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How Germany got it right on the economy

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Re: How Germany got it right on the economy

#71

Post by nickpinkston »

jules wrote: post #66
nickpinkston wrote: post #25

Earlier quoted context omitted.

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?

Exactly... that's where I was getting at. In the mid 1800's, they were bad ass in chemical production and science in general - really many areas. Seemingly, WWII made them a more risk adverse society. Beforehand, the small/mid size businesses were actually very entrepreneurial.

Re: How Germany got it right on the economy

#72

Post by edderly »

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.

Over the period of time the average unemployment rate in Germany has been notably higher than in the US. It seems unreasonable to compare the performance of economies on spot years. If you want you could compare the 11.5% unemployment in Germany in 2005.

I suggest that criticizing governments who live with long term unemployment is pretty reasonable.

Re: How Germany got it right on the economy

#73

Post by nsvida »

brc wrote: post #17
forkandwait wrote: post #4

I think one of the interesting things about Germany, Japan, and China is that they are NOT strictly capitalist countries, and they do NOT follow Chicago style economic models (which, ahem, seem to be inaccurate when one attempts to verify them empirically). I think a little bit of socialism is necessary to keep a thriving industry (not finance) driven economy going. Trade barriers, spending on long term public educat…

I think this is a bit revisionist at best. One of the defining characteristics of post-war West Germany was the embracing of free markets and de-regulated business. The most influential post-war Economics Minister, Ludwig Erhard was a fierce proponent of liberal economic theory and laid down the foundation for the decades of strong growth that West Germany experienced. He flatly rejected calls for subsidisation of in…

You are completely wrong. Ludwig Erhard like most other German politicians used an economic school named Social market economy. This school has been the main economic model in mainland Western Europe.

Re: How Germany got it right on the economy

#74

Post by jacques_chester »

chipsy wrote: post #29
jacques_chester wrote: post #18

Earlier quoted context omitted.

> Trade barriers, in the sense of protective tariffs to prevent outside manufactures selling cheaply in your domestic market, can be very, very, very good for industrial development. Not really. You hurt your own economy because your own consumers now to pay a higher price for their goods. The protected manufacturer has reduced incentive to reduce costs or improve quality. And of course you have hurt people on the ot…

A completely open market will favor the introduction of single-source monopolies - such as making all electronics in China. It is ostensibly more efficient to do things this way, but there is a massive downside. It's fragile, it's over-optimized to specific environmental conditions. For an example of a shock that exposes these problems in the U.S./China trade, if oil prices rise, everyone loses. The producers will ha…

All well and good, but this approach implies that "someone" is better at predicting the future than the market. The historical record on this is pretty clear: nobody is very good at predicting the future, but out of central planners and markets, markets are far better at adjusting to change.

See, for the classic example, Japan's MITI. An uninterrupted story of the brightest men and women in Japan making incorrect guess after faulty prediciton, leavened with a dose of no-better-than-random-chance blockbuster industrial picks.

Re: How Germany got it right on the economy

#75

Post by jacques_chester »

forkandwait wrote: post #21
jacques_chester wrote: post #18

Earlier quoted context omitted.

> Trade barriers, in the sense of protective tariffs to prevent outside manufactures selling cheaply in your domestic market, can be very, very, very good for industrial development. Not really. You hurt your own economy because your own consumers now to pay a higher price for their goods. The protected manufacturer has reduced incentive to reduce costs or improve quality. And of course you have hurt people on the ot…

>> Trade barriers, in the sense of protective tariffs to prevent outside manufactures selling cheaply in your domestic market, can be very, very, very good for industrial development. > Not really. Yes really, though not always. (The word "only" when talking about who benefits is a little to coarse a generalization...) The tradeoff is between cheap goods now and capitalization (building of factories, etc) for later;…

> The complexity of human society defies abstract reasoning, and begs for actual example. I don't see any grounding in actual knowledge of history in your arguments (though (1) I grant that too much protectionism is just as bad as too little, and (2) you are probably better grounded in fact than your arguments).

The complexity of human society is an argument in favour of freer markets. Knowledge about resources and demands is distributed extremely widely and no one actor can gather and react to even a miniscule fraction of it, compared to the totality.

Protectionism, amongst other things, is an act of central planning. Those who decide what to protect and what to leave open are making guesses about the current and future economy which might or might not be true. Given the poor record of central planning in every form it has been tried (most famously Gosplan), I would prefer to let a distributed dynamic optimising system create an approximate solution to an incomplete-knowledge problem than to wait for a single actor provide a perfect single solution.

Re: How Germany got it right on the economy

#76

Post by Derbasti »

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…

Sure, they did not collapse actually. But their economy very nearly did. Both Greeces and Irelands economy basically only survived because the rest of Europe paid for it. And I think this is a good thing. Europe is a better place if we help each other.

Of course, no country in the Euro zone is supposed to be a weak country. After all, investing so much money in Greece and Ireland is a testament that Europe indeed does believe that these countries can get back on their feet.

Re: How Germany got it right on the economy

#77

Post by brazzy »

Mrich30 wrote: post #39
Derbasti wrote: post #34

Earlier quoted context omitted.

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 d…

the social divide has become as large as in e.g. The US.

Not even close.

Gini coefficient of Germany 2005: 0.28. The USA in 2009: 0.46

http://www.eurofound.europa.eu/areas/qualityoflife/eurlife/i... http://www.census.gov/newsroom/releases/archives/income_weal...

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