I have tried to go against some of the arguments because some are wrong, some are okayish, and some are just plain wrong, but I gave up. The article moves all over the place pulling random facts from all kinds of places in support of the idea that Germany is declining. Maybe that's true, maybe not. This article appears not rigorous enough to come to a right conclusion.
Same here. It reads like a huge list of cherry-pickings.
You'd think that quoting facts would strengthen ones argument, all these tiny and sometimes very specific facts with no context had the opposite effect.
It's directionally correct though, no? What's the case to be made that Germany is ascending? The fact that most German billionaires inherited their wealth is pretty telling I think.
Since 2015 I can’t remember Matthew Karnitschnig writing a neutral or even positive article on Germany. The sky is always immediately falling. Back then it was of course the refugee crisis and other assorted culture war nonsense, but now he seems to be retooling.
I found the article quite good but has missed a couple of points that need to be mentioned:
1. The attitude of the average German consumer
It seems to me that one of the national sports in Germany is to find cheaper deals for pretty much anything (and then brag about it). Even if it's fractions of a euro! After trimming down on everything that they could, the manufacturers and service providers had to finally reduce quality. This happened to such an extent that the famous "Made in Germany" is now meaningless, if not worse.
2. The attitude of the average German manager
"I am your boss, you are the employee, now shut up and do as I say" attitude does not work well in knowledge-based industries like Software. And I believe this is one of the reasons why Germany is behind in digitalization, let alone in digital innovation.
1. Made in Germany for consumer products might be worth less today but the export of industrial supplies like machines, chemicals and materials are much more important to the economy as a whole. Outside of Germany it is still quite respected - to the point where foreign companies give themselves and their products German sounding names while slapping German flags on their boxes to sell more.
2. Why software Made in Germany doesn't work well has a number of reasons but I'd say that it is primarily because it is much harder to raise capital for things that only might work 1 out of 50 times. People who start businesses are much more risk-averse and most try to be profitable or self-financed from year 1. This makes them uncompetitive in innovative sectors.
> I am your boss, you are the employee, now shut up and do as I say
This would also not work in engineering and never did. In fact, it's likely one of reasons why german engineering was so good: because people would (and still do) tell their boss bluntly what is wrong.
I don’t have an informed opinion, but with my limited interactions with Germans, the problem with software engineering is that it is not considered a high status profession. The smart German would rather go into law, medicine, accounting (!!) or teaching, than into software development. It is true that before Brexit salaries were much lower compared to the UK, and that only recently, after Covid, they skyrocketed. So this perception may have changed for the younger generations.
Mind, this is my poor man’s sociologist analysis, but it seems that they rely heavily on foreigners, which are very hard to attract because of the language and bureaucratic barrier. From what I see, even companies that pay good salaries (say ~100K total compensation for a senior) mainly employ foreigners.
> "I am your boss, you are the employee, now shut up and do as I say"
I don’t mean to be disrespectful in any way, but (there’s always a but after that opening) if that’s you’re experience working in Germany, I’m afraid you’re either ignorant of culture in other countries, or not working in a job with a lot of impact, or responsibility. The German work culture is distinctly the opposite, namely people being blunt in what they say and brutally honest with their superiors.
>This happened to such an extent that the famous "Made in Germany" is now meaningless, if not worse.
This was originally an anglo pejorative meant to denigrate the quality of German goods. Mild irony.
>2. The attitude of the average German manager
>"I am your boss, you are the employee, now shut up and do as I say" attitude does not work well in knowledge-based industries like Software. And I believe this is one of the reasons why Germany is behind in digitalization, let alone in digital innovation.
We're definitely huge fans of paperwork here and it hurts a lot.
Want to sell something? Company registration takes months, just getting a business tax ID was 6 weeks for me. To sell electronics, register with Stiftung EAR, then find an intermediary to get you a WEEE-Nummer and report monthly (!) sales figures of all your device types. Just that registration costs 1k and 8 weeks. And don't forget your battery and packaging license!
By comparison, similar WEEE fees in UK are 30 pounds and in Estonia are 12 euros, no wait.
