> 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.
Ya this is propaganda (inheritance taxes affect mainly the very wealthy, not the lower and middle classes). Germany's real secret is that labor still has voting rights within corporations:
And actually if you look at the history of the United States, the civil rights movement depended on a strong labor sector. They don’t teach this in schools, but Martin Luther King, Jr was a threat to the establishment more for his emphasis on unifying workers than for breaking down racial barriers:
The labor movements between WWII and Ronald Reagan’s election led to the US becoming the largest industrial superpower in the world, with some of the highest per capita incomes. The loss of unions and the decline of worker’s rights in the US (and accompanying stagnation of wages post-2000) coincide exactly with the loss of civil rights as we’ve moved to a more authoritarian society.
Things like the loss of habeas corpus under GW Bush and Obama just blow my mind, and I think if the electorate knew what was really going on they would not elect the people they do. But they don’t, that’s why capitalists have traditionally pushed for the privatization of public schools and funding propaganda (infotainment) to preserve the echo chamber. The more striated, divided and polarized a society is, the more wealth can be concentrated in fewer hands. Older nations like Germany have a better handle on this because they’ve seen it repeated in history so many times and are more aware of the dangers of unilateral thinking and monarchy. Inclusivity has paid off handsomely for them.
Yeah this sounds like a bunch of baloney. Inheritance continues to be the most likely way for people to get rich in both the US and France, and the tax is nowhere near the amount that would cause a serious dent in the assets being inherited.
I've heard the argument that, with high inheritance taxes, the heir of a family-owned company has to sell parts or all of the business in order to pay the tax. I don't know enough about the issue to say whether there is some truth to it.
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' value, Germany's was pegged lower).
Germany's export boom after joining the Euro would have been short lived if they reverted back to the DM as the value of their currency would have risen in value, pushing up the cost of exports, ending the boom. Instead it continued unabated.
China also achieved the same thing largely by buying foreign debt (mostly US treasuries). As did Singapore, Taiwan, Hong Kong and Japan, all of which achieved similar results. There's no magic sauce, it's just a question of whether industry takes political precedence over banking (which likes an overvalued currency).
I don't understand why this comment is being down voted. While "currency suppression/ currency manipulation" is usually spoken about in association with fraud, this is most certainly one of the reasons that has allowed German manufacturing to remain competitive despite having higher labor costs. Excellent comment.
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
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.
Now, if the goal is to make Germany richer then we are in the correct path.
While there is definitely some truth to the effects of the value Euro being "too low", I don't think that is the "main reason" for the number of German middle class manufacturers which the article is talking about. This is rather a historical artifact and did not develop in the last 17 years since the introduction of the Euro.
I would also like to mention that currency value is not simply a banking vs. industry result in my opinion, there are many up- and downsides to "currency surpression" and Germany does not decide about the value of the Euro but the members of the Eurozone do.
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.
A further pillar of the Hidden Champions’ competitive strength is the unique German dual system of apprenticeship, which combines practical and theoretical training in non-academic trades. The Hidden Champions invest 50% more in vocational training than the average German company.
I think a 4 year college degree does not make sense for a lot of jobs. It just puts students with more debt, and sometimes skills that don't lead to a job.
We have similar educational system here in Czech Republic. There are numerous pros and cons. Basically at the age of 15 you have to choose what you want to do with your life as changing careers are not that simple. And lets be honest, most of 15 years old kids have no idea what they want to spend rest of their life doing.
I did take this technical route (focusing on electronics, computer networking and programming) and it give me some edge when I started my CS degree, but further study of medicine, law or even art is out of question as I don't had any theoretical basics for those majors. All I study during my high school was mathematics, physics and specialised subjects.
>I think a 4 year college degree does not make sense for a lot of jobs. It just puts students with more debt, and sometimes skills that don't lead to a job.
Well, the thing is that college and university don't cost as much and there are various government and private funds you can take advantage off. Counting from personal anecdotes, I think only 1 student in my current semester group is actually on a credit debt and that not entirely related to university spending either.
This article grinds too many axes to be as insightful as it could be. E.g., "[T]he inheritance tax in the U.S. prevent the accumulation of capital necessary for the formation of a strong mid-sized sector." is just casually tossed in there.
