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 sector. He was always ranting about the hurdles thrown up by politics in Germany, "We'll just continue building cars and machines for the next 100 years." Well, sounds like it's still working although the end of the cold war and 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 conducive to high productivity and good quality did not help - it definitely did. And I'm not trying to redirect blame for the Eurozone crisis - Greece has mainly itself to blame.
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 specialized and niche products, where you'd expect your customers, specially b2b, to be more rational in their decisions.
My experience of Economists is that they love a lot of numbers!
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.
BTW: It is a misconception that a trade deficit and a poor economy are related.
This system was later abandoned due to pressure of the US to make the banking system and the BoJ "independent". The result from this operation was that the commercial banks diverted more credit away from real investment to financial markets and assets investments, which in turn resulted in an unsustainable real estate boom in Japan.
From of this real estate boom Japan never recovered when the bubble burst.
BTW: The Bank of China uses nowadays window guidance as a system to steer the economy - and seems to be pretty successfull with it.
I dont think that's relevant though. Desirable products mean more countries buy your product, means the value of your currency changes, means your products are effectively "more expensive". Sharing a currency with other countries dilutes that effect, just like any prosperous region within a country sharing a currency with poorer regions.
I'm not an economist so I cant say how valid any of the points ARE, but from the logic presented I didnt think this was an attack on the quality of German products.
Out of cursiosity: What did he try to do, and what organisations was he using?
"German products arent as high quality ad they used to be and most if them are pretty stale in terms of innovation."
Germany just surpassed again South Korea as the most innovative country. News are just three days old. Where do you base your own assessment? Did your BMW break down?
https://www.bloomberg.com/news/articles/2020-01-18/germany-b...
There has been a lot of talk about eastern Europe being a junkyard for german cars (or old european cars in general) in recents times, not the least locally, especially by politicians trying to justify weird decisions. Most of the time one vital factor remains overlooked, people don't have money for anything else here. German cars are valued by most the people, whether that is deserved or not is a different question. There are plenty of mechanic shops for repairing those cars and cars itself are cheap. Public transport is mostly horrible, so a car is a must for most people. If a family has a budget of ~€1500 per month, how can you realistically choose anything else but an old imported car from western Europe (majority from germany).
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.
They are market leaders in some very high-margin things most people never think about, and interestingly they sell a lot in Asia, where one might expect them to be more vulnerable to competition. German Quality is a huge brand worldwide.
I also have a friend in Berlin who's sort of inheriting the family business, manufacturing something so random I always forget what it is. Involves rubber I think. High margins, privately-held family business, etc.
I really think a lot of these companies, if they were in the US, would either go public (the bigger ones) or be sold up to a bigger concern. But in Germany you'd have to pay a really big premium to get your hands on someone's multi-generational family business. As long as there are kids to inherit the factories then that's what they're gonna do.
(and the businesses tend to be filled with a weirdly self-contradicting mix of nationalistic hybris and massive imposter syndrome)
Sheffield was the steel city with all the production, infrastructure and suppliers to feed all the cutlers, precision instrument makers, tool makers, scissor makers and all the other specialisms surrounding tool steel and stainless steel. The Potteries, well you can probably guess that one. So it went on around the regions of each city and across the country.
I go beyond it being a shame, it's criminal, or bloody well should be. We have had no chance of balanced export books since 1980.
If you search around the web, there's a lot of archive sites showing what was lost -- though in truth it was far more an intentional destruction.
Edit: Didn't know this, but Aldi bought Trader Joe's and currently owns it.
>The Single Market launched just four months later, in January 1993, though something like it had been in the works for a while. But on that launch date was there anyone in Europe with any doubts about which nation — which “area” — was ascendant, economically speaking?
Germany in 1993 was in no shape or form to be the ascending economic superpower, in fact 1993 was a recession year: https://d3fy651gv2fhd3.cloudfront.net/embed/?s=wgdpgerm&v=20.... That of course is due to reunification which was extremely costly at the time and the implosion of the former socialist economy hindered growth massively.
Germany got extremely lucky with its timing - when the exchange rate for the DM to EUR conversion was fixed, the German economy was still in dire straits, so it was basically undervalued. But the German companies used the sudden strategic location of the country between east and west to massively invest in production capacities in the former eastern block to keep production costs low while selling to the industrialized neighbors in the west.
In so much of the developed world we're becoming more and more politically split along urban/rural lines, is this the case in Germany is does their distributed industry even things out?