But the real fun starts if you hire someone :) The paperwork there is a magnitude more.
I don't think we're doomed though. The schools are packed with kids, education is free and good, health services are not a concern (looking at you, US), society is healthy. I think we'll manage :) Hopefully no more self-inflicted energy crises in the works.
And obviously the reason is the lack of labour reform and not the billions in handouts currently given by the US and China which the EU refuses to match because of its brain dead insistence on undistorted markets and fiscal rigour. Ah Politico, such well researched and reasonable journalism, it warms my heart…
Is this the same Germany that last I know allowed bribes and kickbacks on international sales to be tax deductible? We lost so many contracts because the things the Germans did were illegal for a USA company.
I have the typical American of German descent hate for Germany because they threw my family away but now are open for everyone else to come live there (making it a huge 'fuck you and your family specifically love Germany'), but also how truly horrible they behave when it comes to business.
> because its brain dead insistence on undistorted markets and fiscal rigour
The issue lies in the fact that the EU is comprised of numerous countries within a single market. When one nation begins to subsidize a company or an entire sector, the other nations are left powerless, merely watching their own companies struggle to compete against those bolstered by government subsidies. It becomes a game of pouring government money down the drain and destroying any semblance of free market mechanisms.
Why aren't other EU countries facing the same problems? Also, from the article:
> BASF opened a plant near Dresden that makes cathode materials for electric-car batteries just two weeks ago and has pledged to keep investing in its home market. To secure such commitments, however, local and federal governments have been forced to offer generous incentives. BASF will receive €175 million in government support for its new battery operation, for example.
> Similarly, in June, the U.S. chipmaker Intel secured an eye-watering €10 billion subsidy for a massive new factory in the eastern city of Magdeburg. That translates into €3.3 million for each of the 3,000 jobs the company has pledged to create.
Nothing about European markets is undistorted. The most distorted of all is the view that Europe is declining out of some moral stance. The classic example is how California and the US had to go clean up Volkswagen because local regulatory authorities weren't up to snuff.
Opposite lots of commenters here deriding the article as "all over the place", I thought it was very well-written and comprehensive. Seems like there are concerns across a wide swath of companies and industries in Germany.
Reading between the lines, the proposed solution seems something like lower corporate taxes (currently making decamping to Dublin more attractive) and lower energy prices.
The risk brought up is that if things continue it will likely lead to increasing blaming of immigrants and a rise in the far-right AfD party, which has already started.
- Germany is heavily reliant on industry (like Autos)
- Cheap energy has ended due to war in Ukraine
- The available replacements are going to be even more expensive (and they are still closing more nuclear plants)
- The production costs will increase reducing their competitiveness even further
- The competitives was bad even before this (VW vs Tesla anyone?)
- Once the huge layoffs and closures will begin, the entire economy will enter recession.
Industry-focuses businesses are now low-margin and high-competition (competition mostly coming from Asia). The same is happening here what happened during the shift of Agriculture economy into Industrial economy.
And the shift to services (tech/software specifically) was pretty much non-existent. Also, it's unlikely to become any better due to alienation of investors (who wants to invest in a country where everybody is taxed and red-taped into oblivion?).
So... who nows. Germany is probably going to pull a "Greece" on us :).
In addition to this general malaise, the EU Cyber Resilience Act (CRA) is going to have a big, negative impact on all of the EU, especially Germany, and especially the software industry. The CRA itself is insane, requiring, for example, that conforming software phone-home. Which is, of course, the opposite of what we should be pushing for. Note that something similar is probably coming to the US in the next few years.
I learned about this today from Eclipse Foundation executive director Mike Milinkovich's excellent video/tutorial/warning on the subject: https://www.youtube.com/watch?v=AmsM5_5QO5A
When you look at open source AI, for example, EU laws are a huge problem: Not only the act you mentioned, but also GDPR, where it is not clear so far how the "right to be informed" or the "right to deletion" can/must conceivably be implemented. (From my interpretation I also don't see how OpenAI can conform to the "right to be informed" without publishing its training data).
