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If Germany switched back to the Deutsche Mark tomorrow, their currency would instantly shoot up in value relative to the rest of the EU. That'd make their expor

If Germany switched back to the Deutsche Mark tomorrow, their currency would instantly shoot up in value relative to the rest of the EU. That'd make their exports less competitive and make the exports of Greece, Portugal, Spain and Italy more competitive. It's not just the currency though. The "German model" has been to keep wages depressed. That's also how their exports are "cheaper". Make no mistake the result has been to enrich German capital at the expense of labor (even German labor). https://www.economist.com/leaders/2017/07/08/why-germanys-current-account-surplus-is-bad-for-the-world-economy https://www.economist.com/leaders/2017/07/08/why-germanys-cu... https://theconversation.com/questioning-the-claim-of-germanys-employment-miracle-106895 https://theconversation.com/questioning-the-claim-of-germany...

Dylan16807 7y ago
> If Germany switched back to the Deutsche Mark tomorrow, their currency would instantly shoot up in value relative to the rest of the EU. I don't see how that stops them from selling things at the same price as ever, denominated in a neutral currency. > It's not just the currency though. The "German model" has been to keep wages depressed. That's also how their exports are "cheaper". Paying your workers less does make things cheaper, so I'm not sure why you used scare quotes.
segmondy 7y ago
if German wages were depressed and labor was so cheapened, how come they are still able to save more than their counterparts?
- adventured 7y ago
  They consume less. Their economy is heavily tilted to being an export power rather than a consumer economy. Household consumption is around 52% of their GDP. For the US it's closer to 67-68%. Germany's personal savings rate is about 10.x%. The US - infamously tilted toward consumer spending - is actually not far behind at 8.x% (up from a low of 2.2% in 2005).
  - gingabriska 7y ago
    >Household consumption is around 52% of their GDP. For the US it's closer to 67-68%. Wonder how much of that is healthcare and education which is wayyy expensive in US.
Barrin92 7y ago
>Make no mistake the result has been to enrich German capital at the expense of labor (even German labor). it's simply a cultural preference. Germans have accepted lower wages for general full-employment and job security even in times of recession. It is exceedingly rare for qualified German workers to ever have to switch jobs during economic downturns because the somewhat lower levels of negotiated pay give companies breathing room to act socially equitable. the hire and fire and short-term consumption mentality that dominates american labour contracts has never been perceived as desirable in Germany.
- freeflight 7y ago
  > Germans have accepted lower wages for general full-employment and job security even in times of recession. They haven't really, they ended up giving up more and more job-security, with stagnating wages, to keep the sham of "full employment" going. Something that's been especially affecting West Germany since reunification, where previously wages were extremely high. But contrary to popular belief, even in Germany the labor markets were quite "liberalized" over these last couple of decades [0]. Nowadays plenty of low/middle-class Germans having to work two part-time jobs and still receiving government assistance, or unemployed people getting "loaned out" by the Arbeitsagentur to private companies as cheap 1€ labor force [1]. With programs like those, it's not very difficult to make your employment statistics look amazing: On paper barely anybody is actually unemployed because in reality most of them are "hidden away" in pointless training programs or straight up subsidizing the labor costs of private companies. [0] https://www.diw.de/documents/publikationen/73/diw_01.c.567683.de/diw_sp0936.pdf https://www.diw.de/documents/publikationen/73/diw_01.c.56768... [1] https://en.wikipedia.org/wiki/Working_opportunities_with_additional_expenses_compensation https://en.wikipedia.org/wiki/Working_opportunities_with_add...
  - Barrin92 7y ago
    yes, the hartz reforms have liberalised the very low-end of the labour market, but it seems like a mis-characterisation to declare the German model dead as a result. If you pick up a vocational training path in Germany and you get hired by a large company, you're still in a very, very stable employment relationship. Germany's middle-class relatively speaking to many other countries is still fairly intact which is reflected in the low priority that class issues or employment has in German politics. Not many people in Germany fall into the 1$ job market, and it should be pointed out that (IIRC) as time went on the majority of part-time jobs has converted into full-time employment.
southerndrift 7y ago
I don't disagree, but I think that switching back to Deutsche Mark wouldn't be such a big problem since it would essentially be the Swiss situation. The exchange rates don't have to be high because Germany could print money or go on a buying spree until a target rate is reached.