Small and medium sized towns often (not always) struggle with that and are looking into ways to become more attractive...
Just imagine, Adidas (sports, revenue 21 billion Euro), Puma (sports, 4.6 billion Euro revenue) and Schaeffler (14 billion Euro revenue, from manufacturing) have their home in Herzogenaurach, a small town in Bavaria with 23k population.
http://herzo.adidas-group.com/#working/places/intro
How do you get people working there? When Munich, Berlin, etc. are trending?
Germany was export-oriented even before WW2. It's funny whenever you read about "How germany or japan became industrial powers after ww2". With many crediting the US or whatever aligns with their agenda. The truth is that both germany and japan were industrial powers before ww2 and they just reverted back to what they were after ww2.
> For example Germany is not a centralized economy (like the UK or France, which are grouped around London and Paris).
Germany is most definitely a centralized economy. Just because it doesn't have the dominant city center like London and Paris doesn't mean it isn't centralized. The reason why germany is a manufacturing power is because german federal government and the state decided to make germany export-oriented manufacturing power. While in the UK, they decided to become finance oriented and service oriented and shifted their manufacturing overseas. Which is smarter in the long run, only time will tell.
Not really. If you look at successful companies, they are all over the country - though not much yet in the former East Germany, for historical reasons.
> because german federal government and the state decided to make germany export-oriented manufacturing power
Germany has been manufacturing/trade oriented for centuries. The 'federal government' does not decide these things on their own just now. Germany does not work like that - there is no 'federal government' which decides the economic policy in a centralized manner, WITHOUT involvement of the Bundesländer and/or the companies/employees/... > finance oriented and service oriented
Germany is also finance and service oriented, just to a slightly different degree and with slightly different domains. Even the manufacturing companies are often extremely service oriented. Selling not just products, but a lot of services around these products.
> While in the UK, they decided to become finance oriented and service oriented and shifted their manufacturing overseas.
Good luck with that.
That's .. kind of the definition we were using? If it's centralized, in which city is it centralized?
The London dominance of the UK is almost debilitating; it's very hard to get any kind of policy discussion that sensibly includes even Birmingham or Manchester. Let alone all the Brexity post-industrial towns.
It's also not entirely true that the UK has lost "manufacturing" - we still make a lot of stuff in £ value terms, but it tends to be small production runs of expensive stuff. Scientific instruments, aerospace, weapons, pharmaceuticals. The industrial relations disaster of the 1970s caused a backlash against vast production lines - not very many of those left apart from Nissan.
I personally shop in Lidl, not Aldi, but Lidl is often compared to Aldi, about as popular and occupies the same price segment. And I eat like a king from there! Excellent protected origin cheeses, meats, wines, organic products... Half the time I leave the Lidl I go with a shopping cart that would make an American foodie drool. My most recent purchase there included Manchego cheese from Spain (fantastic stuff!), French wine, Kalamata olives, Belgian beer, Belgian chocolate...
The Americans I've taken to the Lidl have all been impressed; they certainly did not say anything to the effect of it being 3rd world. Canadian supermarkets, on the other hand, I remember as having shockingly high prices (even after converting prices from Canadian peso) and far fewer fresh items than I was used to.
Furthermore, people with "regular jobs" in Germany generally live much richer lives than their American counterparts. Fancy/organic foods are far lower priced in Europe, 30€ with a low-cost airline will take you everywhere from the south of France to Spain or Italy, museums, music and events are cheaper, top universities are in reach for your children... And yes (gasp!) in many places you don't even need a car! I commute around 240km a day by train + a few minutes' bike :)
Germany allows foreigners to purchase property, and as such prices in very desirable locations (Munich, Dusseldorf) have gone up. But not everywhere. Furthermore, it is really not necessary to own a house, as the rental market is well developed - many people choose to rent. Lastly, looking at The Economist data, affordability in Germany is better than, say, UK, Canada, and the US. [1]
> People dress cheaply, buy used cars and many live in frugal appartments
Yes, it is considered impolite to show off, and people don't really care about appearances, so they can be shabbily dressed. But then, they don't have to worry about healthcare, they travel quite a bit, and have time to read or follow their passions.
> buy in stores that many American or Canadians would consider third world
Aldi sells good food at excellent prices, by foregoing the eye candy and marketing found elsewhere.
[1] https://infographics.economist.com/2017/HPI/index.html or https://www.economist.com/graphic-detail/2019/06/27/global-h...
Like someone said, Germany is a rich country of poor people.