The linked article is mentioning additional factors:
- tax incentives and favorable legislation offered in the US and China.
- drawn out planning and approval procedures in Germany
- no more cheap natural gas from Russia (i guess that was a big hit for the chemical industry)
- cheaper energy (also cheaper green energy) in the US and China.
Germany is extremely well positioned to rise again economically in the next five years or so. It's attracting migrants from all over Europe, it's located quite nicely in the middle of the continent and it's currently building a massive capacity of renewable energy.
The only real problem right now is efficiency of spending. Nearly all public sectors (defense, housing, transportation, education, healthcare) bemoan significant lack of financing and workers. Yet, Germany spends enormous amounts of money and employs record levels of workers there. It's like all the money and workers just vanish. This leads to the situation that it's currently difficult to hire in Germany.
This process leads to the attraction of skilled workers especially from eastern Europe. I don't know where this ends, but I doubt the spending and employment will get significantly more efficient. Instead, Germany might very well attract additional millions of well-educated Poles, Ukrainians, Romanians, etc.
I wouldn't be surprised if by 2030 we see a Germany with a population of 90M people absolutely dominating the European market.
I help German immigrants for a living. It's currently one of the hardest countries to settle in due to the archaic and labyrinthine bureaucracy. Berlin's immigration office is completely unable to handle its workload, delaying immigration to the point people just give up and leave.
I've been here long enough to apply for citizenship, but Berlin has a backlog of 26,000 applications and literally refuses new ones until they centralise the processing. The new central office is expected to handle 20,000 applications per year.
This is the city where you need an in-person appointment weeks in the future to register your address, a key process that many other things depend on.
All of this can only be done in German, of course.
If Germany wants to attract talent, it has to meet it in the 21st century.
i would not be so hopeful. A big problem is that germany does not operate in the global lingua franca - English. This really shows when countries like Australia and Canada - combined, both have a population less than germany’s - are able to attract the best and brightest from around the world.
Another problem is one that plagues all old world countries - societies are based around ethnicity.
These combine to mean that Germany and the EU in general are not attracting the best from abroad. The region is often the second or third choice of the educated migrant. Don’t believe me - look at the EU’s own internal migration numbers and the stats for immigrants from outside the EU. Internal EU migration is pretty low relative to countries like US (states vs countries, sure) and the immigrations from outside are largely poorly educated.
This shows in Germany’s immigration policy - they have been reducing barriers to entry for over a decade now and are yet struggling to hire foreign talent. This begs the question - why?
Considering that Switzerland is No. 1, Sweden, Netherlands or Singapore are all above Germany, I'd guess population is not a big factor in computing this index.
Keep in mind that politico is a subsidiary of Axel Springer, which is largely controlled by a man that has recently been exposed to have actively ordered chief editors write in support of the party of economic liberalism (FDP) before the last election in Germany. I.e. it is entirely possible that this article is also politically motivated.
The article mentions 'high energy prices' and 'energy costs' and alludes to 'Kremlin cutting off natural gas supplies' but otherwise provides zero discussion of the overall energy picture in Europe. A couple of major issues they could have addressed:
1. In retrospect, was the German decision to eliminate nuclear power wise? Could they have squeezed another decade of power out of their existing plants, even if they didn't see that as a viable long-term energy source (having to import uranium fuel is not all that better from having to import natural gas, economically speaking)? Granted, nuclear only provides electricty, while BASF needs methane.
2. Russian gas exports to Germany have been replaced by US LNG gas exports, but the cost differential is pretty huge. Looking around, I see this site has discussed it before (Nov 2022):
That's an interesting article, pointing to tight markets being taken advantage of by European energy traders (though Exxon and Chevron shares are up 50% since the price boom, Permian Basin development, booming LNG exports, etc.). It also might explain why some European interests see a finacial benefit in prolonging the Ukraine war (i.e. keeping Russian gas sanctions in place).
