10 ms·

The German Model

99 points by hussong 14y ago

Roritharr 14y ago
Being german i find this very blandly written. Most of the German economists know and say that Germany is only at the top right now because it has profited so much from the Euro, especially on the cost of other EU countries. I find this very shortsighted to attribute Germany's financial and economic situation to some underlying culture of perfection and expectation. As much as i'd love to attribute our current success to these things, i think we should rather look at the very fortunate fiscal situation the EU positioned us in.
- Tichy 14y ago
  Do you have articles about this "benefiting from the Euro" thing? Being German myself, I still don't understand what they mean - and btw this seems mostly to be an accusation by the struggling European countries, not "most German economists"? So how does it work - how do we profit from the Euro, on the cost of other EU countries?
  - sebbi 14y ago
    Germany is an export country. The Euro enables us (yes, German too) to sell our goods in the Euro-zone without having to worry about exchange rate fluctuations.
  - cdavid 14y ago
    The general idea is that Germany, since 2000 or so, did what is essentially an internal devaluation, by freezing salaries. This only works because Germany was the only big economy within the Eurozone to follow this policy. Note that GDP increase was not especially high in Germany compared to other countries with a similar size within the Euro (e.g. France did better in the 1999-2011 period: http://fatasmihov.blogspot.co.uk/2011/12/internal-devaluation-german-style.html http://fatasmihov.blogspot.co.uk/2011/12/internal-devaluatio...). This policy cannot possibly work if other countries follow it within the Euro zone.
    - Tichy 14y ago
      What does that have to do with the Euro? And why can such a policy not work if "other countries follow it within the Euro" zone? Also I wasn't aware that the government determines the salaries here in Germany. You are aware that the cold war is over and capitalism won, even here in Germany? We don't have a communist/socialist regime that can simply set salaries. Although the government can of course affect salaries by raising taxes (less net salary for everyone).
      - cdavid 14y ago
        If everybody decreases their labour cost everything else being equal, then obviously you don't get a competitive advantage from it. You just made everyone poorer. See also http://seekerblog.com/2012/01/17/euro-crisis-german-unit-labor-cost-repression-is-the-primary-cause-of-periphery-stress/ http://seekerblog.com/2012/01/17/euro-crisis-german-unit-lab... for the same line of arguments. Germany essentially gained market shares at the expense of other eurozone countries (0-sum game) instead of actual increases in productivity (which is not a 0-sum game). As far as pressure for decreasing labour cost, this is pretty much uncontroversial. I did not say that Germany had a gvt authority setting salaries, but various factors such a pressure from high unemployment in the early 2000, and lower-than-eurozone inflation helped it (see e.g. http://www.voxeu.org/article/how-restore-competitiveness-eu http://www.voxeu.org/article/how-restore-competitiveness-eu - even though that article argues something closer to the opposite of what I am arguing here).
  - Roritharr 14y ago
    A good article about it in german is here: http://www.handelsblatt.com/politik/international/vorteile-der-gemeinschaftswaehrung-der-euro-darf-nicht-zerbrechen/6738998.html http://www.handelsblatt.com/politik/international/vorteile-d... the tl;dr: Germany is and was always a strong export oriented nation with our main-markets being in the direct vicinity. Before the Euro many of those neighbors hadn't had the economic lending power to build up their infrastructure and buy german goods. With the introduction of the Euro these countries could suddenly lend money on the international markets with the support of the german rating, and spend that borrowed money to a large degree in Germany. (Greece is still buying German tanks...) tl;dr of the tl;dr: Germany is rich because other countries bought our stuff with money they could lend because of the trust the Euro had because of Germany.
    - Tichy 14y ago
      OK I get that, but won't that backfire in a big way? It's happening right now, I guess... Still, I don't really think Germany can be blamed. Unless you think of the "weaker" countries as children who can't take responsibility for themselves. But why would Germany be smarter? I think overall we are just lucky atm (or were lucky for a while...).
      - Roritharr 14y ago
        Thats why i said, the euro put Germany in a very fortunate situation. I can't imagine Ex-Chancellor Kohl expecting it to play out this way. Its not that Germany is in any way smarter, Germany would probably have done the same, even if it were just on a governmental or banking level, as private lending is very conservative in Germany.
      - dan00 14y ago
        "Still, I don't really think Germany can be blamed. Unless you think of the "weaker" countries as children who can't take responsibility for themselves." Well, you can't directly blame Germany, that's right. But someone had to lend all that money, and I don't believe, that no one could see the real financial situation in these countries. So, what did the banks wrong, and why nobody looked after the banks?
  - rbehrends 14y ago
    Because Germany is an export-oriented economy with a huge trade surplus, primarily trading with other EU countries. If the Euro didn't exist, the natural course of events would be for countries at the receiving end (who are running a trade deficit) to devalue their currencies. That would cut into German exports. But with a unified currency, devaluation to counter trade or current account imbalances is impossible.
    - Tichy 14y ago
      I have to admit, I never understood the point of devaluing your currency, except maybe for sneaking taxes by your citizens. Say you want to buy a German car that costs 20000€, and your country uses Drachme, not Euro. How does devaluing Drachme help you afford the car? if you say "no, a Drachme is not worth 0.5 Euros anymore, it is only worth 0.05Euros", it only means you have to 10 times more Drachmes for the car than before? Say you produce olives, and one pound of olives goes for 1 Eur. So you need to sell 20000 pounds of olives to afford the car. How does the valuation of Drachme enter into that?
      - czr80 14y ago
        You don't buy a BMW. But: 1) You buy a local car because the foreign ones are all too expensive 2) BMW decides to build a plant in your country because it is so much cheaper. Both of those things help grow your economy, growth leads to a stronger currency, and then you buy a nice new BMW.
        Tichy 14y ago
        Why is it cheaper to build the factory in your country? Instead of paying with a devalued currency, you could simply pay less Euros? Same for buying local vs foreign cars - I just don't see how the currency makes a difference (or the possibility to devalue the currency). Let's stick to olives: either you get x Euros for a pound of olives, or y Drachmes. In the end, if you want to buy a car, you have to exchange the Drachmes into Euros. You should get exactly x Euros for y Drachmes. Otherwise there would be an opportunity to get infinite olives for free. So it doesn't matter how much you devalue the Drachmes, you'll always get the same amount of Euros per pound of olives.
  - HSO 14y ago
    It's a strawman. In every country, you will find sectors (and the associated people) who have a net gain from the EUR and some with a net loss. It doesn't really matter and would be impossible to figure out who benefits and loses more, both on the micro and the macro level. I myself think about it in this (admittedly broad stroke) way: 1) The EUR is not just an economic project. It is a political instrument. That's why it exists, and that's what will determine its future. The economics is only a constraint (alas, now binding) not the objective. 2) No matter the history, a breakup now would be incredibly costly for everybody. Bob Rubin, US treasury secretary under Clinton, aptly described it as "Lehman times x". That's why a complete reversal is highly unlikely. 3) There is a solution: Peripheral states must accept a German-dominated external voice in their fiscal affairs; Germany must let the ECB monetize the debt. Neither of which is politically realistic. 4) In the absence of a conventional political solution, the continent "needs" a holy-shit-moment, something that will scare enough people sufficiently s.th. politicians can reach the costly compromise (3). So I expect one to happen. 5) What journalists, economists, and whoever writes about the success of a country ex post does not matter, it's just noise. Think about what people wrote about Japan in the 80s, the "Asian tigers" in the 90s, the "Washington consensus", etc etc. Until just a few months ago, it was China's state-dominated model, now it's Germany's social-consensus-based turn. Or, to stay with Germany, remember the Economist cover about "the sick man of europe"? It's quite similar to the attribution bias when successful people write autobiographies (or have biographies written about themselves). People like "the illusion of control", and a nice story with a neat, understandable "explanation" with max three identifiable causes or "factors" that led to the observation supports it. Personally, I think the best way to test your understanding of how the world works is to make predictions and bet on them, preferably money, less preferably your reputation or your ego. So yeah, this article is probably blah but I will read it anyway because it will probably make me feel good, having grown up in and thus having links to the successful system du jour ;-)
