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Forum Post: The secret of Germany's success

Posted 2 years ago on Feb. 21, 2012, 1:40 p.m. EST by francismjenkins (3713)
This content is user submitted and not an official statement

Employees' representation in Germany has a binary structure: trade unions that set the framework for working conditions, such as collective wage agreements, for whole sectors or single companies, defining wage levels and working time on the one hand - and works councils ("Betriebsräte") that are elected by employees and represent their interests on company level. They shape and supervise the execution of the frameworks set by trade unions and laws in the company. German industrial relations are characterized by a high degree of employee participation up to co-determination in companies' boards ("Aufsichtsrat"), where trade unionists and works councils elected by employees have full voting rights. Local trade union representants are democratically elected by union members and formally largely autonomous. Central boards of directors ("Vorstand") are elected by delegatees.

http://en.wikipedia.org/wiki/Trade_unions_in_Germany

That has to do with the commitment of executives to keeping jobs in Germany. Sure, German companies have opened factories in China and outsourced to Eastern Europe. Yet many German firms are stubbornly maintaining a certain amount of production within Germany as well. Part of the reason is skills. Germany has a lot of very talented engineers and assembly-line workers who are crucial to making those high-quality products that sell for so much money. But I’m going to speculate that part of the reason can be found in Germany’s corporate structure. The backbone of German manufacturing is small to mid-sized firms that are often family-owned. These families are in many cases committed to keeping factories at home. Though they want, of course, to make as much money as possible, they’re not under the same pressure from shareholders to show bigger and bigger profits each quarter. That allows them to take a long-term view.

http://business.time.com/2011/02/25/does-germany-know-the-secret-to-creating-jobs/

There's also the fact that the Euro is probably undervalued by about 20% compared to where a "German only" currency would be valued. So what basic lessons can we learn?

1) currency devaluation can be a good thing (this gives us considerable flexibility in formulating a robust "Keynesian" stimulus).

2) stock holders can be a bad thing (while we want to expand ownership of companies, or production more generally, to as many people as possible, with most of our productive assets controlled by public companies, all the incentives are geared towards "short term" profits, which does not align with our national interests).

3) investing in science & engineering education is critical.

4) labor unions and worker participation in decisions, are good things.

The question is, how do we achieve these things? Nationalizing industry has been a problematic strategy when applied (the problem with "transitional" strategies has been, the state often won't cede control over productive resources once it accumulates it). Another option would be "subsidizing" alternative types of organizations, like employee owned companies, nonprofits, co-ops, etc. Inducing growth in labor unions is a pretty straightforward exercise. Pass laws expanding protections for labor unions. The one problem with anarcho-syndicalism, as applied (in Spain), was high unemployment. However, I think the same goals can be achieved, through a slightly different implementation model (and one which is supported by evidence); that allows us to reap the benefits and avoid the pitfalls. Call it, Anarcho-Syndicalism II.

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70 Comments


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[-] 3 points by beautifulworld (22091) 1 year ago

Germany as an example.

[-] 1 points by ineptcongress (648) 2 years ago

good luck with #2--our blind allegiance to our bizarro brand of capitalism means that there are no higher, nor other, duties a company owes other than to generate profits for shareholders. workers be damned, environment be damned, national interests be damned for the sake of our equally bizarro notion of "progress" that is shoved down your throat. anything else is labelled socialist, which is supposed to be evil incarnate prima facia. and #1 is the root of inflation. there is a very sound argument that you want the dollar you earned today that buys a loaf of bread today to also be able to buy a loaf, rather than a slice, of bread 5 years from now if you park it in the bank. that said, a currency which is devalued relative to the rest of the worlds' currencies is good for facilitating exports.

[-] 1 points by kylelee34 (48) 2 years ago

If I start a buisness and put up my life savings to get it up and running and then hire two employees to work for me who put none of their money into the buisness and get a set paycheck regardless of if we make a profit or not, why sould they get an equall share of the profit?

Shareholders put up all the money to start a company and take all the risk of having it fail. If workers want to be just as high on a company priority list how about they have to hand over their lifesavings when they get hired and if the company has a bad month they don't get paid?

[-] 1 points by ineptcongress (648) 2 years ago

i didn't say equal share of profit--i am talking about the very narrow singular duty. and very few people have the opportunity to buy into their employer because most very small employers don't want to deal with the personal issues that can arise. the employees are at risk in this arrangement too, not just your capital. they may commit to a mortgage or other bills, but they have no right to employment at all, none whatsoever; and, to boot, they have no right to make decisions about the company and it's direction except as allowed. if the company loses money they may get laid off, but yet they have continuing commitments... so this unrecognized risk goes unnoticed, unrewarded and unmitigated save for unemployment compensation.

