Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

Why Germany Still Has So Many Middle-Class Manufacturing Jobs

flipboard.com

Post reply on HN
Print view View original

21–30 of 165 posts

Re: Why Germany Still Has So Many Middle-Class Manufacturing Jobs

#21

Post by JanSt »

crdoconnor wrote: post #6

He missed the main reason: currency suppression. Germany has managed to suppress the value of its currency over the years to make its exports artificially cheap, which encouraged growth, creating manufacturing jobs. It did this firstly through reunification (dragging down the value of the DM) and subsequently by joining the Euro (Southern Europe had the value of their currencies pegged higher than their 'natural' val…

You are right and wrong at the same time.

The DM was pretty strong and was used as a reserve currency in many european countries, that regularly devalued their respective currency.

The current german export strength is based (at least, there may easily be more) on four factors:

1) The weak Euro. Personally, I hate it because the other european countries cannot compete with Germany. Historically, they would have devalued their own currency and thus gained competitiveness relative to Germany. There is no such mechanism left now, and that's terrible for Europe. However, the salary in Germany is way higher than in the South-Europe (say Spain), so these countries should still be able to compete. They can't though, and that is mostly due to productivity, which is very high in Germany.

2) The Hartz IV reforms that added flexibility for companies and deconstructed some of the welfare state under Gerhard Schröder (the welfare state would now still be seen as hardcore-socialistic by some americans)

and last but not least

3) A highly educated workforce (free university + a sophisticated apprenticeship system) + A high workplace efficiency (germans tend to be very productive at work) coupled with long recovery periods (most have 30 days off (24 days is minimum allowed) + unlimited sick days + strict rules on overtime) and a high level of automation + universal healthcare -> Workers recover quickly, have more energy when at work and are less stressed.

4) Inflation-adjusted wages have actually declined in the last ten years making german products even cheaper for other countries. That' terrible for everyone.

Most Germans would rather see a stronger Euro - there is no way to make that happen though. Currency markets are no longer adjusting properly which is a huge distortion and leads to many problems

Re: Why Germany Still Has So Many Middle-Class Manufacturing Jobs

#22

Post by mbid »

buro9 wrote: post #11

Wow, that's a pretty appalling article. Seems to avoid even mentioning the desire of most of Europe to try and learn from what went wrong after the Great War. In 1918-1930 Germany was left so weakened by peace treaties that the seeds were sown for WW2. Post-WW2 the allies felt that a Germany crippled would only bring future wars, and a huge co-ordinated effort to build a sustainable industry and economic growth was p…

> post-WW2 policies to ensure that Europe could be at peace

What do you mean by this? According to Wikipedia, the other Western European nations semm to have received more funds from the Marshall Plan than Germany did.

> most of Germany's industrial capability had been destroyed or damaged

Source? I remember my history teacher telling us the exact opposite.

Anyway, I don't understand how your points shed light on the differences in ecomomic structure to other Western nations, e.g. France.

Re: Why Germany Still Has So Many Middle-Class Manufacturing Jobs

#23

Post by IdontRememberIt »

I think the most important factor has been missed: planned luck. All the countries (in Europe) who are having success today are the ones who had a crisis (each for a different reason) in the '90s and made structural reforms. During the crisis in the 2000s and 2010s, these countries (Sweden, Switzerland, Germany, etc.) were leaner, more flexible than their "competitors". Fun fact, most of these countries are protestant. It would be interesting to have an explanation for this correlation.

Re: Why Germany Still Has So Many Middle-Class Manufacturing Jobs

#24

Post by krona »

buro9 wrote: post #11

Wow, that's a pretty appalling article. Seems to avoid even mentioning the desire of most of Europe to try and learn from what went wrong after the Great War. In 1918-1930 Germany was left so weakened by peace treaties that the seeds were sown for WW2. Post-WW2 the allies felt that a Germany crippled would only bring future wars, and a huge co-ordinated effort to build a sustainable industry and economic growth was p…

Another geopolitical factor unaddressed is the more recent export growth of the other CE4 countries (Czech Republic, Hungary, Poland, and the Slovak Republic) in to Germany since 1990. The growth of these supply chains to the east play a big part in the German global export machine, largely at the expense of the competitiveness of southern European countries.

https://www.imf.org/external/pubs/cat/longres.aspx?sk=40987....