But thank god it still kept the good barcode scanner. I've just been to another (higher-end) store, Edeka, and the cashier tried to scan the potatoes twice over the band, then again with the handheld scanner, then typed the EAN in, all without success. Then she typed in the price directly, which she got from a crumpled-up note in her pocket. The same again with another article.
Aldi cashiers never have to scan twice, it always works. Because Aldi actually cares about speed and reliability of scanning, their barcodes are large, black on white, not small black-ish on transparent (and whatever color the article has inside the wrapping).
(I still rarely go to Aldi, although I realize I'm sounding like a fan right now)
Not that the US is a bastion of fairness, but there seems to be a teeny-tiny miniscule amount of meritocracy in the labor force. This doesn't really seem to exist in most of Europe.
The top 10% of earners don't make much more than the bottom 10%. Meanwhile, aristocrats are richer than the median by more than in the US.
This seems like the opposite of Marx's dreams...
ETA: It will matter if the City continues to dominate European financial transactions, because it is the tremendous amount of money that goes to the City which keeps the Pound priced above the levels that are good for manufacturing exports. If the multinationals all move to Hamburg or wherever, the Pound (probably) loses in value and British manufactured goods become more competitive on the global market. In theory. Possibly. Who knows?
That's one ticking time-bomb that they keep resetting with new QE initiatives, that will have to end soon and suspect BREXIT will offer a wonderful scapegoat opportunity that may well be availed.
[EDIT ADD} Nice article highlighting the QE situation: https://www.ft.com/content/e4964f08-f196-11e9-ad1e-4367d8281...
Also worth noting that negative interest rates seem to be the new tool that will replace/augment QE. Which may just work, though once again, perpetuating a mindset that borrowing over saving mentality in a way that whole generations will become saving avert. More so if/when negative interest rates take traction.
By the way, Germany is one of the top 5 exporting countries since decades, so this has little to do with the Euro:
https://wits.worldbank.org/CountryProfile/en/Country/WLD/Yea... https://wits.worldbank.org/CountryProfile/en/Country/WLD/Yea...
Productivity: They work hard, a lot and deliver.
Education: above average and leaning towards being curious
Conservativism: depends on county but is a thing
Innovation: despite conservtivism inmovation is high
Collaboration and criticism: Even though you might be in strong disagree with someone arguments count and once you quickly talked out the differences, intense collaboration towards goal achievemt is obvious.
I worked for 10+ years in continuing education and had students of all age and all infustrial sectors and these have been common shared characterstics.
Favorable characterstics towards success I would say.
(Edited formating)
Contrast this with public opinion in Germany back before the common currency: most German EU supporters were openly afraid that the Euro could seriously endanger their economy, but they considered it well worth the risk just for complementing the convenience of open borders with an end to the hassle of dealing with foreign currencies.
To anyone with a bit of critical thinking ability, macroeconomic decisions are close to a coin toss: both sides have good arguments and nobody has convincing data to back up their claim (if there was there wouldn't be a decision to be made).
"Briefings for Brexit is a small group of volunteers, mainly academics, who set up the website in 2017 in order to provide reasoned factual material to help to inform the national debate on Brexit. Most of its members did not previously know each other. The two co-editors are Graham Gudgin and Robert Tombs, both of Cambridge University. Its contributors come from a range of academic disciplines and universities, and cover the whole political spectrum: their names can be found on our website. The group has no links with any political party. Neither of the editors receives any payment, not do any of the contributors. The newsletter editor, a student, receives a small payment. Briefings for Brexit is entirely funded by well-wishers."
Yes, Germany has a positive trade balance in goods. But the trade balance in services is negative. This ... well ... balances the balances.
The UK has shifted its economy from production to services. Hence the negative trade balance for physical products excluding services.
The link you posted doesn't show the UK on it. It just compares four Euro countries.
You realize that it's insanely easy for "knowledge work" to be replicated? Much more so than any manufacturing. China already does it.
What does that leave European and American companies with? Quality. It can apply to tangible and intangible goods equally well.
It will be interesting for my children when either automation or outsourcing has removed the last rung for a typical middle class lifestyle.
>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 unfinished project of the EU. Without becoming a federal union like the US, but having a common currency, Germany's exports have been artificially cheaper and thus more competitive for over 20 years.
>This is the natural outcome from the obsession with running fiscal surpluses. Now Germany is on the brink of recession and they're finally starting to make some noises about fiscal spending, but the politics will likely limit it to modest deficits than anything transformational. Enjoy the negative rates.
