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You are right and wrong at the same time. The DM was pretty strong and was used as a reserve currency in many european countries, that regularly devalued their

by JanSt 9y ago

You are right and wrong at the same time. The DM was pretty strong and was used as a reserve currency in many european countries, that regularly devalued their respective currency. The current german export strength is based (at least, there may easily be more) on four factors: 1) The weak Euro. Personally, I hate it because the other european countries cannot compete with Germany. Historically, they would have devalued their own currency and thus gained competitiveness relative to Germany. There is no such mechanism left now, and that's terrible for Europe. However, the salary in Germany is way higher than in the South-Europe (say Spain), so these countries should still be able to compete. They can't though, and that is mostly due to productivity, which is very high in Germany. 2) The Hartz IV reforms that added flexibility for companies and deconstructed some of the welfare state under Gerhard Schröder (the welfare state would now still be seen as hardcore-socialistic by some americans) and last but not least 3) A highly educated workforce (free university + a sophisticated apprenticeship system) + A high workplace efficiency (germans tend to be very productive at work) coupled with long recovery periods (most have 30 days off (24 days is minimum allowed) + unlimited sick days + strict rules on overtime) and a high level of automation + universal healthcare -> Workers recover quickly, have more energy when at work and are less stressed. 4) Inflation-adjusted wages have actually declined in the last ten years making german products even cheaper for other countries. That' terrible for everyone. Most Germans would rather see a stronger Euro - there is no way to make that happen though. Currency markets are no longer adjusting properly which is a huge distortion and leads to many problems

crdoconnor 9y ago
>The Hartz IV reforms that added flexibility for companies The Hartz reforms suppressed wages and made the average German poorer: https://ideas.repec.org/a/wej/wldecn/557.html https://ideas.repec.org/a/wej/wldecn/557.html Germany's industrial success was evident years before they went into effect. Hartz is like trickle down economics and a lower minimum wage: the wealthy have good reason to love it and the wealthy will make up spurious reasons why you should love it too - which many people will believe. >A highly educated workforce China achieved a similar measure of manufacturing success with an education system that was a great deal worse while the UK has an equally good education system and did not achieve anything like Germany's manufacturing prowess. The difference in the British and German education system probably has more to do with the industrial pressures than it does the nature of the education systems themselves. If the UK followed a similar export-driven path, they would probably have more apprenticeships and fewer people going to Uni to study English lit. So no, I don't think it's that. >Inflation-adjusted wages have actually declined in the last ten years making german products even cheaper for other countries. That' terrible for everyone. Not everyone. German industrialists (like the guy who wrote this article) love lower wages.
- RobertoG 9y ago
  "Not everyone. German industrialists (like the guy who wrote this article) love lower wages." That's one of the keys for understanding what is going on. It's surprising how little we heard it.
- JanSt 9y ago
  > All the Hartz reforms did was suppress wages and make the average German poorer. That's exactly what I'm saying. (edit: on the wages and poorer part; it's of course _NOT_ everything they did) > Germany's industrial success was evident years before they went into effect. > Hartz is like trickle down economics and a lower minimum wage: the wealthy have good reason to love it and the wealthy will make up spurious reasons why you should love it too - which many people will believe. Without those reforms Germany would be part of the European crisis. It was called "the sick man of Europe" not long ago, not without a reason. > China achieved a similar measure of manufacturing success with an education system that was a great deal worse They did mostly mass production by hand while german factories are mostly automated and people there do a lot of higher-value work that requires much more knowledge than the chinese kind of manufacturing. > while the UK has an equally good education system and did not achieve anything like Germany's manufacturing prowess. The UK is and has been much more focused on finance. The brightest will join a bank there, while in Germany they will engineer new things. Germany has 2-3x the number of patents per year compared to the UK > Not everyone. German industrialists (like the guy who wrote this article) love lower wages. Sure, everyone is wrong. Nearly everyone would be right.
  - crdoconnor 9y ago
    "Without those reforms Germany would be part of the European crisis. It was called "the sick man of Europe" not long ago, not without a reason." It would have been fine. Germany was labeled the sick man of Europe in the late 90s. It wasn't Hartz that gave it an economic boost, it was joining the Eurozone. Plenty of other countries have had similar reforms and not experienced any beneficial stimulus (although that doesn't stop European elites trying to ram a pseudo-Hartz down everybody's throats). "They did mostly mass production by hand while german factories are mostly automated and people there do a lot of higher-value work that requires much more knowledge than the chinese kind of manufacturing." This is simply an artefact of the Chinese being poorer while they first enacted this policy. They moved up the value chain and are now close to the top - they're building commercial airliners and designing and building phones every bit as good as an iPhone. In spite of that this education system is still pretty poor and China has not engaged in any reforms similar to Hartz.