3. Somewhat amusingly, if BASF moves a lot of production China, then their natural gas feedstocks will be coming from... Russia's massive Sakahalin 1 & 2 projects (built with extensive help from Exxon and Shell respectively, and ironically)?
I feel embarrassed for Germany. So much pride, built on dishonesty and exploitation of customers and other EU nations. Getting to the point of implementing meaningful reform will be tremendously ugly, in a country that derives such gratification from exporting carbon-intensive industry to China. Sad.
[+] [-] huijzer|2 years ago|reply
[+] [-] Michelangelo11|2 years ago|reply
Anyway, the absolute key issue seems to be energy costs. If they hadn't skyrocketed, this wouldn't be happening.
[+] [-] HackOfAllTrades|2 years ago|reply
You'd think that quoting facts would strengthen ones argument, all these tiny and sometimes very specific facts with no context had the opposite effect.
[+] [-] tvon_g|2 years ago|reply
[+] [-] ttepasse|2 years ago|reply
[+] [-] polytely|2 years ago|reply
[+] [-] 2-718-281-828|2 years ago|reply
[rolls dice - dice gives a 6]
unbelievable ... not 3, not 15, but 6 - that's remarkably close to 8!
you're some smart dice, aren't you!
[+] [-] tdrz|2 years ago|reply
1. The attitude of the average German consumer
It seems to me that one of the national sports in Germany is to find cheaper deals for pretty much anything (and then brag about it). Even if it's fractions of a euro! After trimming down on everything that they could, the manufacturers and service providers had to finally reduce quality. This happened to such an extent that the famous "Made in Germany" is now meaningless, if not worse.
2. The attitude of the average German manager
"I am your boss, you are the employee, now shut up and do as I say" attitude does not work well in knowledge-based industries like Software. And I believe this is one of the reasons why Germany is behind in digitalization, let alone in digital innovation.
[+] [-] aeyes|2 years ago|reply
2. Why software Made in Germany doesn't work well has a number of reasons but I'd say that it is primarily because it is much harder to raise capital for things that only might work 1 out of 50 times. People who start businesses are much more risk-averse and most try to be profitable or self-financed from year 1. This makes them uncompetitive in innovative sectors.
[+] [-] patall|2 years ago|reply
This would also not work in engineering and never did. In fact, it's likely one of reasons why german engineering was so good: because people would (and still do) tell their boss bluntly what is wrong.
[+] [-] mmarq|2 years ago|reply
Mind, this is my poor man’s sociologist analysis, but it seems that they rely heavily on foreigners, which are very hard to attract because of the language and bureaucratic barrier. From what I see, even companies that pay good salaries (say ~100K total compensation for a senior) mainly employ foreigners.
[+] [-] 9dev|2 years ago|reply
I don’t mean to be disrespectful in any way, but (there’s always a but after that opening) if that’s you’re experience working in Germany, I’m afraid you’re either ignorant of culture in other countries, or not working in a job with a lot of impact, or responsibility. The German work culture is distinctly the opposite, namely people being blunt in what they say and brutally honest with their superiors.
[+] [-] dontupvoteme|2 years ago|reply
This was originally an anglo pejorative meant to denigrate the quality of German goods. Mild irony.
>2. The attitude of the average German manager
>"I am your boss, you are the employee, now shut up and do as I say" attitude does not work well in knowledge-based industries like Software. And I believe this is one of the reasons why Germany is behind in digitalization, let alone in digital innovation.
My experience has been the complete opposite.
[+] [-] codethief|2 years ago|reply
[+] [-] croisillon|2 years ago|reply
[+] [-] kachurovskiy|2 years ago|reply
Want to sell something? Company registration takes months, just getting a business tax ID was 6 weeks for me. To sell electronics, register with Stiftung EAR, then find an intermediary to get you a WEEE-Nummer and report monthly (!) sales figures of all your device types. Just that registration costs 1k and 8 weeks. And don't forget your battery and packaging license!
By comparison, similar WEEE fees in UK are 30 pounds and in Estonia are 12 euros, no wait.
But the real fun starts if you hire someone :) The paperwork there is a magnitude more.