The common currency (Eurozone) is deeply flawed and it only allows a rich country like Germany to win at the expense of poorer countries like Greece or Portugal. I find it insane that EU politics have never really dealt with this. I find it absolutely insane that after the 2011 sovereign debt crisis, Germany somehow managed to escape with keeping the Eurozone intact and having the poor countries impose austerity instead.
There absolutely needs to be a political revolution in the Eurozone countries. Either complete the EU project by becoming a United States of Europe, and receive all the equalizing payments of healthcare, social security, and common military spending at the federal level, or get rid of the common currency. It's just hurting the poorest people in the Eurozone to keep the current arrangement.
You might be under the impression "well Germany might be parasitic vis a vis other Eurozone countries, but at least it's good for working Germans", but you'd be wrong.
The US today has a tight labor market which will eventually drive wages up if it persists long enough. Germany on the other hand has similar employment statistics but they did it with the Hartz reforms [2]. The unemployment stats look great because you can get a shitty low wage job [3].
Germany has kept the wages of workers depressed in order to be an export powerhouse. It's parasitic on other Eurozone neighbors but also on German workers. The people who have benefited the most from this arrangement are the German capital class. The shareholders and managerial class of German industry, whether it's giants like Volkswagen or even the small Mittelstand companies. German workers should have gotten wealthier over time which would have made Germany similar to the US in being driven by domestic consumption. That in turn would have made other EU members better off because those wealthier Germans would have been able to consume more of their goods and services. It's truly baffling how even German workers have put up with this. They're losing to the benefit of German capital.
[1] https://news.ycombinator.com/item?id=20793982
[2] https://theconversation.com/questioning-the-claim-of-germany...
[3] https://en.wikipedia.org/wiki/Marginal_employment#Germany
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).
The problem with being like, a systemic export nation, is that your shifting burden to someone else. It sounds okay on paper, but what you see is that can hide a lot of your own issues. If you aren't getting better, your sustained welfare is vampiric, it's coming from your counterparts.
And like you are saying, a personal pet peeve of mine is the outsized amount of private companies. Look at any global etfs, Germany is behind the UK, France, Switzerland (lot of multinationals tbf) and Canada (though not European). That's mainly the work large amounts of private companies. I'm sympathetic to the fact that its their companies, they don't have to sell them. But when it creates a fairly significant skew in sort of a capital picture, you can end up with stuff like this, where your capital class is even more walled off than elsewhere, since you can't build equity in a large portion of their economy even if you wanted to.
Yes, Germany is wealth because others (the southern countries) have to compete because of the union currency. I always thought people of the southern countries (i know people from spain and greece) would rage more vigrously against that. Interestingly rage is only mildly and not a big thing. Maybe it's the selction bias bubble I am living in, I don't know.
Meh, that flies in the face of facts. Real wages in Germany had been depressed for long, not least due to unification, but are picking up: https://d3fy651gv2fhd3.cloudfront.net/charts/germany-wage-gr... and there's not reason to believe that is going to stop anytime soon.
It's not necessarily Germans who own the companies. This article from 2014 shows: [1]
>>Who owns the DAX, Germany’s pre-eminent equity index?
>>Not many Germans, it turns out. According to fresh research from the Bundesbank, the share of domestic ownership of the index—which comprises the 30 largest public companies in traded in the equities markets—fell from 44.1% in 2005 to 36.3% in 2014. Meanwhile, the foreign ownership share rose from 55.9% to 63.7%.
[1] https://qz.com/273655/foreigners-own-most-of-germanys-dax/
The culture here is to outsource everything besides PM, then every few years when the projects fail or are over budget (time or money) to replace the partner with someone new and lose all the domain knowledge those teams had and then they have to start again. I've seen millions of euros wasted in this manner, the only way it'll be fixed is when the current generation of management retire.
I'd be keen to know if anyone else working here has a similar experience, I've tried to 'fix' this culture several times and haven't succeeded yet.
Weirdly, in the last 6 months Azure seems to be making huge inroads, perhaps that'll help.
If you want to work in an environment that works according to common sense and achieve something, take a pay cut and join a smaller company. Of course, you still have to do your research and choose wisely.
i've also worked with Germans a lot, and what you said is one of the keys to their success. Everybody makes mistakes. Mistakes are given. Majority of IT everywhere is mistakes, failures and waste :) What Germans do, at least in my anecdotal experience, is that they [slowly, with time, yet unstoppable] do ultimately notice the mistakes/failures and really react to it with strong reaction like you described, like closing projects, replacing partners, etc. - basically cutting the bad pieces out, cutting losses without fear of sunken costs.
