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  • German Economy Booming

    From the BBC:
    "It's quite simple really - Germany makes things which people in countries with growing economies want to buy.
    As China grows, so does its demand for the machinery which its factories need - and for the accoutrements of wealth which its new rich think they need, like flashy BMWs.
    It is true there may be a "bungee effect" - the economic fall was so fast and far that the springing back from recession now seems all the stronger - the German economy grew by 3.6% last year, much more than comparable economies like that of Britain or the United States.
    But that bounce from down does not explain Germany's current robustness.
    After all, the fall was deep in the US and Britain, too.
    One difference is that Germany did not have a property bubble which then burst, leaving consumers and companies pulling in their belts to a painful degree to pay off debt.
    'Embraced reforms'
    In Germany, for example, renting a home is perfectly respectable, whereas in Britain and the US the great aspiration is to own - even if that means (or at least meant) saddling a mega debt round the owner's neck.
    The result is that British households have 50% more debt relative to their incomes than families in Germany. And debt is now a dampener.
    Before the crash, it did not seem that way.
    Germans expressed angst and even some envy of the Anglo-Saxon economies. Was Germany hide-bound, stuck to tired old manufacturing, they wondered. Shouldn't our labour markets be more flexible, they asked.
    And it is true that for the decade as a whole German growth, at around 1%, seemed measly compared to the US and Britain (though that lowly German figure looks better when you realise that the German population was falling while that in Britain and the US was rising).
    All the same, German companies made changes - but without the big bang of deregulation.
    The country embraced labour market reforms, but in a measured way. It is now easier to hire and fire than it was a decade ago.
    Companies have also taken advantage of the pool of workers in the east of the country (and will do so even more with the full opening of the German labour market on 1 May).
    Volkswagen and BMW, for example, have found it easy to move production to lower cost eastern sites around Leipzig.
    There was some protection of workers during the recession.
    Companies, with an eye on the up-turn, found ways of putting people on shorter time rather than sacking them.
    Government helped to soften the burden, again with an eye on the future. Unions now recognise that the quid pro quo is some restraint on pay.
    They get some reward with an unemployment rate that keeps falling.
    'Spread widely'
    The signs of success are there in countless ways:
    BMW said it is going to hire another 2,000 workers
    BASF, the world's biggest chemical company, reported a 40% jump in earnings
    Siemens, Europe's biggest engineering company, said profits will nearly double this year
    Take the case of Bosch, the maker of parts for machinery and cars. It did cut costs in the recession but not by laying off masses of people. Last year, its post-recession sales were a record 47bn euros, and it is promising to take on more staff.
    This recovery is spread widely because every German town seems to have its periphery populated by the famed "mittelstand" of small and not-so-small companies, exporting countless unglamorous but profitable products.
    These companies are often family-owned and founded on values of quality and investment, combined with a shrewd search for markets.
    As Artur Fischer, the chief executive of the Berlin stock exchange, told the BBC: "Germany has done a number of things correctly and at a much earlier stage. We re-engineered our economy when everybody else saw no need for that.
    "Rather than making people unemployed, we went on to 'short time' where companies didn't have to fire people but they could work for only four hours a day or even less."
    For him the cloud on the horizon may be rising interest rates as the European Central Bank starts to worry more about inflation and raises interest rates.
    It should be said, too, that Germany is also helped by the euro.
    Whisper this in Germany itself, but the woes of Greece, Ireland and Portugal stop the euro being as strong as the soaring German economy alone might take it - and that benefits German exporters very nicely indeed."

    http://www.bbc.co.uk/news/world-europe-13335943
    I hope the Aynrandissofreakingwonderfuleverymanforhimselflibe rtarians take note. Here is a booming economy, run on social consensus, benefiting not only the shareholders and owners of companies, but all segments of society. Failed European welfare state? Hardly.
    Last edited by Egerland; 12 May 11,, 17:57.
    There is no horse too dead to beat.

  • #2
    Originally posted by Egerland View Post
    I hope the Aynrandissofreakingwonderfuleverymanforhimselflibe rtarians take note. Here is a booming economy, run on social consensus, benefiting not only the shareholders and owners of companies, but all segments of society. Failed European welfare state? Hardly.
    Notice it's less socialist than either France or Britain, and far less than the PIIGS.
    "Only Nixon can go to China." -- Old Vulcan proverb.

