Germany: I Have an Ax to Grind.

All economist and politicians keep on blattering the card of more “competitive” companies, more “productivity”, more “research”, etc.

Germany was considered, maybe for 3 decades, a stagnant, “old economy”, with “too much welfare”, free health care, not too many startups, etc. Germany was always considered a low consumer economy, for a time, together with europe it was called “eurosclerosis”, etc.

Now all of a sudden they are the superstars, they have become productive and are winning the economic game, improving profits and increasing employment. What happened ? Nothing, just that since the economists don’t know how to keep on brainwashing everyone that they must make less money, be ready to be fired at any moment, accept increasing health care bills and increasing rents and home prices, etc. they can justify by taking Germany as an example.

  1. Germany is increasing its manufacturing capability, was always strong, so this actually applies to a very small segment of the economies of the developed world, since most work in Services.

  2. By using the logic of productivity of factories and manufacturing, these economists then shift it to all economic endeavors and pretend that all the forces that improve manufacturing improves also services such as more overtime, less pay, harsher working conditions, more flexibility etc.

  3. Services don’t operate at all like this, but this translation of economic description is constantly being done to crush workers, to pay them less, to make them ever more flexible, just like factories (the goal is Vietnam style factories and working conditions).

  4. The developed world has finished growing, USA, EU and JAPAN have gone from poor to middle class from 1950 to 1990 thanks to the same forces that are making growth in 3rd world countries possible: more money to workers, they buy more furniture cars, more money to schools, more jobs etc.

  5. When a country is developed, growth is essentially over, it becomes a steady state economy like JAPAN or Italy. In fact these 2 countries have essentially stopped growing 15 to 20 years ago, their growth is over forever, no matter what they do or think.

  6. The myth of growth is operating in China and India, etc. because it is easy to grow when you start from being so poor. Even a new car, or new furniture is a huge growth element in these countries, something that is taken for granted in the USA, EU and JAPAN.

  7. Work is dissappearing, the growth that JAPAN had was also with a given state of technology and automation, these new growing countries like Brazil and China may grow quicker and end their growth sooner thanks to the present day technology.

So all this talk about Germany being a superstar is just the same old fluff that the ruling class and corporations want everyone to buy, so they can pay workers less and fire them anytime in the name of “growth”.

One thing Germany has is a good housing market, rents seem to be reasonable and home ownership is not such a huge myth, and their home prices haven’t undergone any bubble. Maybe this is the secret to their growth ?

If you can figure out the secret to economics you are way ahead of economists.

“If all economists were laid end to end, they would not reach a conclusion.”

George Bernard Shaw.

Frankly the German system works for Germany I would be wary of saying anything more than that, but it is clear some important lessons can be learned about borrowing and lending from them. And the intrinsic need not to over-inflate prices, something Germany has struggled with in its past. Like any system there are good points and there are caveats, Germany is not a wunderkind it is just working better at this very fragile and pivotal moment in time because of its intrinsic set up. Economics is a chaotic business though. I’d say at this moment more free market capitalist systems like the UK and US are fairing badly, what can we learn from that? What strengths can we take from our systems and what weaknesses can we seek to mitigate?

Germany, JAPAN and Italy (the 3 losers of WW2) had huge economic growth from 1950 to 1990. They followed the textbook on economic growth, more cars, more factories, some technology, exporting, etc. But even after all that growth and the little more they have had from 1990 to 2010, their levels of consumption have remained no higher than about 20 to 30 % of the USA. This is because of cultural differences, they have smaller homes, they have less malls, their homes are concrete not wood like in the USA that easy to manipulate and hence a lot of home improvements: there is nothing like Home Depot or Lowes in JAPAN or Germany, etc. Homes outside the USA are smaller so they can’t fill them up with all the crap bought at WalMart, etc.

So the USA is the only real worldwide consumer, the rest are mostly exporters, but who are they going to export to now that the US is broke ?

JAPAN and Italy can’t grow, like most other developed countries either because of sky high home prices, either rent or buy, it is way too high, they protect the status quo of those who bought during the good times. But no economist ever mentions, CHEAP RENTS, LOW HOME COSTS so as to increase consumption and create some economic growth. JAPAN has spent trillions on useless “infrastructure”, but they never touched home prices, so young people can’t live on their own and start consuming. Even after 20 years of stagnation, they don’t care, the ruling class and status quo win all the time.

Germany will never change its standard of living, they will never buy like crazy, like the USA does, but they will export forever, strange, but at least their housing is somewhat decent and not so insane like USA, JAPAN, Italy or many others.

check out:

viewtopic.php?f=3&t=172219

A lot of people are good enough, but there are not enough jobs anyways. Don’t go into small details of single cases like hotels, etc. everyone is right and everyone is wrong, etc. The major pattern is that the ruling class plays off the little guys each against each other and keeps them in place fighting each other.

