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How Germany is able to run the world’s second largest export economy

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Re: How Germany is able to run the world’s second largest export economy

#151

Post by reaperducer »

varjag wrote: post #35
zwieback wrote: post #31

Not a word about the fact that Germany simply produces desirable products? Somehow that has to factor in. Financial policy and the education system favors a conservative manufacturing sector that incrementally improves upon what Germany has done for decades. While I got my ME degree in Germany my dad, who is a solid state physicist, spent all his energy trying to accelerate the development of a German electronics sec…

Perhaps a bigger distortion was everyone else deciding to become "value-add" over outsourced production. Only so much room for beancounters.

Especially in certain product lines.

A relative uses a particular medial device with parts that wear out. She purchases the regular replacement bits off Amazon which are made in China and only last 30 to 60 days. When she can afford it, she buys from the OEM's online store which has parts that are made in Germany or The Netherlands. They fit better, work better, and last up to six months.

The difference is the Chinese parts cost $10, while the European-made parts cost $25.

Re: How Germany is able to run the world’s second largest export economy

#152

Post by lispm »

What is often overlooked is this: Germany was export-oriented before the Euro, during the transition and with the Euro. Germany was export-oriented before reunification, during reunification and after reunification.

The industry will adopt to those external factors: Germany was 'Exportweltmeister' with the super strong DM (which dominated European currencies) and it is a leading export nation with the Euro.

There are a lot more factors that support the German model. For example Germany is not a centralized economy (like the UK or France, which are grouped around London and Paris). Thus lots of federal states and cities have strong economies: Munich, Hamburg, Düsseldorf, Frankfurt, Berlin, ...

The extreme angle is the concept of 'unknown medium-sized world market leaders' - so-called hidden champions. Germany probably has almost 50% of all hidden champions world-wide:

https://www.forbes.com/sites/rainerzitelmann/2019/07/15/the-...

You'll find many of these companies in rural regions.

Many of these companies are export-oriented, based on a long tradition and they don't care what the current currency in Germany is.

Re: How Germany is able to run the world’s second largest export economy

#153

Post by bpizzi »

pergadad wrote: post #112
ailideex wrote: post #53

Earlier quoted context omitted.

> the common market has distorted things in Germany's favor, an effect that probably won't last. Quite by design. Having the whole Europe on Germany's monetary policy (i.e. Eurozone with EUR interest rates) while not sharing any other policy is heavily in Germany's favour and one of the main reasons the European debt crisis happened. Not to say that being a well governed country with good policy and a culture that is…

That's a very simplistic view and doesn't at all cover the whole picture. The union benefits all countries in varying ways (eg without the union Italian and Spanish and French banks would long have gone bankrupt). At the same time it also has negative effects. But you have the same issue internally inside any larger country.

> eg without the union Italian and Spanish and French banks would long have gone bankrupt

Not french banks. At least from IMF representatives pov.

Source: https://www.imf.org/external/pubs/ft/wp/2009/wp09201.pdf

Excerpt: "French banks were not immune but proved relatively resilient to the global financial crisis reflecting their business and supervision features".

Re: How Germany is able to run the world’s second largest export economy

#154

Post by magduf »

kevin_thibedeau wrote: post #123
arethuza wrote: post #66

Earlier quoted context omitted.

A few years back I worked for a large engineering services company (that nobody has ever heard of) and one of the senior managers from Germany described the quality of Mercedes-Benz cars as a "national disgrace" - he was genuinely upset about it.

The original owners keep them for 5 years max. Nothing has to last longer than that.

Why is this downmodded? It's true, at least in America: the people who buy these cars new don't care if they still work 10 years later, because they don't keep them that long. The people who buy cars intending to keep them a long time don't buy expensive luxury cars here.

Re: How Germany is able to run the world’s second largest export economy

#155

Post by olivermarks »

gharding wrote: post #140
olivermarks wrote: post #100

Earlier quoted context omitted.

Germany is a very new country (1871) and still comprised of markedly different regions. the French German axis has increasingly dominated the EU and driven a strong export culture. As globalization has hit a plateau Germany are now in a tricky position. Many are loathe to admit it but the 'desirable products' Germany produces have a very distinctive Germanic flavor which people identify strongly with the idea of Germ…

I totally agree with you, even though what we are all heading towards is nothing but the total eradication of actual diversity, especially in Europe, pretty much on the American model that totally destroyed all unique characters of the American people of the various American states over the last 70+ years. But the "Germany is a very new country" trope/propaganda is not accurate, as is rather easily identified by simp…

Fair point. My take from UK history lessons last century was that the 1871 'German' entity was in hindsight a very early example of centralization of smaller nation states rebranded as'Germany'. There are arguably traces of this logic in the formation of the original EEC which gradually expanded into the vast and homogenizing EU entities today. Globalization is arguably a stratospheric layer above the EU, US, China etc etc that is rendering the old nation state paradigms of less and less importance, something I don't like...