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    • #3
      Originally posted by gunnut View Post
      Notice it's less socialist than either France or Britain, and far less than the PIIGS.
      uh...no, not really (unless you really have a very ..interesting definition of socialist). Actually from "our" viewpoint the PIIGS are seen as pretty conservative countries. As a very crude rule of thumb, the catholic parts of Europe tend to be more conservative, and the protestant to be more liberal (mostly in the social sense, but it this also extents to all other areas).

      (I mean..come on..Germany pretty much invented the modern welfare state and it is even anchored in our constitution. )

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      • #4
        Originally posted by Tarek Morgen View Post
        uh...no, not really (unless you really have a very ..interesting definition of socialist). Actually from "our" viewpoint the PIIGS are seen as pretty conservative countries. As a very crude rule of thumb, the catholic parts of Europe tend to be more conservative, and the protestant to be more liberal (mostly in the social sense, but it this also extents to all other areas).

        (I mean..come on..Germany pretty much invented the modern welfare state and it is even anchored in our constitution. )
        They are socially conservative but have some outrageous welfares granted by the government.

        Germans are fiscally "more conservative" than PIIGS but socially more liberal.

        Besides, there are always exceptions to the rule. German efficiency is something that cannot be duplicated by others.
        "Only Nixon can go to China." -- Old Vulcan proverb.

        Comment


        • #5
          Sorry, but again, No.

          For one not all PIIGS have the same kind of economic model. The Irish (as well as the Brits of course) are far closer to the Anglo-Saxon school than the Mediterranean states (than again, putting Spain and Greece in the same bag is again an oversimplification, but they certainly do have more in common together than with either Germany or Ireland, or as Germany and Ireland).

          Further none of the PIIGS nor the UK do spend more on Welfare than Germany (France is slightly above, but very close) as part of their GDP. In fact most cases it is much less, with Spain almost a third less and Ireland even spending only about half as much. (Those numbers are far from being exact, though if you wish I'll do a bit more research to get the latest ones,a nd while there might be changes the general direction would stay the same. Actually the differences in spending between Germany and the other countries would most likely increase, as Germany is one of the few countries that is not desperately cutting everything at the moment)

          Besides, there are always exceptions to the rule. German efficiency is something that cannot be duplicated by others.
          Kind of hard to argue with that, but it is not like the rules of economy and physics suddenly change as soon as Germans get involved.

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          • #6
            Originally posted by Tarek Morgen View Post
            Actually from "our" viewpoint the PIIGS are seen as pretty conservative countries.
            Morally perhaps. Socially, Spain, Italy and Greece at least are well known for suffering from utterly inefficient nanny state syndrome.

            Neoliberals here usually hype the Eastern European systems built up with assistance of the World Bank because they're economically efficient. What's overlooked of course is that in the oh so efficient Czech system for example doctors go on strike or quit because they're getting paid a pittance - 20% of hospital-employed doctors in the Czech Republic quit their jobs in protest over this last December, GPs get paid about €2 per patient visit by state health insurance and so on.

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            • #7
              Their welfare tends to be far more inefficient, true, but, based on the GDP, we still outspend them by a lot in that area. One could argue that here we have a welfare system done mostly right, while (from our perspective) they have one done mostly wrong..though that does praise our system quite a bit too much for my taste.

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              • #8
                I can second Tarek's observations. I spend a fair amount of time in Germany every year. My wife is buried there and for her, it was always home even though she only spent the first four years of her life and the last year of her life living there. The Germans do spend a great deal on social welfare. The German income distribution is much flatter than the US because the Germans do have fairly high, though simple, taxes. They have significant employee benefits that are far greater than what we in the US normally encounter. The German federal government is quite willing to practice industrial policy in ways that even the Democratic Party in the US is not. Thus, Germany has a significant amount of industrial output and employment. (Not that the US is any slouch in that sector, our industrial output is greater than any nation on earth's by a wide margin) The German federal government is also very willing to intervene in the markets. They have restricted road building, they have preserved and enhanced passenger rail. Two issues that make the German economy more efficient. The German states are more than willing to restrict retail hours and regulate retail pay in such a way that low paid German employees tend to be relatively well paid. All that comes at a price.

                HTH
                Will

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                • #9
                  All correct - gotta add though that in the last 25 years the above has been constantly eroded from the level we were once at, with this erosion going on since the late 70s. First Schmidt's economy-driven politics coming from the right edge of the SPD, then Kohl's longtime government in which you could buy pretty much every government politician for the right sum, then Schröder's third way politics setting the stage for neoliberalism to become acceptable, then the Grand Coalition of constant compromise, and now we've got effectively the pseudo-Libertarian right wing of the FDP handing out the country and what's left of our taxes to their cronies.