Even if people don’t buy here (US) they buy in another part of the world, in those parts that are growing, so this has no effect on pressuring employers: look at the big picture, when they talk about competition, tax breaks, research, innovation they are saying and referencing millions of office workers worldwide and large corporations and government workers, not your local hotel. And they are basically saying, you don’t deserve more becasue you didn’t innovate, you cost too much, you are not competitive, etc. Very easy to attack workers on this, since it is impossibleto measure, and any measure will always show workers are at fault.

They never say CHEAP RENTS, CHEAP HOME PRICES, MASS TRANSIT so as to help people consume their money on goods and really make the economy grow.

check out:

viewtopic.php?f=3&t=172688

Another AX to grind: I agree…

[b]The myth that small companies will generate the jobs we need. I can’t believe how idiotic all of these economists and politicians worldwide are in believing this BS. our economy is now worldwide and is the hands of fewer and fewer mega monopolies that have an iron fist stronghold on almost all of the economic segments: the Germans have a stronghold on luxury cars, Audi, BMW, etc. the US Silicon valley has a stronghold on Microprocessors and Computers and Software, Data centers, Internet etc. there is WalMart, Samsung (South Korea) on LCD TVs, etc. But the small companies will grow and hire the unemployed: the small mom and pop shop on the corner, that guy will hire more people, he is our hope (not the fact that WalMart ate all of his business), the US spends 200 billion dollars a year on Research equivalent to 5 million scientists a year pay, but a 1,000 smartass new inventors will bring up new companies with some great new invention and they will hire 1,000 employees, they will buy a few wires and transistors at radioshack and in their “garage” invent the next breakthrough 16 core CPUs against Intel.

Now in what kind of insane fairy land do all these people live ? How can they truly believe in all of this BS ? How come everyone drinks the cool aid ? Even if it were true these small companies could hire a million people at most, at the expense of a million people in New York or JAPAN or EU. But the fact is it is not true, it is just another ideological device of the right wing thugs, to fire employees from big companies, tell them to become inventors, and then blame it on them for not inventing the next big thing and not hiring other employees fired from the big companies.

Big organizations and companies and governments worldwide are the only ones that are really able to hire so many millions of workers, but the economists always play the little guys against each other: the small business owner against his crappy employees, it is always the fault of the “unions”, the no tax breaks for the small guys that would hire. In reality the tax breaks are only for the big guys, the small guys can’t hire anyways.

This is another example of rigged ideology and brainwashing, the small company myth, so everyone expects miracles from small people and small companies. The truth is we need big companies hiring millions with high pays, health care, and mass transit bus systems, cheap rents for high quality homes, not BS.

A million cars were sold in the US in August, with that money they could have set up 200 bus systems in each of the 50 most important urban areas of the US and started some kind of mass transit.[/b]

[b]Another myth is manufacturing: manufacturing must come back to the US (or JAPAN or EU). It is not going to happen, it is cheaper to manufacture in Vietnam, Indonesia, the Philippines, etc. They can pay 200 dollars a month, in the developed world you can’t even pay the gas to get to work with that.

But they insist on taking manufacturing as the model, it is false: the developed economies are service, therefore all the ideology of manufacturing is false, like competition, productivity, etc.

And in the 3rd world there are millions of people available, it is easy to set up any kinds of factories anywhere, and it will take 30 years for them to get to 800 dollars a month salary.

And at best, manufacturing and factories can hire maybe 30 million people worldwide, what are you going to do with the other 100 million unemployed slobs ?[/b]

[b]The fact is, when there are few jobs around, the workers are forced to accept whatever they can find at any price otherwise they end up homeless and in the streets. You make it seem as if workers are rich and can afford to choose and quit. Well in many cases that is no longer true, and will increasingly become less and less true.

Your small outfit won’t hire hundreds or thousands of people, but all of this right wing ideology is created for people like you, the little guys attacking other little guys, because of the joy to boot other people, because of the instinct to beat up someone. You are just a tool in the hands of the right wing thugs, they are referencing large organizations worldwide, large corporations, government workers, all those millions of people that everyone has been brainwashed to hate because they exist, because they should just drop dead and starve since they don’t deserve anything since they are not Bill Gates or Steve Jobs and haven’t risked and become a billionaire. But the right wing thugs have a very precise intentionality and goal: that of booting them all, taking away all of their “entitlements”, their “health care”, their “rights”, the monopolies want it all, and they want everyone fighting everyone over breadcrumbs while they steal all the wealth and concentrate it in fewer and fewer hands.