Re: How Germany is able to run the world’s second largest export economy

#156

Post by tpm »

BurningFrog wrote: post #133
pergadad wrote: post #112

Earlier quoted context omitted.

That's a very simplistic view and doesn't at all cover the whole picture. The union benefits all countries in varying ways (eg without the union Italian and Spanish and French banks would long have gone bankrupt). At the same time it also has negative effects. But you have the same issue internally inside any larger country.

> * without the union Italian and Spanish and French banks would long have gone bankrupt* If you think sick institutions should die, that's not a benefit.

Sick banks mostly died anyway, but without outside help even healthy banks would go down in that environment.

Re: How Germany is able to run the world’s second largest export economy

#157

Post by magduf »

zwieback wrote: post #81
iagovar wrote: post #77

Earlier quoted context omitted.

Many other euro companies export based on quality. I know this at least in Spain. In Spain many companies just export with generic names, as it's believed that people associates spanish products with low quality, and this has been apparently confirmed with by Real Instituto Elcano surveys. I did a reddit thread about this: https://www.reddit.com/r/AskEurope/comments/ejgwy7/apparentl... This also happened with special…

I changed my mind about that after working with our Barcelona divison - top notch engineering all around.

Sounds like Catalonia would be better off separating from Spain since then they could establish their own reputation instead of being dragged down by the rest of the country's poor reputation.

Re: How Germany is able to run the world’s second largest export economy

#158

Post by hogFeast »

Despegar wrote: post #48

I've said it before in another comment [1]: >There's nothing I enjoy more than the plight of the German Saver, who's obsession with "fiscal responsibility" has led to shitty austerity politics all across the EU (to be fair some other northern European countries like Netherlands also share the same view) and depressed growth for the poorer southern European countries. Germany has benefited most of all from the unfinis…

You can't complete the "EU project". Politically and economically, it is just very obvious that states want different things from Brussels (btw, the people who go to Brussels are generally very different from national politicians...they are globalists, most citizens in Europe are not)...that is why it hasn't happened already.

You also raise very good points, that most people forget, about how Germany got here: they got here by squeezing the poor and transferring wealth to billionaires (there is a reason German billionaires are low-key). Another important feature is banking: that is how the wealth transfer occurred, and German banks are in a terrible state (they seem to get involved in literally every financial crisis: CDOs, lending to shipping companies, lending to Turkey, lending to Greece...it is unbelivable). That is why the German model doesn't work (Japan copied the German model, and their banks self-destructed eventually...it doesn't work).

One cool stat that demonstrates this is that Germans have slightly lower net financial assets than Greeks. Yes. The richest country in Europe has citizens that are poorer than the "basket case".

What is also forgotten is that two decades ago, it was Germany that was the basket case (the OP also inaccurately says that Germany was a powerhouse in the early 1990s...nope, it was a basket case then too because it had to integrate East Germany). The Euro has benefited one nation above all others (and Netherlands...although their success is partly due to becoming a tax haven) and imposed massive costs on others (Italy, in particular, has had nearly three decades of austerity between the ERM and the Euro...it is madness).

Re: How Germany is able to run the world’s second largest export economy

#159

Post by olivermarks »

thaumasiotes wrote: post #137
olivermarks wrote: post #100

Earlier quoted context omitted.

Germany is a very new country (1871) and still comprised of markedly different regions. the French German axis has increasingly dominated the EU and driven a strong export culture. As globalization has hit a plateau Germany are now in a tricky position. Many are loathe to admit it but the 'desirable products' Germany produces have a very distinctive Germanic flavor which people identify strongly with the idea of Germ…

> Germany is a very new country (1871) and still comprised of markedly different regions. Interestingly, this is apparent in the genetics of Germans. You can distinguish, say, Frenchmen from non-Frenchmen fairly easily -- they form a natural cluster. Germans don't form a German cluster; they break down into three clusters focused in the north, south, and east. Northern Germans may look more like Danes than they do li…

The northern German 'look' spreads into Scandinavia and the UK also. regarding the French... it's complicated... https://www.eupedia.com/forum/threads/24932-Genetic-make-up-...

Re: How Germany is able to run the world’s second largest export economy

#160

Post by pvaldes »

bpizzi wrote: post #153
pergadad wrote: post #112

Earlier quoted context omitted.

That's a very simplistic view and doesn't at all cover the whole picture. The union benefits all countries in varying ways (eg without the union Italian and Spanish and French banks would long have gone bankrupt). At the same time it also has negative effects. But you have the same issue internally inside any larger country.

> eg without the union Italian and Spanish and French banks would long have gone bankrupt Not french banks. At least from IMF representatives pov. Source: https://www.imf.org/external/pubs/ft/wp/2009/wp09201.pdf Excerpt: "French banks were not immune but proved relatively resilient to the global financial crisis reflecting their business and supervision features".

And not Spanish banks. It was some spanish "cajas", not banks. Can seem similar, but falls in a different category.
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