2016 Postmortem
Related: About this forumWhy is the German economy relatively healthy while other European economies are sick?
Please discuss...
insta8er
(960 posts)Agnosticsherbet
(11,619 posts)ELI5: Why is the german economy so much more robust than in other EU countries?
I believe Tony Blair (former PM of the UK) asked This very question to the current PM of Germany. The answer was '...because, Mr. Prime Minister, we still make things in Germany.'
This anecdote goes a long way towards explaining why Germany is such a powerhouse in Europe. German exports are highly prized for their quality, even though their products might not be price competitive with say, China.
The German economy is based on a solid manufacturing base with well compensated workers, while the economies of other European nations tend to be focused on other things like Banking/Finance, agribusiness or Insurance which can be more prone to market fluctuations.
They have a healthy manufacturing sector.
Vehicles: US$249 billion (18.7% of total exports)
Machines, engines, pumps: $226.1 billion (17%)
Electronic equipment: $131.1 billion (9.9%)
Pharmaceuticals: $76.1 billion (5.7%)
Medical, technical equipment: $61.5 billion (4.6%)
Plastics: $60.7 billion (4.6%)
Aircraft, spacecraft: $46 billion (3.5%)
Oil: $33 billion (2.5%)
Iron or steel products: $29.1 billion (2.2%)
Organic chemicals: $26.9 billion (2%)
SoLeftIAmRight
(4,883 posts)lol
swhisper1
(851 posts)DemocratSinceBirth
(99,710 posts)France, Greece, the U K, and Italy have equal levels of government spending as a percent of GDP as Germany or higher.
dem in texas
(2,674 posts)Germany was not always like they are now. They had a history of high unemployment and low paying jobs. The German government made a commitment to provide better education for their future work force. Now they produce high quality and high tech items that require the workers to read and understand math and be computer savvy. This is what the US needs to do. The old time assembly line jobs are never coming back like Trump promises, instead, new factories (if they ever return to the US) will require highly skilled people to operate complex equipment. I hear famous business leaders say over and over that US has got to do a better job in education in our schools.
cosmicone
(11,014 posts)which have concentrated manufacturing jobs into Germany with a fiscal policy that allows massive amounts of capital formation.
JSup
(740 posts)...for the same reason some Americans are rich while most of us are poor.
But I don't know if that's true or not.
AntiBank
(1,339 posts)these are in no particular order
1 Germany has one of, if not the best high tech trade education systems at secondary/tertiary levels in the world.
2. They have a culture of many privately held manufacturing firms that are crucial to the culture (often multigenerational) of extreme pride in product quality and loyalty to the firm. This also leads to massive innovation at production level, something that is lost when countries transit out the production base to cheap labour markets
3 They have a somewhat ideal (for them) system in the EU. The common currency (euro) keeps the price of their products at a reasonable level, as if they reverted to the old Deutschmark, FOREX trading would drive it through the roof (probably over 3 to 1 v the usd, for sure well over 2), thus rendering their export products unaffordable without a self devaluation.
4. The EU has also allowed Germany to bring in much lower paid workers, exempt from their traditional labour rules, AND also to outsource some manufacturing to nearby EU countries to the east and south, where production costs are lower.
5. The Germans maintain the highest personal savings rate and also close to, if not the lowest personal debt load in the EU, positions they have had for decades. The have an internal, broad cultural fear of hyperinflation, that has been transmitted intergenerationally since the Weimar Republic days of hyperinflation in the 1920's.
6. They practice an intelligent, modern form of semi-mercantilism, insomuch as they have steadfastly not allowed the majority of their manufacturing base to be exported oversees to cheap labour markets, combined with some protectionist tactics in terms of global trade. They also use limited dirigiste-style policies for maintaining the underpinning national infrastructure.
7. Germany, like other highly successful northern European counties has maintained a robust (albeit it has been somewhat chipped away at certain points, such as the "mini-job" scheme) social safety net and high wage platform, as they know that a vibrant, well off middle class is key to social and internal economic cohesion.
that's what come to me off the top of my head, I am sure there is plenty I have missed
JaneyVee
(19,877 posts)floppyboo
(2,461 posts)One great example of the losers getting a good deal. Care was taken to help re-build Germany to be a peaceful, sustainable country. Now, lets use this as a history lesson and keep the pitch forks in the closets.
edit to add - loans of equivalent today 14.3 billion dollars to rebuild infrastructure. Hmm.
edit again - conditions of plan include no military build-up.