    - lispm 14y ago
      good comment
    - stfu 14y ago
      1) The EUR is not just an economic project. It is a political instrument. That's why it exists, and that's what will determine its future. The economics is only a constraint (alas, now binding) not the objective. This can not be repeated often enough. All the gloom and doom commentators making break-up predictions are highly underestimating this aspect. EU behavior can not be explained by rational/economic factors based logic.
  - czr80 14y ago
    1) Cheap currency: "For German companies, the sinking euro acts as a kind of crisis buffer. While it reduces demand for German products within the euro zone, these make up only around 40 percent of the country's exports. But for the rest of the world, a weak euro means cheaper German products, which means they're more competitive." 2) Cheap credit: "But recently even interest rates on German bonds with longer maturities have decreased significantly. The federal government is saving a bundle. The reason for the windfall? Amid the ongoing euro crisis, Germany is one of the few borrowers that are still regarded as a safe haven. Many investors would rather lend the government money at bargain-basement rates than risk losses." 3) Inability of other countries to (quickly) adjust given single currency constraints, leading to, for example: "As mass protests form in Spain due to high unemployment among young people, Germany is benefiting from an influx of new skilled professionals. An increasing number of southern Europeans looking for work are heading north to prosperous Germany." http://www.spiegel.de/international/europe/profiting-from-pain-europe-s-crisis-is-germany-s-blessing-a-808248.html http://www.spiegel.de/international/europe/profiting-from-pa...
  - jordanlev 14y ago
    I just read this article which explains it nicely (IMO): http://www.stratfor.com/weekly/financial-markets-politics-and-new-reality http://www.stratfor.com/weekly/financial-markets-politics-an...
- hessenwolf 14y ago
  I agree. My colleague who sits across from me finished uni when Italy was booming and Italy knew all the economic answers. I finished uni when Ireland was booming and Ireland knew all the economic answers. Germany is booming, but most people don't know why. Ten years ago it was absolutely the sick man of Europe, and now here in Germany they the economic answers? Erm, ja, bestimmt.
- JackFr 14y ago
  I would go one step farther and say it is poorly written. It is rambling, disorganized, and lacks both both narrative structure and thematic clarity. It offers no systematic analysis, and confounds anecdotal evidence with personal rembrances. It reads like a the runner-up entry in a write like Thomas Friedman competition (which is not a good thing.)
- woodpanel 14y ago
  Most of the German economists know and say that Germany is only at the top right now because it has profited so much from the Euro hmm must be a different Germany you live in ;-) DER SPIEGEL from july 24th (http://www.spiegel.de/wirtschaft/soziales/euro-krise-oekonomen-warnen-vor-katastrophe-a-846154.html http://www.spiegel.de/wirtschaft/soziales/euro-krise-oekonom...): 172 renown German economists published a joint appeal to stop the government from implementing the ESM. While in response only 17 renown european economists made their plea in favor of the governments pro-Euro policy.
  - Roritharr 14y ago
    The question whether or not to support the ESM is completely separate from the question where Germanys current success is coming from. The 172 renowned economists are basically stating the obvious that covering for the spending sprees that our lending-power allowed the slow-economy EU countries will hurt the German economy. To me the question if we should or shouldn't support the ESM is a moral one to which i don't have an answer. We benefited from the Euro the most and the very system that allowed our success is now asking who pays the bills. Tough question to answer.
  - sentenza 14y ago
    No, actually he is spot on. The European crisis is layered like an onion and if you peel away the outer layers like banking, sovereign debt and all the things we hear so much about in the press, then you will arrive at the core. That core is a inner-European trade imbalance which makes the existence of the Euro blatantly unsustainable. If you look at the overall trade balance between the EU and the rest of the world, you will see that lately, imports have been about 20 % larger than exports. Germany on the other hand is (and has been for years) an extreme exporter. Now if you add up the numbers, you will see that obviously there must be some very heavy importers within the EU. These importers are the countries that we all know and love from the news reports and the way through which they financed their extreme trade imbalances was through massive private debt (not public debt, that's an outer layer). Here are some numbers on the trade balances (yeah, I know, it's wikipedia. But they present both figures in a readable manner and they list the sources.): http://de.wikipedia.org/wiki/Au%C3%9Fenhandelsstatistik#Entwicklung_der_Au.C3.9Fenhandelswerte_f.C3.BCr_Deutschland_und_Europa_.28EU-27.29 http://de.wikipedia.org/wiki/Au%C3%9Fenhandelsstatistik#Entw... Germany was only able to reach its position as such a massive exporter by 1. Being incredibly competitive to begin with 2. Artificially boosting competitiveness by 10+ years of nonexistent wage increases, (also crippling German domestic demand) 3. Having a majority of its most important trading partners locked inside the Euro, so that they couldn't mitigate their trade imbalance through inflation (better cash in your Lira fast...), thus boosting the net worth of German exports And that number 3 is why this crisis is never going away. Yes, never. All "they" can do is to repair parts of the outer onion shells, buying time. However, that inner core continues to exert a force towards destabilizing the European system. Every single fix to the trade imbalance problem, probably also all partial fixes, are politically infeasible. You cannot have a continuous flow of money from one part of the European Economy towards the other without some sort of approximately equal flow of money in the other direction. What kind of flow? If we look at the United States as a group of States that is of roughly equal size and has about the same internal inequalities between states as the EU there emerges a list of transfers that are effective in couteracting trade imbalances: Social security, Medicare, Common Bank Insurance, Military spending (wanna bet there are per capita more soldiers from Alabama than from Maryland?) and so on. If this is what can fix this crisis, then I am all for it. However, it seems that I am part of a minority here in Europe. So collapse it is. Ein Ende mit Schrecken oder ein Schrecken ohne Ende.
- foobarian 14y ago
  I always wondered how much Germany benefited from the restrictions on keeping a standing army, and being (effectively) defended by the U.S. military. The chunk of budget spent on that surely must have been used more productively.
  - morsch 14y ago
    I'm not sure there are any such restrictions anymore. Germany has a standing army of about 200k soldiers, down from 450k in 1990. The US still has about 50k troops in Germany, but I don't think they're defending us (or controlling us) as much as they're hanging around in an allied state closer to multiple conflict zones.
  - lispm 14y ago
    Which restriction do you think of? Germany had many hundred thousands of soldiers. A huge standing army. Lots of military equipment. We bought stuff from the US. Germany even paid the US for the presence in Germany. We even paid you for the first gulf war. What Germany did though: once the cold war was over, we reduced our military. The threat was over. Accordingly the US reduced its presence in Germany. The rest of the US presence here is working on keeping the US empire. For example the central command for africa is in Germany. Hospitals pick up the soldiers from Iraq and Afghanistan. Logistics...
- tylee78 14y ago
  being German myself, I cannot agree more. I was sometimes wondering if the author of this article was in the same country that I left. But I have seen this tendency before: people who visited Germany in the 60s, 70s and 80s have a "mental picture" of Germany that only partially fits reality. The structural unemployment is still very high, the educational system is a mess, the tax rates and regulations are borderline insane.
- lispm 14y ago
  I thought that our economic success had something to do with working people who produce stuff which is in high demand worldwide: machines, tools, cars, trains, aircrafts, energy systems, chemicals, ...
  - morsch 14y ago