Germany is a highly decentralized country. Maybe go and study in one of the metropolitan areas but then return to their beloved villages far away from the maddening crowds. In fact many of these hidden champions are in the "middle of nowhere" with often sub-par logistics (e.g. no immediate Autobahn or major train connection).
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.
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 put into motion. Germany and the people of Germany should profit from peace. Part of this was the Marshall Plan, part the European Recovery Program.
This positioned Germany to have a couple of advantages, namely that the Victorian era mass production methods that had been pioneered could be discarded (but remained in place in a lot of the other European developed countries). In Germany these were fully replaced by WW2 era production methods as most of Germany's industrial capability had been destroyed or damaged.
Additional processes to limit industrial capabilities (the key method of which was limiting steel output of the Ruhr Valley, which acted to restrain all industry) meant that industry was incentivised to find a larger profit per unit rather than slimmer margins from more units.
Combined with not being able to maintain a military, Germany was able to invest in skilled manufacturing like no-one else were able to.
Over a course of 50 years this resulted in not just a modern manufacturing capability to be put in place, but for that to be at the very highly skilled end of manufacturing.
The reason so many of the mid-sized market leaders come from Germany can be traced back to post-WW2 policies to ensure that Europe could be at peace. Some of these policies were undoubtedly exploitative in the short term, but long term have achieved their goal.
> (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?
Okay, first things- first - no lessons where learned, nobody out of the good of their hearts did anything for anybody. The original plan after world war 2 was to turn Nazi Germany into a agrarian border stripe between the two emerging power blocks.
This plan was put into action, and some starvation resulted from the dismantling and moving of the factories. The reason this changed is because the cold war tensions, made it necessary to bind the former enemy as a useful puppet and ally to each corresponding site.
Thus west and east Germany got away with a blue eye for blundering and murdering east European countries and several minorities.
There is no moral here to be taken home with- maybe some tactical advice- if you want to stab and rob your neighbor - do it in the midst of a gang-shootout and then join in on the side nearby with the stolen goods and weapon.
This is just incorrectly attributing germanys success to the Marshall plan! Yes, the Marshall plan helped Germany recover. But the Marshall plan had absolutely nothing to do with the "Mittelstand" emerging as a predominant industry type. There is nothing in the Marshall plan that enabled this to happen.
More than anything, this has to do with German ability to unite goals of labour and market capitalism, commonly referred to as social capitalism in Germany. It majorly aligns labour and company ownerships goals. Labour wants to have reliable jobs, which you achieve by being highly skilled and thereby competitive. Owners want to be competitive and can do this via highly skilled labour. Labour representatives are by law required to be on a companies board. This is what forces labour and owners to work together. It has lead to a highly skilled and competitive workforce that enables the Mittelstand. There are other factors that help, but none of them are as important.
This has nothing as such to do with the Marshall plan. It's very ignorant to attribute this success to "americas help". it's borderline offensive and does not actually engage with the primary argument in the article. If you want to learn from germanys success, you should read up on labour represantatives being on the company board, rather than attributing it to something that is barely related.
>The reason so many of the mid-sized market leaders come from Germany can be traced back to post-WW2 policies to ensure that Europe could be at peace. Some of these policies were undoubtedly exploitative in the short term, but long term have achieved their goal.
Hilariously, the Volkswagen designs (The Type 1/Beetle), factories, etc. were actually offered as a free war reparation to both the US and to Britain. However, neither party was interested... in what would end up being the most profitable automotive concern on the planet. It is considered the single greatest blunder of the entire automotive industry.
> 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.
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.
does the fact that Germany is right smack in the middle of Europe between Eastern European powers that can supply cheap (EDIT: and skilled, looking for better universities or opportunities) labor and Western/Northern European markets that can afford their goods have anything to do with this?
I wonder how/whether increasing the defense budget would help the German economy. Let me just say right away, that I am in no way advocating for increasing the supply of arms and ammunition in the world, which already seems to be at dangerous levels. However, if Germany invested as much in military R&D and a domestic arms industry, I wonder if that would boost the economy as it has done in the US.
Also, the immigration system seems less broken for smart people to emigrate to Germany. Could probably get the best global talent as well.
