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How Germany got it right on the economy

washingtonpost.com

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Re: How Germany got it right on the economy

#31

Post by alextingle »

edderly wrote: post #13
nickpinkston wrote: post #5

While certainly Germany has done a lot right and deserve credit for their current economic strength, we have to recognize that they've both chosen a very different path: i.e. stability over growth, and also have a very different culture than we Anglo-Saxons - which I would argue are quite inter-related. When it comes to quality manufactured goods, Germany is legendary and has strongly biased its economy over the past…

I suggest that people don't go too overboard in praising Germany. Their unemployment rate over the past 20 years has been a disgrace and do not forget that though their trade surplus is healthy some consider it also reflects the weakness in German commodity consumption. Some food for thought (though the later figures don't seem accurate): http://www.wolframalpha.com/input/?i=us+gdp+growth+since+199... http://www.wolf…

Given that they absorbed the whole of East Germany only 20 years ago, it seems a little unfair to measure their unemployment rate over that period. Today they are doing pretty well - what an amazing achievement that is, given the circumstances.

Re: How Germany got it right on the economy

#32

Post by Derbasti »

wheaties wrote: post #15

The problem with this article is that is glosses over one major problem: if Germany's currency moved in accordance with its economy rather than the entire European Union then its exports would be grossly overpriced and uncompetitive. It's the formation of the EU and a single currency that has allowed it to remain an exporting country rather. The article can not compare apples to oranges and make sense.

What you are missing here is that the Euro only works if the stronger countries support the weaker ones financially. Without this, the Euro could not be a stable currency.

If a country like Greece or Ireland is basically collapsing, it survives because countries like Germany and France pay for it. There is no such thing as a free lunch. What Germany gains now because of the weak Euro, it had to pay a few months ago to help Greece.

However, Greece has been paid by the government, not small businesses. Small businesses only have to bear that burden gradually by paying taxes.

Re: How Germany got it right on the economy

#33

Post by binomial »

forkandwait wrote: post #14
nickpinkston wrote: post #5

While certainly Germany has done a lot right and deserve credit for their current economic strength, we have to recognize that they've both chosen a very different path: i.e. stability over growth, and also have a very different culture than we Anglo-Saxons - which I would argue are quite inter-related. When it comes to quality manufactured goods, Germany is legendary and has strongly biased its economy over the past…

Just as a plug for German innovation -- consider the 19th century: if you include Austria/ Vienna, people who spoke German (and were often Jewish) basically invented modern thought, ranging from mathematics to chemistry to music to philosophy to psychology etc. England was great in applied physics and math, France in dynamics and biology, but in theoretical math, music, and philosophy Germany TOWERS above anyone in t…

To say that Germans "invented modern thought" is pushing it. Perhaps you can qualify that with an appropriate definition of "modern thought". The first few disciplines were around long before the 19th century.

Re: How Germany got it right on the economy

#34

Post by Derbasti »

michaelchisari wrote: post #26
edderly wrote: post #13

Earlier quoted context omitted.

I suggest that people don't go too overboard in praising Germany. Their unemployment rate over the past 20 years has been a disgrace and do not forget that though their trade surplus is healthy some consider it also reflects the weakness in German commodity consumption. Some food for thought (though the later figures don't seem accurate): http://www.wolframalpha.com/input/?i=us+gdp+growth+since+199... http://www.wolf…

Their unemployment is 6.7%, which observing from the US (9% after massive government stimulus), I have a real hard time seeing that as a disgrace.

Remember that in Germany, you are legally unemployed if you earn less than 400 Euros (500-600$) per month. If you are unemployed, you don't have to pay taxes.

This makes most employees of Starbucks, McDonalds etc. count as unemployed.

Re: How Germany got it right on the economy

#35

Post by rb2k_ »

whakojacko wrote: post #20
brc wrote: post #19

Earlier quoted context omitted.

But you could make the same argument against any US state that remains cost competitive due to the currency. And it also discounts the fact that Germany did very well during the period when it did have it's own currency. As it is, German economic performance does have an effect on the Euro, being the largest member state.

>But you could make the same argument against any US state that remains cost competitive due to the currency. Indeed you can. >And it also discounts the fact that Germany did very well during the period when it did have it's own currency. This is true. However Germany also gets decent manufacturing benefits from the income disparity in the east. >As it is, German economic performance does have an effect on the Euro,…

> However Germany also gets decent manufacturing benefits from the income disparity in the east.