[-] 1 points by gwiech (4) 2 years ago

I need to add one thing to your fine article. Workers also serve as a percentage of the board of directors so they can directly represent workers at the highest levels of the upper management. Also, Germany doesn't engage in full free trade. True they import quite a bit, but they have vat taxes which allow the incoming goods to stay expensive relative to what can be made inside the country. It's not good will that keeps jobs in Germany. It's an acknowledgement that government needs to protect its workers and its key industries from external or internal predation.

Another poster noted our trade deficit. It's definitely related to the way we do free trade. Again, no other country completely opens their borders to any goods at cheap prices. Only America does this and the 99% pay the price in lost jobs and low wages.

[-] 1 points by francismjenkins (3713) 2 years ago

Well stated .... we do need a value added tax in this country, we need laws that more rigorously protect and cultivate trade unions, and we should subsidize alternative corporate structures, like employee owned companies, co-ops, nonprofits, etc. (whether it be through small business loan programs, grants, technical support, a combination of these things, etc.).

[-] 1 points by epa1nter (4650) from Rutherford, NJ 2 years ago

Great post, Francis.

I was unaware of the structure of worker participation in German industry. It really seems like a good model.

Germany has been forced to do a lot of soul searching in the aftermath of the horrors they perpetrated on humanity during the war. And they were also forced to create their economy virtually from scratch as well.

I wonder what it will take for America to look at itself as honestly and make the changes needed to become just and equitable.

[-] 1 points by francismjenkins (3713) 2 years ago

Thanks, and yes indeed. What strikes me about Germany is they actually care about workers, they're not just numbers on a balance sheet, or cattle that they try to exploit as economically as possible. That they behave this way, while at the same time enjoying such remarkable economic success, speaks volumes.

I mean, I have no doubt that an economy can be successful while it exploits workers. A slave economy can even be successful (depending of course on how one defines success). Some people view success in terms of dots on a graph, and it's somewhat disturbing that people can become so detached from their humanity, where "how people are treated" isn't even a consideration (indeed, these are precisely the type of people who view laws that require them to treat people decently, as a burden).

[-] 0 points by Jflynn1964 (-206) 2 years ago

Do you realize that the Hartz reforms de-regulated the labor markets?

[-] 1 points by francismjenkins (3713) 2 years ago

My understanding is the Hartz reforms reduced benefits for the long term unemployed (longer than 12 months), but did not eliminate them completely?

[-] 0 points by Jflynn1964 (-206) 2 years ago

Yes, one part of it. It was a segment of Agenda 2010:

Wikipedia - The steps to be taken include tax cuts (such as a 25% reduction in the basic rate of income tax) as well as big cuts in the cost absorption for medical treatment and drastic cuts in pension benefits and in unemployment benefits alike. In that, the programme closely resembles similar measures taken earlier in the USA (Reaganomics) and the UK (Thatcherism)[citation needed]. Those measures are also being proposed in accordance with the market liberal approach of the EU's Lisbon Strategy. The name Agenda 2010 itself is a reference to the Lisbon Strategy's 2010 deadline.

[-] 1 points by francismjenkins (3713) 2 years ago

So then am I to assume it hasn't been "wholly" adopted yet? I'm not sure why Germany would take this approach, given that it doesn't have a problem with deficit spending. I'm not saying that will prevent them from taking this approach, but it would be very disappointing if they do (or if they already have), although it's not really important in terms of the policies I highlighted in my OP (some of which I think we should emulate and expand upon).

[-] 1 points by 1sealyon (434) 2 years ago

In 2010 Germany imported $1.13 trillion in goods and services with a GDP of $ 3.3 trillion. That means that they out-sourced 34% of their jobs to other countries.

The US on the other hand:

Total imports: $ 2.3 trillion

Total GDP: $15 trillion

So we only import about 15% of the stuff that we use. We produce domestically 85% of all of the goods and services that we use in the US or sell abroad.

So we outsourced less than half of our total jobs compared to Germany.

The data indicates that US executives are more committed to keeping domestic jobs than the Germans.

[-] 1 points by francismjenkins (3713) 2 years ago

Germany is the second largest exporter on earth, they have a TRADE SURPLUS, while we have a TRADE DEFICIT (and this is the relevant number in this context). We are transferring wealth overseas, while Germany is importing wealth. Our quality of life is declining, while Germany's is rising (this is why we look at balance of trade, not the ratio of imports versus GNP).