Germany was strong before WK2, the buildings where gone, but the enterpreteneurs, scientists, developers, the workers morale and their experince were still there. Also obedience of the law, memories about how things should be organized etc.
If some money would help so much, more contries would be doing better.
If some money would help, more countries qould be soing better.
It's interesting, because many of the neighboring countries were in much better shape after the war, but since they were forced by the Soviets to reject the Marshall plan, Germany got ahead economically and Eastern Europe became the "poor part of Europe" again.
I'd be interested in knowing what percentage of the Hidden Champions are publicly traded companies. Companies of that size are very likely to be acquired in the US. Consolidation is a constant activity by many public firms and probably (I am speculating) tends to reduce the proportion of mid-tier companies relative to Germany.
Once acquired, these companies have an additional set of factors weighing on them in that the founding team is likely to leave, budgets are controlled by, and, profits are sent to an external firm. Those three factors will reduce the company's ability to determine it's own fate.
>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.
What people overlook, also this linked pieces is, that Germany also has the banking system for this. You can say, there are three types of banks, private, state and co-op banks. And while there are huge private banks, most state and co-op banks are organised locally. Almost every district has its own Sparkasse und many towns still have a Volksbank or Reifeisenbank.
This is an important feature of the economics in Germany I think. Yes, many of these banks might be too small today and many merge into bigger banks but they are still the most trusted banks in the country.
Perhaps this means Germany could suffer disproportionately as a result of automation. It's also worth pointing out that Germany is not immune to global trends that may erode the ability to sell based on quality - I recently bought a 2001 BMW E39, thought by many to be the best BMW ever made. In fixing up the E39 I've come across the same opinion over and over again: BMWs/German cars in general are not as well made as they used to be.
Edit: I'm not saying my E39 is thought to be the best BMW ever made of course :D
I think our education system is pretty solid and well equipped to deal with tomorrows challenges and create competent employees (this is just briefly addressed in the article).
While our education system is pointlessly complicated, a typical product of german bureaucracy, it's surprisingly flexible. If you want a job in Germany, you have do get some form of a degree. Especially "hidden champions" don't hire unskilled labourers, ever. There are essentially 3 options:
1. the apprenticeship: Still popular it is the most practical of the three. It takes a few years where you learn to master all the basics, even if its in practice handled by a machine, but also all the necessary theoretic backgrounds so that you know what you are doing. All the practical skills are taught at the company and there are (mostly) special schools for the theoretic parts. Also important: The apprentice already earns something during his apprenticeship! For some, depending on the individual circumstances, this is very important. Also you apply your skills as soon as possible, since the company already pays you, it tries to get you productive as soon as possible. Apprenticeship are no joke, they produce hard working, competent and practical employees. There are A LOT of companies looking for apprentices right now and not enough applicants.
2. the "dual study system"(direct translation): This is getting more and more popular and for many it is the right choice. It's a mix between apprenticeship and a university study. Half of your time you spend at your company, the other half you study at special "applied university"-like institutions(legally, they are not universities in Germany). I think especially for CS, most would be in good hands in these programs. They don't focus on super-theoretical stuff, they are very practical while providing your with a valid bachelor-degree in the end. For some subjects, the dual is the better option. The applied universities are not super focused on research and staffed with professors coming from the industry. They will teach you real-world, relevant stuff without neglecting the theoretical basics. After the bachelor, you have the choice to delve deeper into research with a master, either at this institution or switching to a traditional university. Also, you get paid during your study.
3. the university study: Well, this is essentially the same compared to your universities beside that it's free ;) They are often way more theoretical then the dual-study system. You have to be motivated by your material, since it's not immediately useful. Also in germany as an university student you are very independent, nobody pushes you to go to your lectures, take the tests or do your weekly problem set. Many get too relaxed and perform better in a more controlled environment. But if you're interested in the theoretical side of your subject and you want get a more academically demanding degree, the university is the right choice.
As a CS-student in germany, automation and digitalisation of factories (industry 4.0, as we call it) is the buzzword heard everywhere and i think this system is equipped to handle the challenge. Don't underestimate the apprentices, they know their stuff. 2-3,5 years of training are separating him from unskilled labor.