Another myth is the myth of “Risk Taking”: they took risks and made it big, you didn’t take risks and deserve to be unemployed. Another insane idea, that everyone should be taking risks, and betting all their money on the totally idiotic invention they made in their garage (since millions of scientists and engineers worldwide are “too stupid” to have figured out your new cool invention). So the guilt complex is reinforced, the victim blames himself, the rich get richer. [/b]

Even if people don’t buy here (US) they buy in another part of the world, in those parts that are growing, so this has no effect on pressuring employers: look at the big picture, when they talk about competition, tax breaks, research, innovation they are saying and referencing millions of office workers worldwide and large corporations and government workers, not your local hotel. And they are basically saying, you don’t deserve more because you didn’t innovate, you cost too much, you are not competitive, etc. Very easy to attack workers on this, since it is impossible to measure, and any measure will always show workers are at fault.

People love to express and exercise their power, they love to decide the life of their employees and lay them off, boot them, they are programmed to fight and beat up people with this capitalist, free market mythology of “competition”, “productivity”, “hard work”, “deserving more than the other slob”, etc.

It won’t work in the long run, too many losers, too many people in a world where “competition” and “optimization”, and the race to the cheapest wage is becoming dominant. We need large corporations, organizations and governments hiring millions of people, even if they have nothing to do, since automation is taking away all the work that was once done in factories and offices. The only thing left is power struggles, status relationships, every encounter is a status challenge, there is no “common good”, only fights.

The world of labor is still stuck in the 1940s and 1950s when the factory and manufacturing and the “8 hour workday” was dominant, but this model is over, advances have essentially eliminated all work, it is all gone, deal with it.

By using the logic of productivity of factories and manufacturing, these economists then shift it to all economic endeavors and pretend that all the forces that improve manufacturing improves also services such as more overtime, less pay, harsher working conditions, more flexibility etc. Services have nothing at all to do with “productivity”, “competition”, in fact services operate better when there are less of them and less need of them, we don’t need more Health Insurance companies with all of their office workers wasting time, we don’t need more banks selling ripoff financial “products”, and especially:

[b]WE DON’T NEED MORE RESEARCH AND TECHNOLOGY THAT IS KILLING THAT LITTLE WORK THAT IS LEFT. BY AUTOMATING EVERYTHING AND OPTIMIZING EVERYTHING, THERE WON’T BE ANYTHING LEFT TO DO IN THIS FAIRY TALE ECONOMY.

We need:

  1. FREE SALARIES OR BIG COMPANIES HIRING MILLIONS OF PEOPLE AND GIVING THEM ALL THEIR BENEFITS LIKE PENSIONS, HEALTH CARE, ETC. JAPAN, FRANCE AND MANY OTHERS HAVE BEEN DOING THIS FOR DECADES ANYWAYS.

  2. CHEAP HOUSING EITHER RENTS OR PAY, LIKE 100,000 DOLLARS FOR A 2 BEDROOM HOUSE ANYWHERE WHETHER MANHATTAN OR OKLAHOMA (OR 200 DOLLARS A MONTH RENT).

  3. MASS TRANSIT SYSTEMS WITH BUSES, HIGH QUALITY BUSES AND INTERNET CALLED MASS TRANSIT NETWORKS.[/b]

I will expose all the deceptions:

[b]Another myth is this idea of “competition” in the global economy, against other nations. Now 80 % of the economies of the USA, EU and JAPAN are services, therefore local, have nothing to do with competition in the industrial sense, like in manufacturing. But the ruling class and all their economists and politicians like to shift ideas valid in manufacturing in to the realm of services, brainwashing everyone that in their local - service job they are competing in a global economy against the Chinese and South Korean tigers, therefore they have to be “flexible”, decrease their “salary”, otherwise they are not competitive. But this is a lie and deception, global competition has nothing at all to due with 80 % of the service jobs.

We need heavy taxes on homes, so these home prices and rents collapse, we need 1% a year tax, so house of 200,000 must pay at least 2,000 dollars a year. No upper limit required. With that money the government can hire millions of young people in research and innovation, but for the common good and not for corporations and capitalists.

[/b]

A good thread, thought it could use a bump.

If you have an ax to grind, then Germany and Northern Europe is the best place to do it. Make certain it is a battle axe.

The Germans are meticulous producers that spend and consume little. Of course they make the ideal economic system. But, they are bad traders, horrible investors, and mediocre capitalists. They are bad at business. This is why others dominate them, good economy, bad marketing and trading.

Relevant to the thread. Worth a read for those interested in how Germany fits into the global financial picture.

http://www.financialsense.com/contributors/john-butler/is-the-german-eagle-a-grey-swan