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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

#61

Post by deadmansshoes »

lispm wrote: post #55
Derbasti wrote: post #32

Earlier quoted context omitted.

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…

Ireland and Greece were not supposed to be 'weak' countries. Ireland just a few years ago was seen as a model for economic growth (supported by very low tax rates for companies). Ireland is a victim of its own misguided policies (housing bubble, banking system, ...) and its orientation to anglo-saxon economic policies. Greece also failed to reform its economic policies (after cheating on the economic data for quite s…

It's a good job Germany don't follow anglo-saxon policies...

Re: How Germany got it right on the economy

#62

Post by wazoox »

brc wrote: post #19
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.

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.

The problem comes more from the fact that 70% or so of German exports go to the rest of European Union and mostly the Euro zone.

Germany actually kept itself out of the water largely by lifting itself upon its neighbours' heads. Then Merkel will rant about the "lazy greeks" and other amenities.

Actually the problem arises from the disparity between a monetary union without financial, fiscal and debt union. Unsurprisingly, the biggest boy did better than the rest of the pack.

Re: How Germany got it right on the economy

#63

Post by wazoox »

te_chris wrote: post #3

An excellent article that clearly illustrates how, if you properly educate and invest in your population and provide a societal structure that allows these people to have a say, then, instead of society imploding, it actually flourishes. Not that anyone in western govt's are listening...

Germany has other serious problems though, demography particularly.

Re: How Germany got it right on the economy

#64

Post by roel_v »

_grrr wrote: post #60
roel_v wrote: post #44

Earlier quoted context omitted.

At first I had typed a paragraph here about how you are wrong, but then I realized that I don't have any numbers on this, nor do I even know a measure on how this could be quantified. I still think you're wrong, but I can't prove it. Do you have any numbers on the amount of redistribution that happens e.g. from blue to red states in the US? If so, is there a description of the methodology used somewhere? Or does anyo…

The UK spends ~£6 Billion/yr on EU. Total UK Budget is £620 Billion. Sources: UK Budget: http://www.guardian.co.uk/news/datablog/2010/may/17/uk-publi... EU Contributions: http://news.bbc.co.uk/1/hi/8036096.stm Afraid I don't have figures for US.

This BBC is a very nice summary, thanks. It looks like it accounts for payments that are not directly to the Member States too, which is the hardest part to account for (I base this on the total payments to France which must include the CAP (agricultural) subsidies).

I have only briefly searched for a couple of reference countries, but it seems that about 1% of the state budget contribution to the EU is the 'normal' amount, with the 'net' expenditures (after discounting for income) is only 30% of that at most (for Germany, for the lesser net contributors that number drops exponentially). So that seems very small, certainly less than I had expected.

Then again, most the most expensive government jobs (social security, medical insurance, pensions) are governed at Member State level, so maybe it shouldn't be that surprising.

So anyway, then we can reduce the original question to 'is there more than 1% income redistribution between states in the US'. Which I think there will be, since Medicaid and SS are federal programs, right? Plus military spending, which redistributes from states without bases or research to states who do have them, and which makes up a big part of the federal budget.

Maybe my initial feeling was wrong, and there is much more redistribution between US States than there is between EU Member States. I'd love to spend the rest of my day researching but I'm afraid I don't have time for that ;)

Re: How Germany got it right on the economy

#65

Post by lispm »

wazoox wrote: post #62
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.

The problem comes more from the fact that 70% or so of German exports go to the rest of European Union and mostly the Euro zone. Germany actually kept itself out of the water largely by lifting itself upon its neighbours' heads. Then Merkel will rant about the "lazy greeks" and other amenities. Actually the problem arises from the disparity between a monetary union without financial, fiscal and debt union. Unsurprisi…

The EU is diverse and has a lot of different member states. Germany's largest trading partners are not Ireland or Greece. Far from it. It is France. Germany is also the largest importer in the EU. For many products it sells there are suppliers somewhere else in the EU.

The problem of Ireland and Greece are not so much caused by trade deficits with Germany. There are problems caused by trade deficits (while at the same time Germany is transferring lots of money into the EU by its EU contributions and investments), but Ireland's problems were caused by its bursting housing bubble and its banking crisis. Greece OTOH has internal budget deficit problems (expensive public sector, corruption, arms deals, ...).

Re: How Germany got it right on the economy

#66

Post by jules »

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.

Can you give an example of any industry revolutionized by any company?

Re: How Germany got it right on the economy

#67

Post by lispm »

lispm wrote: post #54
rb2k_ wrote: post #35

Earlier quoted context omitted.

> 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…

The automotive industry was the first to build new state of the art factories in East Germany. Porsche in Leipzig, VW's transparent factory ( http://www.glaesernemanufaktur.de/gmd.jsp?dok=&lang=&#38... ), ...

The VW transparent factory:

http://www.youtube.com/watch?v=nd5WGLWNllA

http://www.youtube.com/watch?v=OeYi87P31UQ

Re: How Germany got it right on the economy

#68

Post by tallanvor »

Loic wrote: post #43
_grrr wrote: post #41

Earlier quoted context omitted.

>But you could make the same argument against any US state that remains cost competitive due to the currency True, but, there is a policial union of states in the US that doesn't exist in the EU. The EU is a monetary union without a political union, this means that it's politically unpalatable to explicitly redistribute tax money from the relatively rich to poor regions (Germany/France to Greece/Portugal) in the same…

Europe is redistributing enormous amount of money from rich to poor countries within EU. Spain would still look like an underdeveloped country without the massive injection of money coming from the EU. EU (the organisation), even with problems here and there and the need to take a good diet, is working wonderfully at equalizing the rich/poor countries. This is why most of the countries do not want Turkey to be part o…

The US has around 37 million people (over 10% of the population) who receive food stamps, and that number may be greater now. Some of the people on unemployment may also be receiving food stamps, but not all of them. Another 4+ million are on some sort of state welfare or aid program (again, some those may also be included in the 37 million number). So Germany's 7.5 million people in the social welfare program doesn't seem that bad.

Re: How Germany got it right on the economy

#69

Post by DuncanIdaho »

rb2k_ wrote: post #35
whakojacko wrote: post #20

Earlier quoted context omitted.

>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…

That is not due to work shortage - but due to shortage of work that can be done by socialistic, highly (unproductively) unionized and unqualified work-force.

Eastern Germany will stay like that until the workforce that was raised in socialism gets out of the way. Eastern Germany has more in common with Poland, Czech and Slovakia than with western Germany and France.

I'm from ex-socialist country and it is the same situation here - plenty of high value added opportunities are available - but nobody to take advantage of them.

Re: How Germany got it right on the economy

#70

Post by Benjo »

Okay fine, but the article doesn't really tell us anything about why Germany is able to base their economy on export and manufacturing. Is it simply a matter of political will? What do worker wages and income distribution look like? How about education? Without examining these elements, the implication that other economies should be more like Germany seems pointless.
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