One thing you mention is domain knowledge. This actually also a big problem in the US tech companies. The people fluctuation is so high that after some years nobody might really know anymore how a certain component works. This is not that much of a problem in german companies.
Also the bigger german cooperations have I'm aware of had better planning, project management and QA than things projects I witnessed elsewhere (sample size is obviously limited). While that sounds like more bureaucratic effort, it still reduces the chaotic aspects in projects and improves the chance they will finish on time.
They have money to burn on irrelevant things. At the end of the day the IT system will typically not help your margin on a supply chain beyond a tiny amount.
> an efficient & strong military
Now I doubt everything.
Why Speculate - Michael Crichton: http://docdro.id/4wgVecr
> And it means those same workers in Spain are less equipped to compete for Manufacturing jobs — because Elon Musk has to pay them in German Euros instead of cheap Spanish Peseta. If you’ve got to pay everyone in German Euros, you might as well get the most productive workers for your “buck”, right?
If that was the reason then he should move his factory 50+ miles East. Why the factory is near the Berlin? Network effects. They have the logistic, supply chain and talent. Even electric car project, created by Polish government is designed and build in Germany.
https://ec.europa.eu/eurostat/documents/4187653/8516126/Comp...
German exports are also not particularly cost-sensitive because so many hidden champions in Germany deliver specialised industrial goods that are hard to replace (as the saying goes Germany makes "the thing that goes into the thing that goes into the thing"), which reduces the impact of currencly fluctuations.
Maybe we could move this conversation to adult zone and non-cartoonist levels beyond "spanish cheap drunk workers living in the beach" and "german saint teetotalers workers"?
Thinking that a spanish engineer is less educated than a german engineer is hilarious (yeah, we take siestas under a cactus with a big hat all day in between last party and next party). University titles in all EU are equivalent for the same grades.
These are facts, which do not demean Spanish engineers, so no need to be defensive here. You are just taking one incident and using it to brush over economic facts.
It seems to me that there are at least three primary belligerents of the last two world wars (I would also include Russia).
Edit: not trying to troll. Many are thankful, but many are worried aswell. I/we dont consider it difficult to understand. Work hard, save, dont go to wars, its a simple equation, but its not all rosey, and things arent perfect. Many claim this prosperity to be illusory, and fear a harsh crises ahead.
Sorry but this is not why 'Politics is becoming extreme'.
The same way that not every citizen pays much attention to national debt until their on the hook for the bailout. Less drama is better. Strong and steady economy and forward planning.
I would take that over : "Hey lets just spend money we don't have, we'll tax is later or inflation or screw it, worst case, another bailout."
The proof is in the last financial crisis. Germany was able to buy up because they didn't spend like drunken sailors in a brothel during the, (identified by them and france) financial bubble.
Funny that.
I suspect the reason Politics is leaning more Fascist recently, is due to a bit of anger posts like yours that reflect nothing in reality.
Funny that too.
Because if you arent ... well then.
There’s honestly something very fundamentally wrong. And its very irresponsible and honestly nigh defamatory by trying to blame the larger mood on “posts such as mine”, hell im not even a conservatist, actually a moderate leftist that thinks those cries for attention ought to br heard and adressed. Posts like mine arent making the AFD the third strongest party, theyre riding the anger, rather. I will honestly not make statements about you, because im not here to inflame things, but do consider your finger pointing in this case, its unsavory, even if im off base and you know better, there’s a better way to put it.
Because before 1993, you're not comparing apples to apples: "Germany" was two separate countries, and reunification affected the economics on both sides of the border.
It's true that the recession makes this a particularly favorable starting point for Germany, but it'd be misleading to compare Germany's economy today to the economy of West Germany of the 1980s (as many comparisons do) and ignore that half of modern-day Germany was the DDR at that point.
> "Indeed, when the Single Market was adopted (1993), ..."
For instance, the Netherlands had a trade surplus of $76 billion in 2017, but shows up as having a trade deficit.
France does not appear in the list of Germany's export partners, but it's actually number 2.
Hours worked are pretty low compared to other European states even if you factor in a large part time component. I don't think increasing hours would increase productivity anymore.
There is also a darker side of course with a lot of minimum wage jobs or people working long hours while still being dependent on the state. Even for employees of the same company the income can be quite unequal. Compare development or engineering with production or logistics for example.