Dylan16807 7y ago

> If Germany switched back to the Deutsche Mark tomorrow, their currency would instantly shoot up in value relative to the rest of the EU. I don't see how that stops them from selling things at the same price as ever, denominated in a neutral currency. > It's not just the currency though. The "German model" has been to keep wages depressed. That's also how their exports are "cheaper". Paying your workers less does make things cheaper, so I'm not sure why you used scare quotes.

segmondy 7y ago

if German wages were depressed and labor was so cheapened, how come they are still able to save more than their counterparts?

adventured 7y ago
They consume less. Their economy is heavily tilted to being an export power rather than a consumer economy. Household consumption is around 52% of their GDP. For the US it's closer to 67-68%. Germany's personal savings rate is about 10.x%. The US - infamously tilted toward consumer spending - is actually not far behind at 8.x% (up from a low of 2.2% in 2005).
- gingabriska 7y ago
  >Household consumption is around 52% of their GDP. For the US it's closer to 67-68%. Wonder how much of that is healthcare and education which is wayyy expensive in US.

Barrin92 7y ago

>Make no mistake the result has been to enrich German capital at the expense of labor (even German labor). it's simply a cultural preference. Germans have accepted lower wages for general full-employment and job security even in times of recession. It is exceedingly rare for qualified German workers to ever have to switch jobs during economic downturns because the somewhat lower levels of negotiated pay give companies breathing room to act socially equitable. the hire and fire and short-term consumption mentality that dominates american labour contracts has never been perceived as desirable in Germany.

freeflight 7y ago
> Germans have accepted lower wages for general full-employment and job security even in times of recession. They haven't really, they ended up giving up more and more job-security, with stagnating wages, to keep the sham of "full employment" going. Something that's been especially affecting West Germany since reunification, where previously wages were extremely high. But contrary to popular belief, even in Germany the labor markets were quite "liberalized" over these last couple of decades [0]. Nowadays plenty of low/middle-class Germans having to work two part-time jobs and still receiving government assistance, or unemployed people getting "loaned out" by the Arbeitsagentur to private companies as cheap 1€ labor force [1]. With programs like those, it's not very difficult to make your employment statistics look amazing: On paper barely anybody is actually unemployed because in reality most of them are "hidden away" in pointless training programs or straight up subsidizing the labor costs of private companies. [0] https://www.diw.de/documents/publikationen/73/diw_01.c.567683.de/diw_sp0936.pdf https://www.diw.de/documents/publikationen/73/diw_01.c.56768... [1] https://en.wikipedia.org/wiki/Working_opportunities_with_additional_expenses_compensation https://en.wikipedia.org/wiki/Working_opportunities_with_add...
- Barrin92 7y ago
  yes, the hartz reforms have liberalised the very low-end of the labour market, but it seems like a mis-characterisation to declare the German model dead as a result. If you pick up a vocational training path in Germany and you get hired by a large company, you're still in a very, very stable employment relationship. Germany's middle-class relatively speaking to many other countries is still fairly intact which is reflected in the low priority that class issues or employment has in German politics. Not many people in Germany fall into the 1$ job market, and it should be pointed out that (IIRC) as time went on the majority of part-time jobs has converted into full-time employment.

southerndrift 7y ago

I don't disagree, but I think that switching back to Deutsche Mark wouldn't be such a big problem since it would essentially be the Swiss situation. The exchange rates don't have to be high because Germany could print money or go on a buying spree until a target rate is reached.