied about.
German companies are often slow to respond, usually inflexible once a decision has been made or design agreed but they are excellent engineers and craftsmen and usually make really good stuff that lasts. We buy Rexroth hydraulic components for extreme applications. The Rexroth people find it hard to step far out of their box but supply very competent equipment.
I have a German made John Deere that is nearly 40 years old that has taken all the maintenance abuse Dad could dish out and it still goes on ticking.
Quality is remembered long after price is forgotten isn’t it? Doing what you know and doing it well pays off.
Let’s not forget, the Swiss not only make watches and precision parts, just a sample of what they make (real products) :
* ASEA BROWN BOVERI (power and automation technology)
* Caran d’Ache, supplier of pencils, pens and other office supplies as well as art supplies
* Ciba Specialty Chemicals
* Ciba-Geigy (materials, chemicals, dyes and drugs of all kinds)
* Flug- und Fahrzeugwerke Altenrhein, plane manufacturer, now Dornier Flugzeugwerke
* SITA — Based in Geneva. a multinational information technology company specialising in providing IT and telecommunication services to the air transport industry.
* Holcim, construction material supplier
* Kühne & Nagel, world’s biggest shipping company
* Lindt & Sprüngli, chocolatier
* Nestle ( if yuo don’t know who they are you ought to get around more often )
* Nobel Biocare (dental implantology and aesthetic dental solutions)
* Sandoz — specialty chemicals (Sandoz merged with Wander AG (known for Ovomaltine and Isostar). Sandoz acquired the companies Delmark, Wasabröd (a Swedish manufacturer of crisp bread), and Gerber Products Company (a baby food company).
* Wenger (bought by Victorinox), manufacturer of the Swiss Army knives
* Novartis (pharmaceuticals and biotech)
High labor specialisation, industry and trade are the keys to Switzerland’s economic livelihood.
Also, Electricity generated in Switzerland is 56% from hydroelectricity and 39% from nuclear power !! On 18 May 2003, two anti-nuclear initiatives were turned down: Moratorium Plus, aimed at forbidding the building of new nuclear power plants (41.6% supported and 58.4% opposed).