Re: Why Germany Still Has So Many Middle-Class Manufacturing Jobs

#25

Post by strict9 »

>Germany is far ahead of other large countries with regard to mental internationalization. This includes language competencies, international experience from student exchanges, and university studies. Countries such as France, Italy, Japan, and Korea lag far behind in these respects.

Don't know much about France or Italy, but know enough about Korea and to a lesser extent Japan about how important language and international studies are for an already overly rigorous education system.

That along with the bombshell assertion without evidence that the inheritance tax is the greatest burdens companies face today removes any credibility from the rest of the article.

Re: Why Germany Still Has So Many Middle-Class Manufacturing Jobs

#26

Post by izacus »

buro9 wrote: post #11

Wow, that's a pretty appalling article. Seems to avoid even mentioning the desire of most of Europe to try and learn from what went wrong after the Great War. In 1918-1930 Germany was left so weakened by peace treaties that the seeds were sown for WW2. Post-WW2 the allies felt that a Germany crippled would only bring future wars, and a huge co-ordinated effort to build a sustainable industry and economic growth was p…

> (most of Germany's industrial capability had been destroyed or damaged)

Tony Judt in Post War (https://www.goodreads.com/book/show/29658.Postwar) actually claims that this is patently false. That Germany actually came out of WW2 with most of its industry intact (it was away from the most bombed cities and majority of fighting actually happened in France/Poland/USSR) and was in significantly better shape than Frace and UK industry-wise. As an added bonus, the industrial lines were freshly retooled, significantly more modern than the ones in France and UK and its wartime focus could be rather rapidly converted into highly profitable peacetime industries that were highly sought after in 20th century economic boom (chemistry, car manufacturing, electronics, etc.)

The fact that BRD didn't have to support and invest into standing army also funneled investment into emerging industries - investment that was way slower to come in destroyed France and exausted UK.

Was he wrong? Are there any sources contradicting his research?

Re: Why Germany Still Has So Many Middle-Class Manufacturing Jobs

#27

Post by _pmf_ »

crdoconnor wrote: post #6

He missed the main reason: currency suppression. Germany has managed to suppress the value of its currency over the years to make its exports artificially cheap, which encouraged growth, creating manufacturing jobs. It did this firstly through reunification (dragging down the value of the DM) and subsequently by joining the Euro (Southern Europe had the value of their currencies pegged higher than their 'natural' val…

That and unions.

Daimler and Porsche have both had company wide 10000 EUR bonuses (this includes factory workers). It does not include ANÜ engineers and workers, who make up the major part of the workforce and are second class employees that have a lower base wage and no bonus.

Unions are hell bent on keeping it this way, to the detriment of ANÜs and the benefit of full employees.

Re: Why Germany Still Has So Many Middle-Class Manufacturing Jobs

#28

Post by JanSt »

RobertoG wrote: post #14
crdoconnor wrote: post #6

He missed the main reason: currency suppression. Germany has managed to suppress the value of its currency over the years to make its exports artificially cheap, which encouraged growth, creating manufacturing jobs. It did this firstly through reunification (dragging down the value of the DM) and subsequently by joining the Euro (Southern Europe had the value of their currencies pegged higher than their 'natural' val…

Not sure why you are down-voted. It's obvious that this is part of the trick and many economist have pointed it. It works the other way too, the currency of other countries in the Eurozone is above what it would be without Germany, and all that without a fiscal stabilizer between the countries, like it do happens in the United States between different states. It's a recipe for disaster if the goal is an united Europe…

He is right in some way, but he also misses that german workers had to take a lot of cuts in pay, benefits and working conditions. While french workers only have a 35 hours work week and greece workers get to enjoy a long pension, germans work till 67 (soon 69) getting a lower pension (as percentage of pay) and mostly work 40 hours (for full time workers. Statistics are heavily skewed by (mostly) female part time work which is tax-incentized). Many countries did not adjust as hard to a globalized world as germany did (real wage loss in the last ten years while lowering pension, pushing back retirement age, etc.)

edit: I upvoted him, just for the record

Re: Why Germany Still Has So Many Middle-Class Manufacturing Jobs

#29

Post by germanier »

philiphodgen wrote: post #12
polmuz wrote: post #8

> Tax advantages are another reason. The high taxes on assets in France and the inheritance tax in the U.S. prevent the accumulation of capital necessary for the formation of a strong mid-sized sector. Really? How?

In fact Germany has an inheritance tax.

With significant privileges for family-owned companies.
Post reply on HN