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Hm, it did not work like that in Germany in the 90s and 00s. Workers were persuaded not to go after raises, although profits soared, to avoid losing jobs to cou
by atmosx 8y ago
Hm, it did not work like that in Germany in the 90s and 00s. Workers were persuaded not to go after raises, although profits soared, to avoid losing jobs to countries like Poland. The German government decided to keep the surplus from exports and indirectly brag about it, as if countries are households. The result of this idiotic policy was of course that German industry scored record profits, but wages remained stagnant for ~20 years since by not investing in infrastructure the govt kept wages low “virtually”. Then negative interest rates came, the EU went berserk and the AfD is the third political power in Germany. So much for the surplus.
Back to the matter at hand... having workers in the board helps, but doesn’t secure raises.
- antman 8y agoSpecifically in one case I can recall the workers did not go after raises because the union leader was bribed and later convicted. Even after his conviction the workers could not take back the deal.
- walshemj 8y agoYes IG Metal and others seemed to have dropped the ball in not getting payback for restraint earlier.
- nstj 8y agoWhat does it mean to "keep the surplus from exports"?
- geezerjay 8y agoMy guess is that's a loaded term to reffer to Germany's positive trade balance.
- zaphirplane 8y agoI have no doubt a government is to blame for the financial stagnation or decline. Thou not clear on how they are responsible for having companies produce massive profits and keeping wages low.
- atmosx 8y ago> I have no doubt a government is to blame for the financial stagnation or decline. I never said that a government is to blame for financial stagnation or decline. I was referring specifically to Schröder's and Merkel's tenure as chancellors (2000-2018). I was wrong to add the 90s, although it is debatable if the above strategy was already planned by Kohl. > Thou not clear on how they are responsible for having companies produce massive profits and keeping wages low. You have to look at this in the EU context, otherwise it's hard to grasp. For any kind of group, which share the same currency, there must be a surplus recycling mechanism in place. Y. Varoufakis has talked extensively about the lack of surplus recycling, which was and is today a major design flaw and probably the reason the EU is going burst. In a common currency group, where no one can devalue, the exporting countries will have positive surplus vis-a-vis non-exporting countries. To revert the flow, exporting economies must invest in infrastructure (build schools, universities, public swimming pools, stadiums, roads, airports, setting up social services, public internet infrastructure, welfare which translates in jobs, etc.). The action of building infra will create scarcity in the labour market: companies will struggle to keep underpaid workforce. The secondary effect is that products, will be become more expensive. At that point the positive surplus will become balanced or negative... Then the same process should be repeated. Of course there are a lot of important details, but hopefully you get the gist.
- mpweiher 8y agoEr...in the 90s and 00s, Germany was "The Sick Man of Europe", significantly lagging the other Western European countries. So there were no soaring profits to distribute at the time, and wage restraint agreed by the unions was one of the factors in bringing Germany back (note: not "the" factor, as usual there were many).
- pluma 8y agoThe reason for Germany carrying that title at the time was the cost of reunification, not the economy itself. West Germany was still doing relatively fine but East Germany required massive investments. Germany was hit by the early 00s recession but that was hardly unique in Europe.
- atmosx 8y agoTrue, what I wrote applies for the 00s. In the 90s, Germany was referred as the sick man of Europe.