Germany's real secret is that they don't pay their engineers.
An engineer, even with a PhD from a world class university, makes around 55k. Even in cities like Munich they will laugh about you if you request 60k.
Sure, if you have tons of experience, industry contacts etc., maybe more SOMETIMES. But let's get back to the 55k. A short internet search (www.nettolohn.de) tells us this is approximately 2600 Euro net pay per month. And this is for a full time job that is likely very stressful and comes with tons of responsibility. An English teacher in China (Shanghai, Beijing) can make 3000 Euro net a month.
Even if you claim my numbers are a bit off. It gives you an idea.
First of all, you have to adjust this for the cost of living and the fact that employers have to pay about half of the health insurance and retirement savings cost on top of the salary as well as three or four weeks of payed holidays etc. 55k Euros in Munich is easily worth more than $100k in the US.
Second, a CS graduate can certainly get 60k in Munich and a PhD will likely have 70k or more. At BMW this may be 80k or more.
Rarely mentioned is the fact that post-war Germany turned to free markets, hence the "German Miracle". This persisted until 1970 or so, when the German economy turned significantly towards socialism and big government.
[+] [-] polmuz|8 years ago|reply
Really? How?
[+] [-] zackmorris|8 years ago|reply
https://en.wikipedia.org/wiki/Codetermination_in_Germany
And actually if you look at the history of the United States, the civil rights movement depended on a strong labor sector. They don’t teach this in schools, but Martin Luther King, Jr was a threat to the establishment more for his emphasis on unifying workers than for breaking down racial barriers:
https://www.theatlantic.com/entertainment/archive/2011/02/al...
The labor movements between WWII and Ronald Reagan’s election led to the US becoming the largest industrial superpower in the world, with some of the highest per capita incomes. The loss of unions and the decline of worker’s rights in the US (and accompanying stagnation of wages post-2000) coincide exactly with the loss of civil rights as we’ve moved to a more authoritarian society.
Things like the loss of habeas corpus under GW Bush and Obama just blow my mind, and I think if the electorate knew what was really going on they would not elect the people they do. But they don’t, that’s why capitalists have traditionally pushed for the privatization of public schools and funding propaganda (infotainment) to preserve the echo chamber. The more striated, divided and polarized a society is, the more wealth can be concentrated in fewer hands. Older nations like Germany have a better handle on this because they’ve seen it repeated in history so many times and are more aware of the dangers of unilateral thinking and monarchy. Inclusivity has paid off handsomely for them.
[+] [-] pm90|8 years ago|reply
[+] [-] mbid|8 years ago|reply
[+] [-] philiphodgen|8 years ago|reply
[+] [-] crdoconnor|8 years ago|reply
[+] [-] unknown|8 years ago|reply
[deleted]
[+] [-] crdoconnor|8 years ago|reply
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' value, Germany's was pegged lower).
Germany's export boom after joining the Euro would have been short lived if they reverted back to the DM as the value of their currency would have risen in value, pushing up the cost of exports, ending the boom. Instead it continued unabated.
China also achieved the same thing largely by buying foreign debt (mostly US treasuries). As did Singapore, Taiwan, Hong Kong and Japan, all of which achieved similar results. There's no magic sauce, it's just a question of whether industry takes political precedence over banking (which likes an overvalued currency).
[+] [-] pm90|8 years ago|reply
e.g. see this article on Politico which basically says the same thing: http://www.politico.com/agenda/story/2017/05/26/trump-right-.... The reunification part though: I had not thought about that, and is an interesting revelation.
[+] [-] JanSt|8 years ago|reply
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
[+] [-] RobertoG|8 years ago|reply
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. Now, if the goal is to make Germany richer then we are in the correct path.
[+] [-] chki|8 years ago|reply
[+] [-] _pmf_|8 years ago|reply
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.
[+] [-] lispm|8 years ago|reply
[+] [-] mbid|8 years ago|reply
[+] [-] samfisher83|8 years ago|reply
A further pillar of the Hidden Champions’ competitive strength is the unique German dual system of apprenticeship, which combines practical and theoretical training in non-academic trades. The Hidden Champions invest 50% more in vocational training than the average German company.