    That just means that "we" are selling stuff people would like to buy -- the supply side --, not that they are buying it from "us", or even buying it from anybody at all -- the demand side. Being able to buy stuff requires money, and one way of getting money is borrowing it. The Euro resulted in incredibly low interest rates for all the EUR countries, making borrowing money very easy. Certain German entities were also very happy to lend out, having lots of spare money. Having money is not enough, though, you need to have money in a stable currency. So far the Euro has been very stable. Many of the countries that have got the Euro got in by falsifying statistics, something that was widely known at the time. Finally, Germany engineered it's economy into extreme efficiency. You can do that by being super smart, broadly speaking, and by being super cheap. I guess Germany did the former; it certainly did the latter and Germany's working force suffered for it: increased retirement age, increased VAT, stagnant net real wages, reduced benefits, reduced unemployment, etc. The end result: We drove our economy with a focus on exporting stuff to countries which can't really afford it, buy pay us with money borrowed from us. If/when they default, we're left with a huge amount of worthless defaulted loans, a huge export oriented economy that suddenly has lost most of its customers and not enough internal demand to make up for it.
    - lispm 14y ago
      'reduced unemployment' is hardly suffering. The opposite was true: we had, and still have, a lot of people without employment perspective. The main goal of the policies was to drive unemployment down - especially in the new states. > Many of the countries that have got the Euro got in by falsifying statistics A few. Not 'many'. You seem to go for the easy explanation. In the EU and the Eurozone countries are still responsible for their politics. Even their economic politics. It's also not Germany which lend especially much money to our southern partners in the EU. Check out France, US, Britain, ... The speculators were most from areas and industries which were not especially 'German'. German banks were dumb enough to follow the lead of the investment banks and speculators. Each country has to: * reduce debt * keep an educated work force * invest money wisely * prevent bubbles That Spain had a housing bubble is not Germany's fault. That Greece has incompetent economics and finance is also not Germany's fault. Our fault was to sell them submarines. But I bet the Nato partners were more than happy that Greece wanted them. That Ireland's economy collapsed was also not our fault. If you are not aware the is a global economy competition. Germany wanted to keep Europe able to compete. Many others made themselves a nice time - brought their money to offshore tax havens, to Switzerland, speculated in London, speculated in the housing boom. Its not really our fault that we have no housing bubble, our investment banks were stupid enough, but the damage could be contained, we reduced our budget deficit, ... Instead of blaming Germany, you should look at the incompetent politicians of those countries who are not able to collect taxes, not able to control bubbles, not able to invest in the 'real' economy instead of virtual ones, who are not able to balance their budgets. Germany made enough mistakes on their own. For example we sold infrastructure to foreign investors. We were told that this was so much better. Huge mistake.
maayank 14y ago
Yesterday I submitted an interview with the co-founder of SAP, a leading figure in the technology sector[1], about the state of the software sector in Germany. He had lots of criticism and comparisons with the U.S., so if you find this article interesting consider reading that interview: http://news.ycombinator.com/item?id=4344429 http://news.ycombinator.com/item?id=4344429 [1] I'm a former employee of SAP, so I'm biased :-)
- mbesto 14y ago
  Former SAP employee here too :) Great interview. Awesome questions and always enjoy Plattner's view of the world. ps- Where were you based? I was in Newton Square and St.Leon/Rot.
  - maayank 14y ago
    Research at Ra'anana Israel: http://goo.gl/maps/M7Xcw http://goo.gl/maps/M7Xcw It is a great interview! Both the reporter and Hasso were not afraid to be bold. It is also a common criticism in the local financial newspapers that Israeli startups have a problem with rapid international growth because of language/cultural differences, so it was interesting for me to compare what he said also to the local scene and not just the American one.
    - mbesto 14y ago
      Very cool. I worked in support, and would deal with some of the portal guys from time to time in Ra'anana
      - maayank 14y ago
        Would be interesting to hear your take on [1] :-) In any case, if you're ever in the greater Tel Aviv area give me a shout! (my email is at my profile) [1] http://www.quora.com/Israeli-Culture/Why-are-Israeli-people-so-hard-to-work-with/answer/Ohad-Samet http://www.quora.com/Israeli-Culture/Why-are-Israeli-people-...
_delirium 14y ago
Oddly this doesn't talk a lot about the German model, despite that being the title. The education-tracking system is just about the only structural feature the article discusses. A big part of the German model is ordoliberalism (http://en.wikipedia.org/wiki/Ordoliberalism http://en.wikipedia.org/wiki/Ordoliberalism) and the "social market economy", a particular view on the relationship between the state and private sector. The German approach to labor-employer relations is another part of the model, oriented around consensus-building between sector-wide unions and sector-wide employers' federations.
harryf 14y ago
As a half English, half German who's had a fair bit of professional contact with the US, I'd argue the main difference between the US and Germany is short term vs. long term thinking The US is brilliant at the short term, as characterized by it's sales culture; the mentality of sell first, build second is extremely effective in allowing some forms of innovation, capturing market share fast and eliminating certain forms of waste. This of course was traditionally offset by attracting talent worldwide, such as academics and engineers, to immigrate to the US By contrast Germans are famous for their engineering. It's much more a build first, sell second approach that's characterized by long term thinking and planning. Socially that's also reflected education where everyone has a chance, irrespective of your parents income - having a well educated populace is a huge asset and that's seen as a long term investment. All that said, Germany's economy may be less wonderful than it seems. While the US seems to solve any economic issues by "printing money", Germany props themselves up with exports - that a country of just 80 million people is the world's 3rd largest exporter ( http://en.wikipedia.org/wiki/List_of_countries_by_exports http://en.wikipedia.org/wiki/List_of_countries_by_exports ) is kinda... strange and makes we wonder if something doesn't quite add up? Having worked for a couple of years in Germany, one thing that struck me is taxes came to almost 50% of my salary. Another impression was my generation in Germany - currently in their 30's - wasn't very motivated toward their own careers. That might not entirely be a bad thing - less of a rat race - but it comes across as a generation that doesn't really know what it's purpose is. So I have a kind of gut feeling that the German focus on exports is done at the cost of "self neglect".
- jsilence 14y ago
  "Socially that's also reflected education where everyone has a chance, irrespective of you parents income" Unfortunately exactly the opposite is true.
  - fberger 14y ago
    Can you be more precise what you're referring to? Germany's lower school system of deciding at age 10 whether you go to a school (Gymnasium) that allows you go to college later or not is definitely a big issue. But when I went to college in Germany 10 years ago in my hometown, the cost was minimal (< 300 Euros per semester including unlimited public transport). Also there are regulated student loans (Bafoeg) that less affluent students can take advantage of.
jsilence 14y ago
Interresting read. The inside perspective from within Germany is different. Yes the Mittelstand is the backbone of our economy, but it is also the majority that thinks it is being f*cked over a lot by government decision which favor big companies with huge lobbying budgets. The Mittelstand carries the weight, but has little room and opportunity for shaping our society. A lot of neocapitalistic concepts have been implemented during the last decade and have crippled our social security system and eroded workers rights. The dreaded subcontracted labour is on the rise. Welfare/social subsidy levels have been ruled inhumane by our courts. Our highest court has ruled that our voting system is against our contitution. Twice. What an embarrassment. The dual education system mentioned in the article is indeed quite good. Apart from that our school and university education system does have serious flaws. In international comparison (PISA test) we are way apart from the best in class and nowhere else but in Germany does the quality of your education correlate as much with the income of your parents as it does here. More money, better education and vice versa. The tight organization and structure praised in the article also does have its downsides. For example if you wanted to open a bicycle repair shop, you need to have a Zweiradmechanikermeister. (Meister = Master). So you need to be or employ someone who has been educated for several years as a bicycle repair mechanic. In a company that has a certificate for educating bicycle repair mechanics. Yes, almost all of