I don't think we're doomed though. The schools are packed with kids, education is free and good, health services are not a concern (looking at you, US), society is healthy. I think we'll manage :) Hopefully no more self-inflicted energy crises in the works.
[+] [-] jareklupinski|2 years ago|reply
> society is healthy
no pain, no gain :)
there's probably a terry prachett quote attributing bureaucracy to the stability of a large-scale civilization
[+] [-] fxtentacle|2 years ago|reply
I've been very happy with Sage, an online SaaS to manage employees and their payments, taxes, and related paperwork.
[+] [-] WastingMyTime89|2 years ago|reply
[+] [-] ROTMetro|2 years ago|reply
https://www.bloomberg.com/news/articles/1995-08-06/germany-w...
I have the typical American of German descent hate for Germany because they threw my family away but now are open for everyone else to come live there (making it a huge 'fuck you and your family specifically love Germany'), but also how truly horrible they behave when it comes to business.
[+] [-] LudwigNagasena|2 years ago|reply
The issue lies in the fact that the EU is comprised of numerous countries within a single market. When one nation begins to subsidize a company or an entire sector, the other nations are left powerless, merely watching their own companies struggle to compete against those bolstered by government subsidies. It becomes a game of pouring government money down the drain and destroying any semblance of free market mechanisms.
[+] [-] amadeuspagel|2 years ago|reply
> BASF opened a plant near Dresden that makes cathode materials for electric-car batteries just two weeks ago and has pledged to keep investing in its home market. To secure such commitments, however, local and federal governments have been forced to offer generous incentives. BASF will receive €175 million in government support for its new battery operation, for example.
> Similarly, in June, the U.S. chipmaker Intel secured an eye-watering €10 billion subsidy for a massive new factory in the eastern city of Magdeburg. That translates into €3.3 million for each of the 3,000 jobs the company has pledged to create.
[+] [-] renewiltord|2 years ago|reply
[+] [-] sauercrowd|2 years ago|reply
[+] [-] sparrc|2 years ago|reply
Reading between the lines, the proposed solution seems something like lower corporate taxes (currently making decamping to Dublin more attractive) and lower energy prices.
The risk brought up is that if things continue it will likely lead to increasing blaming of immigrants and a rise in the far-right AfD party, which has already started.
[+] [-] tasubotadas|2 years ago|reply
- Germany is heavily reliant on industry (like Autos)
- Cheap energy has ended due to war in Ukraine
- The available replacements are going to be even more expensive (and they are still closing more nuclear plants)
- The production costs will increase reducing their competitiveness even further
- The competitives was bad even before this (VW vs Tesla anyone?)
- Once the huge layoffs and closures will begin, the entire economy will enter recession.
Industry-focuses businesses are now low-margin and high-competition (competition mostly coming from Asia). The same is happening here what happened during the shift of Agriculture economy into Industrial economy.
And the shift to services (tech/software specifically) was pretty much non-existent. Also, it's unlikely to become any better due to alienation of investors (who wants to invest in a country where everybody is taxed and red-taped into oblivion?).
So... who nows. Germany is probably going to pull a "Greece" on us :).
[+] [-] lyu07282|2 years ago|reply
[+] [-] javajosh|2 years ago|reply
I learned about this today from Eclipse Foundation executive director Mike Milinkovich's excellent video/tutorial/warning on the subject: https://www.youtube.com/watch?v=AmsM5_5QO5A
[+] [-] Vuizur|2 years ago|reply
And of course the AI act, which might make it possible for the publishers of open models to be sued if a third party misuses it: https://techcrunch.com/2022/09/06/the-eus-ai-act-could-have-...
[+] [-] MichaelMoser123|2 years ago|reply
https://www.berliner-zeitung.de/wirtschaft-verantwortung/dei...
The linked article is mentioning additional factors:
However just last year Tesla opened a big plant in Brandenburg, near Berlin, go figure... https://en.wikipedia.org/wiki/Gigafactory_Berlin-Brandenburg... and Intel is building one big fab in Magdeburg - that one is costing 17 billion euro: https://www.intel.com/content/www/us/en/corporate-responsibi...