A lot of very basic, work-intensive or energy-intensive work has left Germany over the last 30y, but the companies make a killing of value-added manufacturing.
Also, not least due to unification, till a couple of years ago, German wages were very stagnant, so it wasn't that great a country for industrial workers, paywise.
Yeah, what's that all about? Surely the entire point is to incentivise people to _not_ buy heavy cars, since the lowest emission models (aside from electric cars) are smaller?
This "re-distribution" feeds an enormous compliance sector in the receiving countries. An useless sector chocking domestic innovation and allowing the politicians to trumpet successes in "receiving the EU grants".
Btw, the IMF actually produced a special report on inequality in Germany. It is a very serious problem and probably more serious than in the US (a trade surplus is just an excess of savings over investment: Germany industrialised through subsidised loans to politically connected companies, this meant very low interest rates...they are basically China, btw China copied Japan's model and Japan copied Germany...insolvent banks, very high inefficient saving rates, very low wealth, very weak savings system, low wages, very concentrated/vulnerable economically, non-functioning capital markets...it goes on and on).
Net income declined for ten years in a row.
Never mentions hidden champions[1], never mentions the high level of training and morale and hence productivity for the German worker, never mentions German dedication to quality, never mentions the social capital of corporations which are hundreds of years old, never mentions the fact that MBA quarterly profit maximization uber alles bullshit never caught on in Germany, never mentions the Landesbanks.... I submit this article as evidence that economists don't understand any economy.
He may not be an economist, but he excels at economic imbecility.
What Germany does is 'vendor finance' other parts of the Eurozone. The Greek government buys German battleships and the savings the Germans are famous for buy the paper the Greek government issues to close the circle. Then they blame Greece for going into debt once the ponzi scheme reaches its limit.
You get the same effect with London to the wider South East of England, arguably England to Scotland and no doubt several areas in the USA where outside of the area, but within the currency zone, is encouraged to borrow to buy the output of the area.
China's mercantile currency lock does much the same thing.
The eternal problem is that exporting is giving away the output of your people in return for a shiny bauble. If you don't then exchange that shiny bauble for the output of some other people, what was the point of doing all that work in the first place?
You may as well have used your productivity to have Friday off instead and gone fishing.
That's an important point!
In the case of China, I'd guess that it was a strategic decision to do so. Being in debt with others gives others political power over you - at least as long as you are not stronger (ultimately, in a physical sense) than them. I guess China wanted to avoid that as long as it wasn't strong enough. Now that China is getting stronger and stronger, they are starting to invest that accumulated capital in order to gain political power over other, weaker nations. That's btw. a hot topic even on Germany, if it's ok to let the Chinese buy local companies and other assets.
In the case of Germany, I don't really understand why it went that way. The surplus seems to have become some kind of fetish. During the Greek crisis, the risks of such imbalances became visible. The big risk for Germany is imo that a major country like France or Italy will tip over politically, leading to the destruction of the Euro. There's no playbook for how to handle that and I guess it would be a messy and ugly political process which may render quite some of those collected "shiny baubles" worthless. With European history in mind, I don't think taking that risk is worth it.
https://www.asme.org/topics-resources/content/how-does-germa...
Compared to German insolvency procedures [1]
> The aim of insolvency proceedings is not to protect the cor-porate debtor from its creditors, but to maximize the insol-vency dividend payable to the creditors. To achieve this aim, proceedings may be directed either at a liquidation of the company’s business or at a reorganization of the company it-self by means of a plan of restructuring (Insolvenzplan). In the event of a liquidation, the company’s business operations may be sold as a going concern to an investor or the business may be wound up and the individual assets sold.
1. https://www.jonesday.com/files/Publication/1ec093d4-66fb-42a...
A pretty grandiose claim. Reading the essay, the "understanding" seems little more than the fairly mainstream narrative that the Euro is too weak for Germany and too strong for the EU peripheral. Am I missing something?
I particularly liked the insight that currency stability may be desirable for the most successful economies but undesirable for the least successful.
Being in the cryptocurrency space, I can see how this also plays out on a much smaller scale as well. When your community is made up of nobodies, one of the few advantages that you have is that your cryptocurrency has more upside potential than established players. This can offset the significant downside of not having a reputation.
Why this time we succeed and conquered our old enemies using capitalism, money and demand for precise machines that save time instead of wasting everything to fight with everyone around.