the space is managed. Over and over. Example: A club owner brought a ship, renovated it and made it into a bistro/bar/club boat. For the permission to use the ~20m of harbor space ranging from the ship to the nearby road he had to negotiate with four different parties. Just because there are abandoned rairoad tracs running across. Four different bureaucratic entities. I am a hobbyist bee keeper. Which makes me sort of a registered farmer. With a farmer registration number and with registered bee stands. With insurance. With a local bee keeping society and the regional bee keeping society and the national bee keeping society I have to be member of (by proxy). If I want to sell some of the honey, I have to comply with nine different laws. For example I have to comply with a packaging law that tells my what and how I have to declare the honey on the label. Despite a broad public consensus that genetically modified food should be labelled as such, lobbyists prevented just that. But. If my bees collect pollen from genetically modified plants, I can no longer sell that honey. So now I have to educate my bees to become certified honey collection masters and teach them the difference between unmodified and modified plants and teach them to only collect from the former. But the fathers of my bees died during sex and the queen despite her royal title does not have any money. No money, no education. Lately my girlfriend and I have been camping at a lake in a different city. On a paid camping ground of course. No wild camping in Germany. With a barbed wire fence around it. It almost felt like a prison camp. At midnight my girlfriend and I made a warm summer night walk around the campsite, talking little and very quietly. Yet someone from inside a camper barked at us what the fuck we thought we were doing and that there has to be peace and quiet at ten. Period. Our health care system is fundamentally broken. You don't get to see what the doctor bills to your insurance. But also your insurance does not get to see the bill. There is another layer of indirection in between called the Kassenärztliche Vereinigung which collects and anonymizes the doctors bills and sends collective bills to the insurances. You can imagine how easy it is to bill more than you worked for as a doctor. There is no control instance. In order to correct this, there are quarterly billing caps for doctors. Thus if you get sick in the middle of march, june, september or december, when the caps are hit, then either you don't get treated, or the doctor treats you without getting paid. A bad doctor will go on vacation four times a year, a good doctor will treat you on his own expense. I wish I were joking. The city of Bremerhafen mentioned in the article ranges among the least favourite cities in Germany. Despite its interresting history only few people choose to live there. Sky high unemployment and an almost nonexistent social and cultural life. But hey, the article did not talk about how nice Bremerhafen is. Anyway, I guess my perspective is one of the "its always greener on the other side" variety. Germany is indeed a good place to live. I sometimes wish we would not try to be Weltmeister in everything so that we wouldn't have to solve Europes problems. (We still benefit from the european union, so keeping Europe tight and up and running benefits our own situation. So.)
yk 14y ago
Interesting article, which summarizes nicely how German conservatives like to view the country. So I think it is more interesting as a report how our current ruling (center right) coalition views Germany than as being grounded in reality.
- sprash 14y ago
  Exactly! This article brings up a lot of anecdotal evidence to build up stereotypes. This should ring all kinds of alarm bells. It is a propaganda piece with little basis on reality.
woodpanel 14y ago
Disclaimer: I'm form Germany and usually have a more libertarian view on things. Much of the German Model is attributed to ordoliberalism (http://en.wikipedia.org/wiki/Ordoliberalism http://en.wikipedia.org/wiki/Ordoliberalism). But to me this rather "wierd" play of liberalism itselfs seems to be more influenced by German culture than the other way around. And with "culture" I rather mean pieces of wisdom, wich every culture gathers throughout history. The most destinctive events in German history have in common that bad things happened out of chaos. And salvation (order) came from above: 1) The Thirty Years War eraded the German populace. Espacially in Brandenburg with almost 70% gone. It does not wonder that from that area, the prussians developed the proto-German clichet-like mindset of good-governance. Germany went on to be the only country in the world (for a long time) were evangelicals and catholics considered each other countrymen (http://en.wikipedia.org/wiki/Thirty_Years%27_War http://en.wikipedia.org/wiki/Thirty_Years%27_War) 2) Napoleon had to bring in social reforms and the rule of law. While our nobils had to give us back our independence and pride from Napoleon and were the ones "creating" Germany in 1871. The nobils also created social security - as a means to keep the masses from revolting. 3) While WWII and the Holocaust are examples to what evil this believe in good-order can lead to, the reaction to the loss of the first and the shame of the latter are itself shaped by German culture: - Implementing democracy with war seems to have worked in Germany, it came from above. - Denouncing anti-semitism came somewhat from above and, to some extent, the people have obtained this view. Also: - The most successful participants of the German protests of 68 were those who believed in reforming the "system from within" (http://en.wikipedia.org/wiki/Alliance_%2790/The_Greens http://en.wikipedia.org/wiki/Alliance_%2790/The_Greens) - our national-holiday is not a date where good came out of a revolt but where politicians made a contract come into effect (http://en.wikipedia.org/wiki/German_Unity_Day http://en.wikipedia.org/wiki/German_Unity_Day) - Our unions and left-parties were willingly enduring pain, in that they proactively implemented harsh reforms in the labor market and social security system. My point is, our culture makes it hard in Germany to argue against government. Even our liberals believe in the benefits of good order. The historc feedback loop tells me it might be better to endure a little pain now (eg giving up freedoms) than to endure fatal pain later (mob lynching). PS: This is not a praisal. As libertarian-tending I don't think fear of chaos is always a sign of maturity. It makes a lot of little things much more costly (http://www.youtube.com/watch?v=-oYl-Lm9a6U http://www.youtube.com/watch?v=-oYl-Lm9a6U ?! Never happening in Germany without regulatory approval and intense testing) And on the big scale: the fear of order being disturbed was also an argument against policies that gave more rights to the German jews in the 1800s. And it is the underlying argument against anything "capitalist" or "gentrifying" today.
wahsd 14y ago
I lulzed when I heard that a Wall Street Financier said "We need to learn from the German model" Wall Street will look at the "German model" and scoff at it because it is on the opposite end of the spectrum of exploitation, deception, manipulation, and fraud. Don't get me wrong, humans are involved, so the "German model" is no where near perfect either, but it is a social democracy at its core; where the government at least tries to have the best interest of as many of its people in mind as possible. That is diametrically opposed to everything on Wall Street and the aristocracy that controls our country and effectively psychologically abuses the minds of Americans to the point of schizophrenic mental illness. There is no way that anyone on "Wall Street" will learn anything, just like when they almost executed the American economy in 2008 they said "Oops! Sowy! We learned our lesson and promise to behave." And just like the primal animals they are, they continue to deceive, defraud, manipulate, corrupt, and exploit as they are building their next scheme to sell us all a house of cards.
vitaminj 14y ago
I'm one of the many guest workers in Germany. I'm not an EU citizen and I didn't speak a lick of german when I got here. I'd say over half the other engineers in my company are non-german, and most of them couldn't string a single german sentence together when they started either (some still can't!). The company has had an open engineering position for a german national (or at least native speaker) since before I started almost 2 years ago... and still haven't filled it, even after half a dozen foreigners have joined. So I can sympathise with the idea that Germany is struggling to find skilled technical workers. It's telling that a company has to resort to hiring a bunch of non-german speaking foreigners and sponsor their visas and so on. I'd find it hard to imagine a French or Italian firm doing the same thing. The article alludes to the fact that the Mittelstand firms are spread out across the countryside and many are headquartered in small villages. This is true and could perhaps be a big factor in why they find it hard to attract people - I mean, how many skilled engineers are willing to live in the middle of nowhere? I chose to work to here because the company is one of the leaders in a niche specialist field, and I certainly don't regret the decision given the amount I've learned so far. But frankly, I'd rather live in a bigger city.

