Can Germany Compete?

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Inspired by this.

So, what do you think? Is the German mismanaged economy going to be able to pull itself up to a point where its not costing thousands of people jobs?

 

Well, I'll put it this way:

The last time that Germany's economy hit rock bottom, the German people pulled together and were able to get their industries running again.

Of course, this was the 1930's....


(Edited to fix year typo)

[ January 16, 2004, 08:48: Message edited by: Blackhawk ]

 

well....I don't want to step on the moderator's toes, but it was the 1930's.......not 40's

 

... and then once again in the late 1940s and 1950s when Germany's economy modernised and recovered from war.

Our economy is very efficient, and very competitive, as a matter of fact, the industry doesn't need that many people atm. That could change quickly when the market prospects look better.

The weak dollar also hasn't helped our exports that much. Plus, the consequences of the gulf war, and the briefly rising oil prices added to the problem.

And it isn't that we don't have not enough work, we don't dare to pay people for doing it. Plus, we haven't been encouraged by the economical progress that spending is 'safe', so people sit on their money rather then spending it. At the same time the gvt is losing tax revenues and cutting whereever they feel it's safe - that is not the encouraging sign people have been counting on.

As we atm have a social democrat gvt, with an unhealthy strong union influence, our chancellor would risk open revolution in his party (and power base) would he cut in the aereas where spending is highest: Social spending and unemployment sectors, healthcare too, and - quite a heavy burden from the times when we credit-fueled the ecomony, and lend the money for our military and the reunification - debth repayment.

Maybe a brief lesson from our experience: When you have debths, you have to repay them - as long as the debtor is from overseas. Russia, after the end of the cold war, had to re-accept it's debth oblication from the time of the tsar, obligations the commies always denied. With your own population that's easier, inflate the currency, or steal the rents. Chancellor Kohl in fact stole our rents to finance the re-unification.

Another aspects is, and the US will see that too the next years when the Babyboomers retire, rents.

I am confident that Germany will recover, even when it might need a new chancellor to do that. Germany atm needs the focusedness and the political will neccessary to do that, especially sine against the lobbies and the understanding in the population to accept cuts that hurt.

 

If modern history has taught us anything, it's to never, never, EVER underestimate Germany.

 

Other than Ragusa, I see our situation not as optimistic.

We still have a lot of problems which are known for at least 20 years. The main points are IMHO sinking tax revenues (mostly from the economy/the tax system is to complicated and has to many exceptions) and a lack of highly educated students (due to an ineffective educational system) combined with high subsidies, for example for dead parts of the economy (coal mining), and a political system that needs an overhaul.

The solutions are actually quite easy: The proposition for a new, very simple tax system has just been made and ideas for a rework of our kindergartens, schools and universities do exist for at least ten years. The changes could be financed through radical cuts of subsidies.

The hard part is the implementation. Due to the political system with its various possibilities for blocking innovations, the government has actually very few options. And, as Ragusa stated, our government is (partly) incompetent (IMHO, the greens are not the problem.) But on the other side, I don't expect much of the opposition, either.

 

Agreed. Subsidies are a big problem. Education systems are also not at their peak effiency. Thanks to lobbies monetary funds are spent on obsolete industries, such as coal mining - rather than our most important asset: The human mind.
Furthermore our political system ~ federalism extreme. The Bundesrat blocking and slowing the government all over the place. Needs to be toned down a bit.

And yes, the Ecologists are not prefenting reforms, but I am not with the conservative side here either. Not at all.
Selling out the employees and stripping them of their rights wont solve the biggest problem: Lack of confidence. If only the politicans could bring about a change of mind. That would rid us of our weakness, I think. The rest is little more than ornamental work.

Someone needs to breath some life into this stagnant bunch!
And to prove my point: I am quite pessimistic about the future. :/ It will get better, but not much. Economic growth isnt an infinite thing.

 

On the contrary: Federalism is good. Under all the federalist countries (which are not that many), Germany is the most centralised. So we need more capacities for the states. We just have to make sure that the responsibilities of federal government and state governments are clearly set.

About economic growth: I found a nice article today: http://archiv.tagesspiegel.de/archiv/18.01.2004/933797.asp

In short: Our economy is taking not enough risks and is cutting their own throat. With less innovations, the companies cannot compete on the world market. Sure, this problem is caused also by cutting of public money for scientific research and other public shortcomings. But before company representatives whine (they do this all the time) about that, they should start to clean up their own households.

 

How true!

Czechoslovakia underestimated Germany, Austria undersestimated Germany, Poland undersestimated Germany, France undersestimated Germany, Denmark ...

 

Keep in mind that even after a decade of slow growth, near recession, and the costs of absorbing East Germany, Germany still remains the third-largest economy in the world. Once East Germany catches up to the West - and have no doubt, it WILL catch up - then Germany will have already paid the upfront costs for a boost to its land area, resources, infrastructure, and population. China may overtake them in sheer GDP weight, but only by dint of its size - Germany's per capita purchasing power will remain far higher.

As much as it pains me to admit it, the prospects of France bypassing Germany economically are slim to none. And Germany continues to take bites out of America - Daimler-Chrysler, anyone?

Even limping, Germany is a power to be reckoned with. What will we do when they start sprinting?