[-] 1 points by 1sealyon (434) 2 years ago

Irrespective of whether they have a trade surplus they still out-source jobs; and they outsource more jobs relative to their GDP than the US does. A lot more. More than twice. If they were really serious about keeping jobs they would increase the amount of goods and services that they produce domestically.

They had 8% unemployment in 2009. Why did they not find jobs for those poor folks instead of out-sourcing?

[-] 1 points by francismjenkins (3713) 2 years ago

Germany's unemployment rate is 5.5% ... and they have an excellent social safety net.

[-] 1 points by 1sealyon (434) 2 years ago

It was 8 % in 2009. The 2010 data shown above is based on employment established 18 - 12 months prior.

[-] 1 points by francismjenkins (3713) 2 years ago

Germany's unemployment rate is 5.5%, yes it was 8% in 2009, but WHAT WAS THE US UNEMPLOYMENT RATE IN 2009?

[-] 0 points by 1sealyon (434) 2 years ago

Do the work. The US had a an even better performance in low job out-sourcing than Germany in 2009.

[-] 2 points by francismjenkins (3713) 2 years ago

Do the work, you'll find Germany's manufacturing as a percent of GNP is extremely high (while ours is dismal, and shrinking quickly). Indeed, compared to 1980, US manufacturing as a percent of GNP has been cut in half. This is unsustainable, and this is why our economy is so weak (and our prospects aren't very good). We traded quality, unionized manufacturing jobs, for lower paying service sector jobs, with an economy based on the illusion of a housing boom financed by reckless levels of debt. We overspecialized, under the impression that an economy can be successful by retaining jobs only at the high end, and the parts of its service sector that cannot be outsourced. I think the data overwhelmingly suggests, this experiment failed miserably.

[-] 1 points by 1sealyon (434) 2 years ago

Of the top 30 countries in world with the highest GPDs only one nation (Norway) has a higher worker productivity than the US (and that's because they have gobs of oil and only 5 million people) .

Americans are the among the most productive workers on the planet.

http://stats.oecd.org/Index.aspx?DataSetCode=LEVEL

[-] 1 points by francismjenkins (3713) 2 years ago

While I'm not suggesting we shouldn't care about productivity, it's somewhat irrelevant to my point. I'm talking about human quality of life.

[-] 1 points by 1sealyon (434) 2 years ago

Productivity improvement has been one of the single greatest drivers in improving quality of life. You should applaud it.

Increased productivity means higher wages, more leisure time, discretionary income to enjoy that leisure time, safer jobs and work places, more interesting vocations, longer life span, healthier lives, abundant food supply. All of these things have happened and continue to happen in direct consequence to productivity increases.

[-] 1 points by francismjenkins (3713) 2 years ago

The problem is these claims have no factual basis. Where are these higher wages? Where is this extra leisure time? I suggest they reside exclusively in the imagination of the economist who dreamed up this theory. Don't get me wrong, the theory makes sense if we were talking about a "closed system" (but the global economy is not a closed system).

[-] 1 points by 1sealyon (434) 2 years ago

Just ask a few questions about improvements in the US in the last 50 years:

Do We live longer? Yes Do fewer kids die from childhood diseases? Yes Are more diseases cured? Yes Do we travel more? Yes More TVs per home? Yes Bigger homes? Yes Greater variety of food? Yes More freedom for more people? Yes Cellphones? Yes Computers? Yes Internet? Yes Dentistry? Yes

Think up some of your own and pile that list against the things that have gotten worse.

[-] 2 points by epa1nter (4650) from Rutherford, NJ 2 years ago

Their unemployment is 5.5%. Even if it were at 8% at you say (which is untrue) it is STILL a better number than ours. And those who are currently unemployed still have health care and better benefits than their American counterparts.

Their economy is no more declining than ours is. They also went through a recession. And as long as their debt is sustainable, and in balance with the economy as a whole, it is not burdening to any future generation.

[-] 1 points by 1sealyon (434) 2 years ago

Look at the growth rates for the US and Germany. Their growth rate (curve slope) has declined over the past 15 years while it has risen in the US.

http://blog.rockstarbanks.com/united-states-gdp-vs-china-germany-france-rus

[-] 1 points by 1sealyon (434) 2 years ago

German unemployment was 8% in 2009 which is the period for which all of the other data that I provided was based.