Strangely enough, the east has (by far) the highest unemployment rate in Germany:

http://upload.wikimedia.org/wikipedia/commons/6/6f/Arbeitslo...

The big German manufacturing plants for e.g. cars are usually also found in the south/west (Daimler + Porsche around Stuttgart, BMW in Bavaria). This goes even as far as adding a "solidarity surcharge" to help the east:

http://en.wikipedia.org/wiki/Taxation_in_Germany#Solidarity_...

Re: How Germany got it right on the economy

#36

Post by InclinedPlane »

Derbasti wrote: post #32
wheaties wrote: post #15

The problem with this article is that is glosses over one major problem: if Germany's currency moved in accordance with its economy rather than the entire European Union then its exports would be grossly overpriced and uncompetitive. It's the formation of the EU and a single currency that has allowed it to remain an exporting country rather. The article can not compare apples to oranges and make sense.

What you are missing here is that the Euro only works if the stronger countries support the weaker ones financially. Without this, the Euro could not be a stable currency. If a country like Greece or Ireland is basically collapsing, it survives because countries like Germany and France pay for it. There is no such thing as a free lunch. What Germany gains now because of the weak Euro, it had to pay a few months ago t…

And Ireland, which has been recently bailed out to the tune of a significant fraction of its GDP.

Re: How Germany got it right on the economy

#37

Post by rb2k_ »

nickpinkston wrote: post #25
forkandwait wrote: post #22

Earlier quoted context omitted.

What I meant to say was that any statement saying that Germany is an "uninnovative" country is just hogwash. The downvote -- why? Because you disagree?

I didn't downvote you, and I also didn't say they didn't innovate. Rather, modern German innovation rarely takes the form of transformation, more of incremental innovation. I can't think of any modern industries revolutionized by German companies. Automotive saw a steady stream of good innovation no doubt, but hardly very transformative.

well, there was MP3 (invented, at least partially, at the Fraunhofer Society).

Re: How Germany got it right on the economy

#38

Post by michaelchisari »

Derbasti wrote: post #34
michaelchisari wrote: post #26

Earlier quoted context omitted.

Their unemployment is 6.7%, which observing from the US (9% after massive government stimulus), I have a real hard time seeing that as a disgrace.

Remember that in Germany, you are legally unemployed if you earn less than 400 Euros (500-600$) per month. If you are unemployed, you don't have to pay taxes. This makes most employees of Starbucks, McDonalds etc. count as unemployed.

Which would mean that their unemployment rate is even lower than 6.7%, wouldn't it?

I've also read that they do more accurate accounting of unemployment than the US. Some say the real unemployment rate in the U.S. is around 17%.

http://www.youtube.com/watch?v=QudPK1uJii8

Re: How Germany got it right on the economy

#39

Post by Mrich30 »

Derbasti wrote: post #34
michaelchisari wrote: post #26

Earlier quoted context omitted.

Their unemployment is 6.7%, which observing from the US (9% after massive government stimulus), I have a real hard time seeing that as a disgrace.

Remember that in Germany, you are legally unemployed if you earn less than 400 Euros (500-600$) per month. If you are unemployed, you don't have to pay taxes. This makes most employees of Starbucks, McDonalds etc. count as unemployed.

To the contrary, you do not count as unemployed towards the official statistics. You will get benefits in addition to your salary though. Essentially the same manipulations are done to the statistics here as in many countries, they try to remove most unemployed people from the numbers by sending them to training, minimum wage jobs (so called 1 euro jobs). This has gotten a lot worse in the past years and the social divide has become as large as in e.g. The US.

Re: How Germany got it right on the economy

#40

Post by sb »

Derbasti wrote: post #34
michaelchisari wrote: post #26

Earlier quoted context omitted.

Their unemployment is 6.7%, which observing from the US (9% after massive government stimulus), I have a real hard time seeing that as a disgrace.

Remember that in Germany, you are legally unemployed if you earn less than 400 Euros (500-600$) per month. If you are unemployed, you don't have to pay taxes. This makes most employees of Starbucks, McDonalds etc. count as unemployed.

Hm, that seems kind of strange to me--while it might legally be considered unemployed, would these employees not have health-insurance paid by their employer and receive retirement compensation?
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