99 points by hussong 14y ago

Being german i find this very blandly written. Most of the German economists know and say that Germany is only at the top right now because it has profited so much from the Euro, especially on the cost of other EU countries. I find this very shortsighted to attribute Germany's financial and economic situation to some underlying culture of perfection and expectation. As much as i'd love to attribute our current success to these things, i think we should rather look at the very fortunate fiscal situation the EU positioned us in.

Tichy 14y ago
Do you have articles about this "benefiting from the Euro" thing? Being German myself, I still don't understand what they mean - and btw this seems mostly to be an accusation by the struggling European countries, not "most German economists"? So how does it work - how do we profit from the Euro, on the cost of other EU countries?
- sebbi 14y ago
  Germany is an export country. The Euro enables us (yes, German too) to sell our goods in the Euro-zone without having to worry about exchange rate fluctuations.
- cdavid 14y ago
  The general idea is that Germany, since 2000 or so, did what is essentially an internal devaluation, by freezing salaries. This only works because Germany was the only big economy within the Eurozone to follow this policy. Note that GDP increase was not especially high in Germany compared to other countries with a similar size within the Euro (e.g. France did better in the 1999-2011 period: http://fatasmihov.blogspot.co.uk/2011/12/internal-devaluation-german-style.html http://fatasmihov.blogspot.co.uk/2011/12/internal-devaluatio...). This policy cannot possibly work if other countries follow it within the Euro zone.
  - Tichy 14y ago
    What does that have to do with the Euro? And why can such a policy not work if "other countries follow it within the Euro" zone? Also I wasn't aware that the government determines the salaries here in Germany. You are aware that the cold war is over and capitalism won, even here in Germany? We don't have a communist/socialist regime that can simply set salaries. Although the government can of course affect salaries by raising taxes (less net salary for everyone).
    - cdavid 14y ago
      If everybody decreases their labour cost everything else being equal, then obviously you don't get a competitive advantage from it. You just made everyone poorer. See also http://seekerblog.com/2012/01/17/euro-crisis-german-unit-labor-cost-repression-is-the-primary-cause-of-periphery-stress/ http://seekerblog.com/2012/01/17/euro-crisis-german-unit-lab... for the same line of arguments. Germany essentially gained market shares at the expense of other eurozone countries (0-sum game) instead of actual increases in productivity (which is not a 0-sum game). As far as pressure for decreasing labour cost, this is pretty much uncontroversial. I did not say that Germany had a gvt authority setting salaries, but various factors such a pressure from high unemployment in the early 2000, and lower-than-eurozone inflation helped it (see e.g. http://www.voxeu.org/article/how-restore-competitiveness-eu http://www.voxeu.org/article/how-restore-competitiveness-eu - even though that article argues something closer to the opposite of what I am arguing here).
- Roritharr 14y ago
  A good article about it in german is here: http://www.handelsblatt.com/politik/international/vorteile-der-gemeinschaftswaehrung-der-euro-darf-nicht-zerbrechen/6738998.html http://www.handelsblatt.com/politik/international/vorteile-d... the tl;dr: Germany is and was always a strong export oriented nation with our main-markets being in the direct vicinity. Before the Euro many of those neighbors hadn't had the economic lending power to build up their infrastructure and buy german goods. With the introduction of the Euro these countries could suddenly lend money on the international markets with the support of the german rating, and spend that borrowed money to a large degree in Germany. (Greece is still buying German tanks...) tl;dr of the tl;dr: Germany is rich because other countries bought our stuff with money they could lend because of the trust the Euro had because of Germany.
  - Tichy 14y ago
    OK I get that, but won't that backfire in a big way? It's happening right now, I guess... Still, I don't really think Germany can be blamed. Unless you think of the "weaker" countries as children who can't take responsibility for themselves. But why would Germany be smarter? I think overall we are just lucky atm (or were lucky for a while...).
    - Roritharr 14y ago
      Thats why i said, the euro put Germany in a very fortunate situation. I can't imagine Ex-Chancellor Kohl expecting it to play out this way. Its not that Germany is in any way smarter, Germany would probably have done the same, even if it were just on a governmental or banking level, as private lending is very conservative in Germany.
    - dan00 14y ago
      "Still, I don't really think Germany can be blamed. Unless you think of the "weaker" countries as children who can't take responsibility for themselves." Well, you can't directly blame Germany, that's right. But someone had to lend all that money, and I don't believe, that no one could see the real financial situation in these countries. So, what did the banks wrong, and why nobody looked after the banks?
- rbehrends 14y ago
  Because Germany is an export-oriented economy with a huge trade surplus, primarily trading with other EU countries. If the Euro didn't exist, the natural course of events would be for countries at the receiving end (who are running a trade deficit) to devalue their currencies. That would cut into German exports. But with a unified currency, devaluation to counter trade or current account imbalances is impossible.
  - Tichy 14y ago
    I have to admit, I never understood the point of devaluing your currency, except maybe for sneaking taxes by your citizens. Say you want to buy a German car that costs 20000€, and your country uses Drachme, not Euro. How does devaluing Drachme help you afford the car? if you say "no, a Drachme is not worth 0.5 Euros anymore, it is only worth 0.05Euros", it only means you have to 10 times more Drachmes for the car than before? Say you produce olives, and one pound of olives goes for 1 Eur. So you need to sell 20000 pounds of olives to afford the car. How does the valuation of Drachme enter into that?
    - czr80 14y ago
      You don't buy a BMW. But: 1) You buy a local car because the foreign ones are all too expensive 2) BMW decides to build a plant in your country because it is so much cheaper. Both of those things help grow your economy, growth leads to a stronger currency, and then you buy a nice new BMW.
      - Tichy 14y ago
        Why is it cheaper to build the factory in your country? Instead of paying with a devalued currency, you could simply pay less Euros? Same for buying local vs foreign cars - I just don't see how the currency makes a difference (or the possibility to devalue the currency). Let's stick to olives: either you get x Euros for a pound of olives, or y Drachmes. In the end, if you want to buy a car, you have to exchange the Drachmes into Euros. You should get exactly x Euros for y Drachmes. Otherwise there would be an opportunity to get infinite olives for free. So it doesn't matter how much you devalue the Drachmes, you'll always get the same amount of Euros per pound of olives.
- HSO 14y ago
  It's a strawman. In every country, you will find sectors (and the associated people) who have a net gain from the EUR and some with a net loss. It doesn't really matter and would be impossible to figure out who benefits and loses more, both on the micro and the macro level. I myself think about it in this (admittedly broad stroke) way: 1) The EUR is not just an economic project. It is a political instrument. That's why it exists, and that's what will determine its future. The economics is only a constraint (alas, now binding) not the objective. 2) No matter the history, a breakup now would be incredibly costly for everybody. Bob Rubin, US treasury secretary under Clinton, aptly described it as "Lehman times x". That's why a complete reversal is highly unlikely. 3) There is a solution: Peripheral states must accept a German-dominated external voice in their fiscal affairs; Germany must let the ECB monetize the debt. Neither of which is politically realistic. 4) In the absence of a conventional political solution, the continent "needs" a holy-shit-moment, something that will scare enough people sufficiently s.th. politicians can reach the costly compromise (3). So I expect one to happen. 5) What journalists, economists, and whoever writes about the success of a country ex post does not matter, it's just noise. Think about what people wrote about Japan in the 80s, the "Asian tigers" in the 90s, the "Washington consensus", etc etc. Until just a few months ago, it was China's state-dominated model, now it's Germany's social-consensus-based turn. Or, to stay with Germany, remember the Economist cover about "the sick man of europe"? It's quite similar to the attribution bias when successful people write autobiographies (or have biographies written about themselves). People like "the illusion of control", and a nice story with a neat, understandable "explanation" with max three identifiable causes or "factors" that led to the observation supports it. Personally, I think the best way to test your understanding of how the world works is to make predictions and bet on them, preferably money, less preferably your reputation or your ego. So yeah, this article is probably blah but I will read it anyway because it will probably make me feel good, having grown up in and thus having links to the successful system du jour ;-)
  - lispm 14y ago
    good comment
  - stfu 14y ago
    1) The EUR is not just an economic project. It is a political instrument. That's why it exists, and that's what will determine its future. The economics is only a constraint (alas, now binding) not the objective. This can not be repeated often enough. All the gloom and doom commentators making break-up predictions are highly underestimating this aspect. EU behavior can not be explained by rational/economic factors based logic.
- czr80 14y ago
  1) Cheap currency: "For German companies, the sinking euro acts as a kind of crisis buffer. While it reduces demand for German products within the euro zone, these make up only around 40 percent of the country's exports. But for the rest of the world, a weak euro means cheaper German products, which means they're more competitive." 2) Cheap credit: "But recently even interest rates on German bonds with longer maturities have decreased significantly. The federal government is saving a bundle. The reason for the windfall? Amid the ongoing euro crisis, Germany is one of the few borrowers that are still regarded as a safe haven. Many investors would rather lend the government money at bargain-basement rates than risk losses." 3) Inability of other countries to (quickly) adjust given single currency constraints, leading to, for example: "As mass protests form in Spain due to high unemployment among young people, Germany is benefiting from an influx of new skilled professionals. An increasing number of southern Europeans looking for work are heading north to prosperous Germany." http://www.spiegel.de/international/europe/profiting-from-pain-europe-s-crisis-is-germany-s-blessing-a-808248.html http://www.spiegel.de/international/europe/profiting-from-pa...