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                  • #10
                    Originally posted by wabpilot View Post
                    I can second Tarek's observations. I spend a fair amount of time in Germany every year. My wife is buried there and for her, it was always home even though she only spent the first four years of her life and the last year of her life living there.
                    Commander, my condolences ... and my envy. To have such a love, it is the story of dreams.

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                    • #11
                      What we have here is an exception, rather than the rule. If high degree of socialism really works, then why is Germany the only one not in trouble in the Eurozone? Perhaps the PIIGS nations aren't socialistic enough. Maybe they should increase taxes and increase welfare. Could it really be that easy?
                      "Only Nixon can go to China." -- Old Vulcan proverb.

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                      • #12
                        Uh actually the countries (in europe) with the highest welfare spending (per capita), are the ones doing better. The PIIGS are in the lower & middle field mostly. So Germany is not the only "socialist" country in Europe (almost everyone here would laugh at me for calling Germany socialist) doing rather well, (though it is doing quite a bit better than even those other countries not in crisis).

                        One of the reasons often cited for Germany doing so well at the moment and even being able to reduce unemployment during the crisis (and afterwards) was a Government program called Kurzarbeit (short time/work), which is also mentioned in the article above. Of course it is not the sole reason things went better here, but it IS an example of a tool that can be used by the government which would be from the American viewpoint most likely be called socialist which was and is successful with overcoming economic crises.

                        There ARE things Governments can do to help the economy (besides deregulation and lowering taxes) that do work. That does not mean that EVERYTHING governments do (or could do) would work or help.

                        Comment


                        • #13
                          Originally posted by Tarek Morgen View Post
                          Uh actually the countries (in europe) with the highest welfare spending (per capita), are the ones doing better. The PIIGS are in the lower & middle field mostly. So Germany is not the only "socialist" country in Europe (almost everyone here would laugh at me for calling Germany socialist) doing rather well, (though it is doing quite a bit better than even those other countries not in crisis).

                          One of the reasons often cited for Germany doing so well at the moment and even being able to reduce unemployment during the crisis (and afterwards) was a Government program called Kurzarbeit (short time/work), which is also mentioned in the article above. Of course it is not the sole reason things went better here, but it IS an example of a tool that can be used by the government which would be from the American viewpoint most likely be called socialist which was and is successful with overcoming economic crises.

                          There ARE things Governments can do to help the economy (besides deregulation and lowering taxes) that do work. That does not mean that EVERYTHING governments do (or could do) would work or help.
                          Sure, there are things that government can do to help the economy. Unfortunately almost everything we do here fail because of various interest groups (unions) buying their politicians to screw someone else out of the government money pie.

                          I suspect the "socialst" countries you mention are the Scandanavians. We have already talked about those. They are 1. small nations with 2. homogeneous population make up. Those 2 reasons are huge in a working socialistic model. A family unit is pure communism at work. Why can't it work on a larger scale? People don't care much about those not related to them.

                          Capitalism works with everyone because everyone is greedy.

                          Socialism works with very select few because not everyone can choose to be less greedy.
                          "Only Nixon can go to China." -- Old Vulcan proverb.

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                          • #14
                            The Scandanavians countries are among them, but there are also others like France that would be called Socialist by many Americans. While one can argue that the Nordic countries are simply to different to compare them to the US (or on a world wide scale) you can't say the same to the same extent about Germany and France...after all those aren't really small countries, neither in population, nor in economic size.

                            The problem I have with US politics is that it seems that any suggestion will be shut down by the other side, simply because it is a left/right solution. There are things that can solve problem on both sides (and things that would make matters worse). They don't become right or wrong simply due their political origin, but should be measured on their actual content itself.

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                            • #15
                              Originally posted by Tarek Morgen View Post
                              The Scandanavians countries are among them, but there are also others like France that would be called Socialist by many Americans. While one can argue that the Nordic countries are simply to different to compare them to the US (or on a world wide scale) you can't say the same to the same extent about Germany and France...after all those aren't really small countries, neither in population, nor in economic size.

                              The problem I have with US politics is that it seems that any suggestion will be shut down by the other side, simply because it is a left/right solution. There are things that can solve problem on both sides (and things that would make matters worse). They don't become right or wrong simply due their political origin, but should be measured on their actual content itself.
                              I wouldn't call France a success. What is the average unemployment rate and growth rate over the last 10 years? I'm sure they could never match our 5.5% unemployment rate during the Bush years.

                              France also wants Germany to bail out Greece and the US to bomb Libya (which we stupidly did).
                              "Only Nixon can go to China." -- Old Vulcan proverb.

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