I think a 4 year college degree does not make sense for a lot of jobs. It just puts students with more debt, and sometimes skills that don't lead to a job.
[+] [-] dejv|8 years ago|reply
I did take this technical route (focusing on electronics, computer networking and programming) and it give me some edge when I started my CS degree, but further study of medicine, law or even art is out of question as I don't had any theoretical basics for those majors. All I study during my high school was mathematics, physics and specialised subjects.
[+] [-] tscs37|8 years ago|reply
Well, the thing is that college and university don't cost as much and there are various government and private funds you can take advantage off. Counting from personal anecdotes, I think only 1 student in my current semester group is actually on a credit debt and that not entirely related to university spending either.
[+] [-] kevmo|8 years ago|reply
[+] [-] baxtr|8 years ago|reply
[+] [-] IdontRememberIt|8 years ago|reply
[+] [-] thesumofall|8 years ago|reply
However, the German economic powerhouses are the Southern states - all of which are predominantly Catholic
[+] [-] JanSt|8 years ago|reply
[+] [-] buro9|8 years ago|reply
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 put into motion. Germany and the people of Germany should profit from peace. Part of this was the Marshall Plan, part the European Recovery Program.
This positioned Germany to have a couple of advantages, namely that the Victorian era mass production methods that had been pioneered could be discarded (but remained in place in a lot of the other European developed countries). In Germany these were fully replaced by WW2 era production methods as most of Germany's industrial capability had been destroyed or damaged.
Additional processes to limit industrial capabilities (the key method of which was limiting steel output of the Ruhr Valley, which acted to restrain all industry) meant that industry was incentivised to find a larger profit per unit rather than slimmer margins from more units.
Combined with not being able to maintain a military, Germany was able to invest in skilled manufacturing like no-one else were able to.
Over a course of 50 years this resulted in not just a modern manufacturing capability to be put in place, but for that to be at the very highly skilled end of manufacturing.
The reason so many of the mid-sized market leaders come from Germany can be traced back to post-WW2 policies to ensure that Europe could be at peace. Some of these policies were undoubtedly exploitative in the short term, but long term have achieved their goal.
[+] [-] izacus|8 years ago|reply
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?
[+] [-] Pica_soO|8 years ago|reply
This plan was put into action, and some starvation resulted from the dismantling and moving of the factories. The reason this changed is because the cold war tensions, made it necessary to bind the former enemy as a useful puppet and ally to each corresponding site. Thus west and east Germany got away with a blue eye for blundering and murdering east European countries and several minorities.
There is no moral here to be taken home with- maybe some tactical advice- if you want to stab and rob your neighbor - do it in the midst of a gang-shootout and then join in on the side nearby with the stolen goods and weapon.
[+] [-] ricw|8 years ago|reply
More than anything, this has to do with German ability to unite goals of labour and market capitalism, commonly referred to as social capitalism in Germany. It majorly aligns labour and company ownerships goals. Labour wants to have reliable jobs, which you achieve by being highly skilled and thereby competitive. Owners want to be competitive and can do this via highly skilled labour. Labour representatives are by law required to be on a companies board. This is what forces labour and owners to work together. It has lead to a highly skilled and competitive workforce that enables the Mittelstand. There are other factors that help, but none of them are as important.
This has nothing as such to do with the Marshall plan. It's very ignorant to attribute this success to "americas help". it's borderline offensive and does not actually engage with the primary argument in the article. If you want to learn from germanys success, you should read up on labour represantatives being on the company board, rather than attributing it to something that is barely related.
[+] [-] MrFoof|8 years ago|reply
Hilariously, the Volkswagen designs (The Type 1/Beetle), factories, etc. were actually offered as a free war reparation to both the US and to Britain. However, neither party was interested... in what would end up being the most profitable automotive concern on the planet. It is considered the single greatest blunder of the entire automotive industry.
James May makes a mention of it in his Cars of the People series: https://youtu.be/6pmp0Oxg520?t=11m54s
[+] [-] mbid|8 years ago|reply
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.
[+] [-] krona|8 years ago|reply
https://www.imf.org/external/pubs/cat/longres.aspx?sk=40987....
[+] [-] olewhalehunter|8 years ago|reply
[+] [-] pm90|8 years ago|reply
Also, the immigration system seems less broken for smart people to emigrate to Germany. Could probably get the best global talent as well.