- jordanlev 14y ago
  I just read this article which explains it nicely (IMO): http://www.stratfor.com/weekly/financial-markets-politics-and-new-reality http://www.stratfor.com/weekly/financial-markets-politics-an...
hessenwolf 14y ago
I agree. My colleague who sits across from me finished uni when Italy was booming and Italy knew all the economic answers. I finished uni when Ireland was booming and Ireland knew all the economic answers. Germany is booming, but most people don't know why. Ten years ago it was absolutely the sick man of Europe, and now here in Germany they the economic answers? Erm, ja, bestimmt.
JackFr 14y ago
I would go one step farther and say it is poorly written. It is rambling, disorganized, and lacks both both narrative structure and thematic clarity. It offers no systematic analysis, and confounds anecdotal evidence with personal rembrances. It reads like a the runner-up entry in a write like Thomas Friedman competition (which is not a good thing.)
woodpanel 14y ago
Most of the German economists know and say that Germany is only at the top right now because it has profited so much from the Euro hmm must be a different Germany you live in ;-) DER SPIEGEL from july 24th (http://www.spiegel.de/wirtschaft/soziales/euro-krise-oekonomen-warnen-vor-katastrophe-a-846154.html http://www.spiegel.de/wirtschaft/soziales/euro-krise-oekonom...): 172 renown German economists published a joint appeal to stop the government from implementing the ESM. While in response only 17 renown european economists made their plea in favor of the governments pro-Euro policy.
- Roritharr 14y ago
  The question whether or not to support the ESM is completely separate from the question where Germanys current success is coming from. The 172 renowned economists are basically stating the obvious that covering for the spending sprees that our lending-power allowed the slow-economy EU countries will hurt the German economy. To me the question if we should or shouldn't support the ESM is a moral one to which i don't have an answer. We benefited from the Euro the most and the very system that allowed our success is now asking who pays the bills. Tough question to answer.
- sentenza 14y ago
  No, actually he is spot on. The European crisis is layered like an onion and if you peel away the outer layers like banking, sovereign debt and all the things we hear so much about in the press, then you will arrive at the core. That core is a inner-European trade imbalance which makes the existence of the Euro blatantly unsustainable. If you look at the overall trade balance between the EU and the rest of the world, you will see that lately, imports have been about 20 % larger than exports. Germany on the other hand is (and has been for years) an extreme exporter. Now if you add up the numbers, you will see that obviously there must be some very heavy importers within the EU. These importers are the countries that we all know and love from the news reports and the way through which they financed their extreme trade imbalances was through massive private debt (not public debt, that's an outer layer). Here are some numbers on the trade balances (yeah, I know, it's wikipedia. But they present both figures in a readable manner and they list the sources.): http://de.wikipedia.org/wiki/Au%C3%9Fenhandelsstatistik#Entwicklung_der_Au.C3.9Fenhandelswerte_f.C3.BCr_Deutschland_und_Europa_.28EU-27.29 http://de.wikipedia.org/wiki/Au%C3%9Fenhandelsstatistik#Entw... Germany was only able to reach its position as such a massive exporter by 1. Being incredibly competitive to begin with 2. Artificially boosting competitiveness by 10+ years of nonexistent wage increases, (also crippling German domestic demand) 3. Having a majority of its most important trading partners locked inside the Euro, so that they couldn't mitigate their trade imbalance through inflation (better cash in your Lira fast...), thus boosting the net worth of German exports And that number 3 is why this crisis is never going away. Yes, never. All "they" can do is to repair parts of the outer onion shells, buying time. However, that inner core continues to exert a force towards destabilizing the European system. Every single fix to the trade imbalance problem, probably also all partial fixes, are politically infeasible. You cannot have a continuous flow of money from one part of the European Economy towards the other without some sort of approximately equal flow of money in the other direction. What kind of flow? If we look at the United States as a group of States that is of roughly equal size and has about the same internal inequalities between states as the EU there emerges a list of transfers that are effective in couteracting trade imbalances: Social security, Medicare, Common Bank Insurance, Military spending (wanna bet there are per capita more soldiers from Alabama than from Maryland?) and so on. If this is what can fix this crisis, then I am all for it. However, it seems that I am part of a minority here in Europe. So collapse it is. Ein Ende mit Schrecken oder ein Schrecken ohne Ende.
foobarian 14y ago
I always wondered how much Germany benefited from the restrictions on keeping a standing army, and being (effectively) defended by the U.S. military. The chunk of budget spent on that surely must have been used more productively.
- morsch 14y ago
  I'm not sure there are any such restrictions anymore. Germany has a standing army of about 200k soldiers, down from 450k in 1990. The US still has about 50k troops in Germany, but I don't think they're defending us (or controlling us) as much as they're hanging around in an allied state closer to multiple conflict zones.
- lispm 14y ago
  Which restriction do you think of? Germany had many hundred thousands of soldiers. A huge standing army. Lots of military equipment. We bought stuff from the US. Germany even paid the US for the presence in Germany. We even paid you for the first gulf war. What Germany did though: once the cold war was over, we reduced our military. The threat was over. Accordingly the US reduced its presence in Germany. The rest of the US presence here is working on keeping the US empire. For example the central command for africa is in Germany. Hospitals pick up the soldiers from Iraq and Afghanistan. Logistics...
tylee78 14y ago
being German myself, I cannot agree more. I was sometimes wondering if the author of this article was in the same country that I left. But I have seen this tendency before: people who visited Germany in the 60s, 70s and 80s have a "mental picture" of Germany that only partially fits reality. The structural unemployment is still very high, the educational system is a mess, the tax rates and regulations are borderline insane.
lispm 14y ago
I thought that our economic success had something to do with working people who produce stuff which is in high demand worldwide: machines, tools, cars, trains, aircrafts, energy systems, chemicals, ...
- morsch 14y ago
  That just means that "we" are selling stuff people would like to buy -- the supply side --, not that they are buying it from "us", or even buying it from anybody at all -- the demand side. Being able to buy stuff requires money, and one way of getting money is borrowing it. The Euro resulted in incredibly low interest rates for all the EUR countries, making borrowing money very easy. Certain German entities were also very happy to lend out, having lots of spare money. Having money is not enough, though, you need to have money in a stable currency. So far the Euro has been very stable. Many of the countries that have got the Euro got in by falsifying statistics, something that was widely known at the time. Finally, Germany engineered it's economy into extreme efficiency. You can do that by being super smart, broadly speaking, and by being super cheap. I guess Germany did the former; it certainly did the latter and Germany's working force suffered for it: increased retirement age, increased VAT, stagnant net real wages, reduced benefits, reduced unemployment, etc. The end result: We drove our economy with a focus on exporting stuff to countries which can't really afford it, buy pay us with money borrowed from us. If/when they default, we're left with a huge amount of worthless defaulted loans, a huge export oriented economy that suddenly has lost most of its customers and not enough internal demand to make up for it.
  - lispm 14y ago
    'reduced unemployment' is hardly suffering. The opposite was true: we had, and still have, a lot of people without employment perspective. The main goal of the policies was to drive unemployment down - especially in the new states. > Many of the countries that have got the Euro got in by falsifying statistics A few. Not 'many'. You seem to go for the easy explanation. In the EU and the Eurozone countries are still responsible for their politics. Even their economic politics. It's also not Germany which lend especially much money to our southern partners in the EU. Check out France, US, Britain, ... The speculators were most from areas and industries which were not especially 'German'. German banks were dumb enough to follow the lead of the investment banks and speculators. Each country has to: * reduce debt * keep an educated work force * invest money wisely * prevent bubbles That Spain had a housing bubble is not Germany's fault. That Greece has incompetent economics and finance is also not Germany's fault. Our fault was to sell them submarines. But I bet the Nato partners were more than happy that Greece wanted them. That Ireland's economy collapsed was also not our fault. If you are not aware the is a global economy competition. Germany wanted to keep Europe able to compete. Many others made themselves a nice time - brought their money to offshore tax havens, to Switzerland, speculated in London, speculated in the housing boom. Its not really our fault that we have no housing bubble, our investment banks were stupid enough, but the damage could be contained, we reduced our budget deficit, ... Instead of blaming Germany, you should look at the incompetent politicians of those countries who are not able to collect taxes, not able to control bubbles, not able to invest in the 'real' economy instead of virtual ones, who are not able to balance their budgets. Germany made enough mistakes on their own. For example we sold infrastructure to foreign investors. We were told that this was so much better. Huge mistake.

