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Germany has much stronger labor unions than the USA, a legal requirement we forced on them when they finalized the constitution (Basic Law) of 1949. Since that

Germany has much stronger labor unions than the USA, a legal requirement we forced on them when they finalized the constitution (Basic Law) of 1949. Since that time, compare the fate of the American auto companies (GM, Ford, Chrysler and American Motors) to German auto companies (Mercedes Benz, Volkswagen, BMW). The American companies ruled the world, and then lost market ground, one went bankrupt, another was bought. The German companies pulled themselves out of the ruins of WW II and became international powerhouses.

nerdponx 6y ago
In my understanding, the United Auto Workers union were one big reason why the US automakers were bailed out in 2008. So if anything, they're (partly) responsible for keeping a dead/dying industry on life support. Can't blame them for not wanting thousands of people to lose their jobs, but market forces were definitely not favorable to American automakers at the time. Then again, American automakers seem to be figuring things out. The problem with counterfactuals is that you can never actually observe them...
- mrguyorama 6y ago
  Ah yes, the companies failing were because of overpaid employees, and not because of incompetent management and an unwillingness to produce competitive products.
  - nerdponx 6y ago
    I never said anything about why the companies were failing.
CryptoPunk 6y ago
It should be noted that Germany's wage/GDP growth has been quite stagnant since the 1970s as well. Its auto industry has been successful, but that can be attributed to numerous other factors, like its effective education system, which puts a much heavier emphasis on vocational training, its engineering culture, and government policy focused on promoting auto manufacturing, all of which can counter-act the negative effects of its unions. Also, German unions are less antagonistic to management than American unions. The UAW took over the Big Three in the 50s and 60s, and they immediately went from extremely successful, to getting to the brink of bankruptcy.
- ska 6y ago
  > Also, German unions are less antagonistic to management than American unions. The same could be said in the other direction. Fundamentally they are set up differently, and one of the results is that corporate-union relationships are more collaborative in Germany, more combative in USA.
- Aerroon 6y ago
  Another point to consider is that Germany also has/had access to cheaper labor through people moving there from the east. And later the euro allows them to export heavily while not skyrocketing the price of their currency, because other euro countries somewhat balance it out. It might be that unions are the reason why German car companies are doing well, but there are definitely other factors at play too.

nerdponx 6y ago

In my understanding, the United Auto Workers union were one big reason why the US automakers were bailed out in 2008. So if anything, they're (partly) responsible for keeping a dead/dying industry on life support. Can't blame them for not wanting thousands of people to lose their jobs, but market forces were definitely not favorable to American automakers at the time. Then again, American automakers seem to be figuring things out. The problem with counterfactuals is that you can never actually observe them...

mrguyorama 6y ago
Ah yes, the companies failing were because of overpaid employees, and not because of incompetent management and an unwillingness to produce competitive products.
- nerdponx 6y ago
  I never said anything about why the companies were failing.

CryptoPunk 6y ago

It should be noted that Germany's wage/GDP growth has been quite stagnant since the 1970s as well. Its auto industry has been successful, but that can be attributed to numerous other factors, like its effective education system, which puts a much heavier emphasis on vocational training, its engineering culture, and government policy focused on promoting auto manufacturing, all of which can counter-act the negative effects of its unions. Also, German unions are less antagonistic to management than American unions. The UAW took over the Big Three in the 50s and 60s, and they immediately went from extremely successful, to getting to the brink of bankruptcy.

ska 6y ago
> Also, German unions are less antagonistic to management than American unions. The same could be said in the other direction. Fundamentally they are set up differently, and one of the results is that corporate-union relationships are more collaborative in Germany, more combative in USA.
Aerroon 6y ago
Another point to consider is that Germany also has/had access to cheaper labor through people moving there from the east. And later the euro allows them to export heavily while not skyrocketing the price of their currency, because other euro countries somewhat balance it out. It might be that unions are the reason why German car companies are doing well, but there are definitely other factors at play too.