So maybe not all of industry is leaving.
[+] [-] unknown|2 years ago|reply
[deleted]
[+] [-] unknown|2 years ago|reply
[deleted]
[+] [-] HackOfAllTrades|2 years ago|reply
God only knows what he thinks his corporate profits "should be", but I'd bet it's a lot higher that you or I would guess.
[+] [-] choeger|2 years ago|reply
The only real problem right now is efficiency of spending. Nearly all public sectors (defense, housing, transportation, education, healthcare) bemoan significant lack of financing and workers. Yet, Germany spends enormous amounts of money and employs record levels of workers there. It's like all the money and workers just vanish. This leads to the situation that it's currently difficult to hire in Germany.
This process leads to the attraction of skilled workers especially from eastern Europe. I don't know where this ends, but I doubt the spending and employment will get significantly more efficient. Instead, Germany might very well attract additional millions of well-educated Poles, Ukrainians, Romanians, etc.
I wouldn't be surprised if by 2030 we see a Germany with a population of 90M people absolutely dominating the European market.
[+] [-] nicbou|2 years ago|reply
I've been here long enough to apply for citizenship, but Berlin has a backlog of 26,000 applications and literally refuses new ones until they centralise the processing. The new central office is expected to handle 20,000 applications per year.
This is the city where you need an in-person appointment weeks in the future to register your address, a key process that many other things depend on.
All of this can only be done in German, of course.
If Germany wants to attract talent, it has to meet it in the 21st century.
[+] [-] eldaisfish|2 years ago|reply
Another problem is one that plagues all old world countries - societies are based around ethnicity.
These combine to mean that Germany and the EU in general are not attracting the best from abroad. The region is often the second or third choice of the educated migrant. Don’t believe me - look at the EU’s own internal migration numbers and the stats for immigrants from outside the EU. Internal EU migration is pretty low relative to countries like US (states vs countries, sure) and the immigrations from outside are largely poorly educated.
This shows in Germany’s immigration policy - they have been reducing barriers to entry for over a decade now and are yet struggling to hire foreign talent. This begs the question - why?
[+] [-] whinvik|2 years ago|reply
Does anyone know what those were?
[+] [-] novaRom|2 years ago|reply
Is it so bad? For 83 millions people economy.
[+] [-] woobar|2 years ago|reply
[+] [-] nicbou|2 years ago|reply
[+] [-] dontupvoteme|2 years ago|reply
[+] [-] unknown|2 years ago|reply
[deleted]
[+] [-] fwungy|2 years ago|reply
[+] [-] aktenlage|2 years ago|reply
[+] [-] photochemsyn|2 years ago|reply
1. In retrospect, was the German decision to eliminate nuclear power wise? Could they have squeezed another decade of power out of their existing plants, even if they didn't see that as a viable long-term energy source (having to import uranium fuel is not all that better from having to import natural gas, economically speaking)? Granted, nuclear only provides electricty, while BASF needs methane.
2. Russian gas exports to Germany have been replaced by US LNG gas exports, but the cost differential is pretty huge. Looking around, I see this site has discussed it before (Nov 2022):
https://www.politico.eu/article/cheap-us-gas-cost-fortune-eu...
That's an interesting article, pointing to tight markets being taken advantage of by European energy traders (though Exxon and Chevron shares are up 50% since the price boom, Permian Basin development, booming LNG exports, etc.). It also might explain why some European interests see a finacial benefit in prolonging the Ukraine war (i.e. keeping Russian gas sanctions in place).
3. Somewhat amusingly, if BASF moves a lot of production China, then their natural gas feedstocks will be coming from... Russia's massive Sakahalin 1 & 2 projects (built with extensive help from Exxon and Shell respectively, and ironically)?
https://www.reuters.com/business/energy/russias-sakhalin-inv...
Maybe blowing up the Nordstream pipeline wasn't such a smart move, after all.
[+] [-] ehvatum|2 years ago|reply