maayank 14y ago

Yesterday I submitted an interview with the co-founder of SAP, a leading figure in the technology sector[1], about the state of the software sector in Germany. He had lots of criticism and comparisons with the U.S., so if you find this article interesting consider reading that interview: http://news.ycombinator.com/item?id=4344429 http://news.ycombinator.com/item?id=4344429 [1] I'm a former employee of SAP, so I'm biased :-)

mbesto 14y ago
Former SAP employee here too :) Great interview. Awesome questions and always enjoy Plattner's view of the world. ps- Where were you based? I was in Newton Square and St.Leon/Rot.
- maayank 14y ago
  Research at Ra'anana Israel: http://goo.gl/maps/M7Xcw http://goo.gl/maps/M7Xcw It is a great interview! Both the reporter and Hasso were not afraid to be bold. It is also a common criticism in the local financial newspapers that Israeli startups have a problem with rapid international growth because of language/cultural differences, so it was interesting for me to compare what he said also to the local scene and not just the American one.
  - mbesto 14y ago
    Very cool. I worked in support, and would deal with some of the portal guys from time to time in Ra'anana
    - maayank 14y ago
      Would be interesting to hear your take on [1] :-) In any case, if you're ever in the greater Tel Aviv area give me a shout! (my email is at my profile) [1] http://www.quora.com/Israeli-Culture/Why-are-Israeli-people-so-hard-to-work-with/answer/Ohad-Samet http://www.quora.com/Israeli-Culture/Why-are-Israeli-people-...

_delirium 14y ago

Oddly this doesn't talk a lot about the German model, despite that being the title. The education-tracking system is just about the only structural feature the article discusses. A big part of the German model is ordoliberalism (http://en.wikipedia.org/wiki/Ordoliberalism http://en.wikipedia.org/wiki/Ordoliberalism) and the "social market economy", a particular view on the relationship between the state and private sector. The German approach to labor-employer relations is another part of the model, oriented around consensus-building between sector-wide unions and sector-wide employers' federations.

harryf 14y ago

As a half English, half German who's had a fair bit of professional contact with the US, I'd argue the main difference between the US and Germany is short term vs. long term thinking The US is brilliant at the short term, as characterized by it's sales culture; the mentality of sell first, build second is extremely effective in allowing some forms of innovation, capturing market share fast and eliminating certain forms of waste. This of course was traditionally offset by attracting talent worldwide, such as academics and engineers, to immigrate to the US By contrast Germans are famous for their engineering. It's much more a build first, sell second approach that's characterized by long term thinking and planning. Socially that's also reflected education where everyone has a chance, irrespective of your parents income - having a well educated populace is a huge asset and that's seen as a long term investment. All that said, Germany's economy may be less wonderful than it seems. While the US seems to solve any economic issues by "printing money", Germany props themselves up with exports - that a country of just 80 million people is the world's 3rd largest exporter ( http://en.wikipedia.org/wiki/List_of_countries_by_exports http://en.wikipedia.org/wiki/List_of_countries_by_exports ) is kinda... strange and makes we wonder if something doesn't quite add up? Having worked for a couple of years in Germany, one thing that struck me is taxes came to almost 50% of my salary. Another impression was my generation in Germany - currently in their 30's - wasn't very motivated toward their own careers. That might not entirely be a bad thing - less of a rat race - but it comes across as a generation that doesn't really know what it's purpose is. So I have a kind of gut feeling that the German focus on exports is done at the cost of "self neglect".

jsilence 14y ago
"Socially that's also reflected education where everyone has a chance, irrespective of you parents income" Unfortunately exactly the opposite is true.
- fberger 14y ago
  Can you be more precise what you're referring to? Germany's lower school system of deciding at age 10 whether you go to a school (Gymnasium) that allows you go to college later or not is definitely a big issue. But when I went to college in Germany 10 years ago in my hometown, the cost was minimal (< 300 Euros per semester including unlimited public transport). Also there are regulated student loans (Bafoeg) that less affluent students can take advantage of.