by JanSt 9y ago

crdoconnor 9y ago

>The Hartz IV reforms that added flexibility for companies The Hartz reforms suppressed wages and made the average German poorer: https://ideas.repec.org/a/wej/wldecn/557.html https://ideas.repec.org/a/wej/wldecn/557.html Germany's industrial success was evident years before they went into effect. Hartz is like trickle down economics and a lower minimum wage: the wealthy have good reason to love it and the wealthy will make up spurious reasons why you should love it too - which many people will believe. >A highly educated workforce China achieved a similar measure of manufacturing success with an education system that was a great deal worse while the UK has an equally good education system and did not achieve anything like Germany's manufacturing prowess. The difference in the British and German education system probably has more to do with the industrial pressures than it does the nature of the education systems themselves. If the UK followed a similar export-driven path, they would probably have more apprenticeships and fewer people going to Uni to study English lit. So no, I don't think it's that. >Inflation-adjusted wages have actually declined in the last ten years making german products even cheaper for other countries. That' terrible for everyone. Not everyone. German industrialists (like the guy who wrote this article) love lower wages.

RobertoG 9y ago
"Not everyone. German industrialists (like the guy who wrote this article) love lower wages." That's one of the keys for understanding what is going on. It's surprising how little we heard it.
JanSt 9y ago
> All the Hartz reforms did was suppress wages and make the average German poorer. That's exactly what I'm saying. (edit: on the wages and poorer part; it's of course _NOT_ everything they did) > Germany's industrial success was evident years before they went into effect. > Hartz is like trickle down economics and a lower minimum wage: the wealthy have good reason to love it and the wealthy will make up spurious reasons why you should love it too - which many people will believe. Without those reforms Germany would be part of the European crisis. It was called "the sick man of Europe" not long ago, not without a reason. > China achieved a similar measure of manufacturing success with an education system that was a great deal worse They did mostly mass production by hand while german factories are mostly automated and people there do a lot of higher-value work that requires much more knowledge than the chinese kind of manufacturing. > while the UK has an equally good education system and did not achieve anything like Germany's manufacturing prowess. The UK is and has been much more focused on finance. The brightest will join a bank there, while in Germany they will engineer new things. Germany has 2-3x the number of patents per year compared to the UK > Not everyone. German industrialists (like the guy who wrote this article) love lower wages. Sure, everyone is wrong. Nearly everyone would be right.
- crdoconnor 9y ago
  "Without those reforms Germany would be part of the European crisis. It was called "the sick man of Europe" not long ago, not without a reason." It would have been fine. Germany was labeled the sick man of Europe in the late 90s. It wasn't Hartz that gave it an economic boost, it was joining the Eurozone. Plenty of other countries have had similar reforms and not experienced any beneficial stimulus (although that doesn't stop European elites trying to ram a pseudo-Hartz down everybody's throats). "They did mostly mass production by hand while german factories are mostly automated and people there do a lot of higher-value work that requires much more knowledge than the chinese kind of manufacturing." This is simply an artefact of the Chinese being poorer while they first enacted this policy. They moved up the value chain and are now close to the top - they're building commercial airliners and designing and building phones every bit as good as an iPhone. In spite of that this education system is still pretty poor and China has not engaged in any reforms similar to Hartz.