[+] [-] someSven|8 years ago|reply
If some money would help so much, more contries would be doing better.
If some money would help, more countries qould be soing better.
[+] [-] darpa_escapee|8 years ago|reply
[+] [-] literallycancer|8 years ago|reply
[+] [-] 11thEarlOfMar|8 years ago|reply
Once acquired, these companies have an additional set of factors weighing on them in that the founding team is likely to leave, budgets are controlled by, and, profits are sent to an external firm. Those three factors will reduce the company's ability to determine it's own fate.
[+] [-] strict9|8 years ago|reply
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.
[+] [-] tehabe|8 years ago|reply
This is an important feature of the economics in Germany I think. Yes, many of these banks might be too small today and many merge into bigger banks but they are still the most trusted banks in the country.
[+] [-] Boothroid|8 years ago|reply
Edit: I'm not saying my E39 is thought to be the best BMW ever made of course :D
[+] [-] sparkling|8 years ago|reply
[+] [-] ChefDenominator|8 years ago|reply
[+] [-] unknown|8 years ago|reply
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[+] [-] unknown|8 years ago|reply
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[+] [-] LeanderK|8 years ago|reply
1. the apprenticeship: Still popular it is the most practical of the three. It takes a few years where you learn to master all the basics, even if its in practice handled by a machine, but also all the necessary theoretic backgrounds so that you know what you are doing. All the practical skills are taught at the company and there are (mostly) special schools for the theoretic parts. Also important: The apprentice already earns something during his apprenticeship! For some, depending on the individual circumstances, this is very important. Also you apply your skills as soon as possible, since the company already pays you, it tries to get you productive as soon as possible. Apprenticeship are no joke, they produce hard working, competent and practical employees. There are A LOT of companies looking for apprentices right now and not enough applicants.
2. the "dual study system"(direct translation): This is getting more and more popular and for many it is the right choice. It's a mix between apprenticeship and a university study. Half of your time you spend at your company, the other half you study at special "applied university"-like institutions(legally, they are not universities in Germany). I think especially for CS, most would be in good hands in these programs. They don't focus on super-theoretical stuff, they are very practical while providing your with a valid bachelor-degree in the end. For some subjects, the dual is the better option. The applied universities are not super focused on research and staffed with professors coming from the industry. They will teach you real-world, relevant stuff without neglecting the theoretical basics. After the bachelor, you have the choice to delve deeper into research with a master, either at this institution or switching to a traditional university. Also, you get paid during your study.
3. the university study: Well, this is essentially the same compared to your universities beside that it's free ;) They are often way more theoretical then the dual-study system. You have to be motivated by your material, since it's not immediately useful. Also in germany as an university student you are very independent, nobody pushes you to go to your lectures, take the tests or do your weekly problem set. Many get too relaxed and perform better in a more controlled environment. But if you're interested in the theoretical side of your subject and you want get a more academically demanding degree, the university is the right choice.
As a CS-student in germany, automation and digitalisation of factories (industry 4.0, as we call it) is the buzzword heard everywhere and i think this system is equipped to handle the challenge. Don't underestimate the apprentices, they know their stuff. 2-3,5 years of training are separating him from unskilled labor.
[+] [-] tiatia|8 years ago|reply
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[+] [-] tiatia|8 years ago|reply
An engineer, even with a PhD from a world class university, makes around 55k. Even in cities like Munich they will laugh about you if you request 60k.
Sure, if you have tons of experience, industry contacts etc., maybe more SOMETIMES. But let's get back to the 55k. A short internet search (www.nettolohn.de) tells us this is approximately 2600 Euro net pay per month. And this is for a full time job that is likely very stressful and comes with tons of responsibility. An English teacher in China (Shanghai, Beijing) can make 3000 Euro net a month.
Even if you claim my numbers are a bit off. It gives you an idea.
[+] [-] quonn|8 years ago|reply
Second, a CS graduate can certainly get 60k in Munich and a PhD will likely have 70k or more. At BMW this may be 80k or more.
[+] [-] skookumchuck|8 years ago|reply
[+] [-] Roboprog|8 years ago|reply