jsilence 14y ago

Interresting read. The inside perspective from within Germany is different. Yes the Mittelstand is the backbone of our economy, but it is also the majority that thinks it is being f*cked over a lot by government decision which favor big companies with huge lobbying budgets. The Mittelstand carries the weight, but has little room and opportunity for shaping our society. A lot of neocapitalistic concepts have been implemented during the last decade and have crippled our social security system and eroded workers rights. The dreaded subcontracted labour is on the rise. Welfare/social subsidy levels have been ruled inhumane by our courts. Our highest court has ruled that our voting system is against our contitution. Twice. What an embarrassment. The dual education system mentioned in the article is indeed quite good. Apart from that our school and university education system does have serious flaws. In international comparison (PISA test) we are way apart from the best in class and nowhere else but in Germany does the quality of your education correlate as much with the income of your parents as it does here. More money, better education and vice versa. The tight organization and structure praised in the article also does have its downsides. For example if you wanted to open a bicycle repair shop, you need to have a Zweiradmechanikermeister. (Meister = Master). So you need to be or employ someone who has been educated for several years as a bicycle repair mechanic. In a company that has a certificate for educating bicycle repair mechanics. Yes, almost all of the space is managed. Over and over. Example: A club owner brought a ship, renovated it and made it into a bistro/bar/club boat. For the permission to use the ~20m of harbor space ranging from the ship to the nearby road he had to negotiate with four different parties. Just because there are abandoned rairoad tracs running across. Four different bureaucratic entities. I am a hobbyist bee keeper. Which makes me sort of a registered farmer. With a farmer registration number and with registered bee stands. With insurance. With a local bee keeping society and the regional bee keeping society and the national bee keeping society I have to be member of (by proxy). If I want to sell some of the honey, I have to comply with nine different laws. For example I have to comply with a packaging law that tells my what and how I have to declare the honey on the label. Despite a broad public consensus that genetically modified food should be labelled as such, lobbyists prevented just that. But. If my bees collect pollen from genetically modified plants, I can no longer sell that honey. So now I have to educate my bees to become certified honey collection masters and teach them the difference between unmodified and modified plants and teach them to only collect from the former. But the fathers of my bees died during sex and the queen despite her royal title does not have any money. No money, no education. Lately my girlfriend and I have been camping at a lake in a different city. On a paid camping ground of course. No wild camping in Germany. With a barbed wire fence around it. It almost felt like a prison camp. At midnight my girlfriend and I made a warm summer night walk around the campsite, talking little and very quietly. Yet someone from inside a camper barked at us what the fuck we thought we were doing and that there has to be peace and quiet at ten. Period. Our health care system is fundamentally broken. You don't get to see what the doctor bills to your insurance. But also your insurance does not get to see the bill. There is another layer of indirection in between called the Kassenärztliche Vereinigung which collects and anonymizes the doctors bills and sends collective bills to the insurances. You can imagine how easy it is to bill more than you worked for as a doctor. There is no control instance. In order to correct this, there are quarterly billing caps for doctors. Thus if you get sick in the middle of march, june, september or december, when the caps are hit, then either you don't get treated, or the doctor treats you without getting paid. A bad doctor will go on vacation four times a year, a good doctor will treat you on his own expense. I wish I were joking. The city of Bremerhafen mentioned in the article ranges among the least favourite cities in Germany. Despite its interresting history only few people choose to live there. Sky high unemployment and an almost nonexistent social and cultural life. But hey, the article did not talk about how nice Bremerhafen is. Anyway, I guess my perspective is one of the "its always greener on the other side" variety. Germany is indeed a good place to live. I sometimes wish we would not try to be Weltmeister in everything so that we wouldn't have to solve Europes problems. (We still benefit from the european union, so keeping Europe tight and up and running benefits our own situation. So.)

yk 14y ago

Interesting article, which summarizes nicely how German conservatives like to view the country. So I think it is more interesting as a report how our current ruling (center right) coalition views Germany than as being grounded in reality.

sprash 14y ago
Exactly! This article brings up a lot of anecdotal evidence to build up stereotypes. This should ring all kinds of alarm bells. It is a propaganda piece with little basis on reality.

woodpanel 14y ago

Disclaimer: I'm form Germany and usually have a more libertarian view on things. Much of the German Model is attributed to ordoliberalism (http://en.wikipedia.org/wiki/Ordoliberalism http://en.wikipedia.org/wiki/Ordoliberalism). But to me this rather "wierd" play of liberalism itselfs seems to be more influenced by German culture than the other way around. And with "culture" I rather mean pieces of wisdom, wich every culture gathers throughout history. The most destinctive events in German history have in common that bad things happened out of chaos. And salvation (order) came from above: 1) The Thirty Years War eraded the German populace. Espacially in Brandenburg with almost 70% gone. It does not wonder that from that area, the prussians developed the proto-German clichet-like mindset of good-governance. Germany went on to be the only country in the world (for a long time) were evangelicals and catholics considered each other countrymen (http://en.wikipedia.org/wiki/Thirty_Years%27_War http://en.wikipedia.org/wiki/Thirty_Years%27_War) 2) Napoleon had to bring in social reforms and the rule of law. While our nobils had to give us back our independence and pride from Napoleon and were the ones "creating" Germany in 1871. The nobils also created social security - as a means to keep the masses from revolting. 3) While WWII and the Holocaust are examples to what evil this believe in good-order can lead to, the reaction to the loss of the first and the shame of the latter are itself shaped by German culture: - Implementing democracy with war seems to have worked in Germany, it came from above. - Denouncing anti-semitism came somewhat from above and, to some extent, the people have obtained this view. Also: - The most successful participants of the German protests of 68 were those who believed in reforming the "system from within" (http://en.wikipedia.org/wiki/Alliance_%2790/The_Greens http://en.wikipedia.org/wiki/Alliance_%2790/The_Greens) - our national-holiday is not a date where good came out of a revolt but where politicians made a contract come into effect (http://en.wikipedia.org/wiki/German_Unity_Day http://en.wikipedia.org/wiki/German_Unity_Day) - Our unions and left-parties were willingly enduring pain, in that they proactively implemented harsh reforms in the labor market and social security system. My point is, our culture makes it hard in Germany to argue against government. Even our liberals believe in the benefits of good order. The historc feedback loop tells me it might be better to endure a little pain now (eg giving up freedoms) than to endure fatal pain later (mob lynching). PS: This is not a praisal. As libertarian-tending I don't think fear of chaos is always a sign of maturity. It makes a lot of little things much more costly (http://www.youtube.com/watch?v=-oYl-Lm9a6U http://www.youtube.com/watch?v=-oYl-Lm9a6U ?! Never happening in Germany without regulatory approval and intense testing) And on the big scale: the fear of order being disturbed was also an argument against policies that gave more rights to the German jews in the 1800s. And it is the underlying argument against anything "capitalist" or "gentrifying" today.

wahsd 14y ago

I lulzed when I heard that a Wall Street Financier said "We need to learn from the German model" Wall Street will look at the "German model" and scoff at it because it is on the opposite end of the spectrum of exploitation, deception, manipulation, and fraud. Don't get me wrong, humans are involved, so the "German model" is no where near perfect either, but it is a social democracy at its core; where the government at least tries to have the best interest of as many of its people in mind as possible. That is diametrically opposed to everything on Wall Street and the aristocracy that controls our country and effectively psychologically abuses the minds of Americans to the point of schizophrenic mental illness. There is no way that anyone on "Wall Street" will learn anything, just like when they almost executed the American economy in 2008 they said "Oops! Sowy! We learned our lesson and promise to behave." And just like the primal animals they are, they continue to deceive, defraud, manipulate, corrupt, and exploit as they are building their next scheme to sell us all a house of cards.

vitaminj 14y ago

I'm one of the many guest workers in Germany. I'm not an EU citizen and I didn't speak a lick of german when I got here. I'd say over half the other engineers in my company are non-german, and most of them couldn't string a single german sentence together when they started either (some still can't!). The company has had an open engineering position for a german national (or at least native speaker) since before I started almost 2 years ago... and still haven't filled it, even after half a dozen foreigners have joined. So I can sympathise with the idea that Germany is struggling to find skilled technical workers. It's telling that a company has to resort to hiring a bunch of non-german speaking foreigners and sponsor their visas and so on. I'd find it hard to imagine a French or Italian firm doing the same thing. The article alludes to the fact that the Mittelstand firms are spread out across the countryside and many are headquartered in small villages. This is true and could perhaps be a big factor in why they find it hard to attract people - I mean, how many skilled engineers are willing to live in the middle of nowhere? I chose to work to here because the company is one of the leaders in a niche specialist field, and I certainly don't regret the decision given the amount I've learned so far. But frankly, I'd rather live in a bigger city.