Look at the German GDP over the last 15 years. It has declined by almost 50 %! US GDP has almost doubled over that period. We are rising and they are in decline.

[-] 0 points by GirlFriday (17435) 2 years ago

No. No. No. Not the facts epa!!!! Not facts!!!

[-] 1 points by epa1nter (4650) from Rutherford, NJ 2 years ago

Reply to post below.

It you were comparing 2009 numbers, perhaps America's 2009 are the ones to compare Germany's to. America's rate topped 10% that year when Germany's was only 8%.

As to GDP, it's a moderately useful number for numbers of dollars, but is fairly useless in term of gaging quality of life issues. By all measures, despite having produced fewer overall dollars (or Euro equivalents) Germans live better lives, and the money is distributed more equitably for a greater number of its citizens. So the middle class is large, there is less poverty, and the is better health care. I'd say that was a marked improvement over the American system.

[-] 1 points by 1sealyon (434) 2 years ago

I agree with you.

By every measure I can find poverty is growing in America.

Out of the top 153 nations the US is number 22 in people living below the poverty level (least to most); while we are 7th in GDP per capita and we are basically tied with number 4.

The question is what to do about it?

[-] 1 points by epa1nter (4650) from Rutherford, NJ 2 years ago

First, I dispute your numbers. You have shown a propensity in most of your posts for deliberate cherry picking and distortion, and that has left anything you say lacking credibility.

But even if your numbers are accurate in this particular case, the answer is : the German system is better for the employees who work there. It is more humane. It pays better. Employes aren't simply faceless drones with no say in how their companies are run or in how employees are treated. And It is all backed up with a far more thorough and generaous werfare state. That alone is reason enough to emulate them.

[-] 1 points by 1sealyon (434) 2 years ago

Are they treating the people well when they out-source 34% of their jobs in the face of 8 % unemployment?

Their GDP has dropped steadily for years. Are they helping their people by letting their economy decline?

Their national debt is almost equal to GDP. Are they helping the children of their people by saddling them with debt?

[-] 1 points by epa1nter (4650) from Rutherford, NJ 2 years ago

The number you gave was for worker productivity in American companies as measured in output. Those numbers are provided by the companies, which do not differentiate between a worker actually in America and an offshore one.

Regardless, that productivity increase has not translated into comparable pay increases, and it has no bearing on the fact that manufacturing jobs have been increasingly outsourced. The number of those jobs has gone from 16% of the nations' jobs in 1955 to about 5% today. You may spin it any way you want, but that's all bad news.

[-] 1 points by 1sealyon (434) 2 years ago

All of the numbers that I gave were for US worker productivity only. They did not include any international labor component.

The point of the post was that Germany has outsourced more than twice the jobs the the US has. Why should we follow their example?

Also, there is a lot of good news today in the US manufacturing sector. We are right now increasing manufacturing output while in Germany and the rest of western Europe it is on the decline. Why should we follow their lead?

[-] 1 points by epa1nter (4650) from Rutherford, NJ 2 years ago

Productivity is measured as labor costs-to-profit. If the company is American owned, and all it's employees are Chinese, earning $20..00 dollars per day, that is counted as American productivity. It is a false measure.

[-] 1 points by 1sealyon (434) 2 years ago

The numbers that I gave were US worker productivity only. It did not include foreign labor.

[-] 1 points by francismjenkins (3713) 2 years ago

You're shifting the goal post. First, you claimed wages were increasing (a totally bogus claim), I pointed out the discrepancy, now you'd like to discuss access to personal computers and iphones?

Okay fine, but of course you're essentially injecting a strawman into the discussion. You assume that I deny the benefits we've derived from our mixed (free market/government) system, and I don't (nor do I want to give up those benefits, or prevent innovation from happening in the future).

In other words, you're defending something that I'm not arguing against, because (I assume) you've misinterpreted my argument. Indeed, I'd like to add more to "your" pile. People often ignore the benefits that have accrued from technology we take for granted, like refrigeration, sewage treatment, clean water, simple medications (like antibiotics), etc.

Nevertheless, nothing I've proposed puts any of this in jeopardy, nor does it risk chilling future innovation. Indeed, just the opposite.

[-] 0 points by 1sealyon (434) 2 years ago

Wages do not have to increase if you get more for your dollar.

What did a cell phone cost in 1990? What does it cost now? Gas even at $ 4 per gallon is as cheap as it was in 1950.

Wages also increase in absolute terms as productivity increases.

Suppose you are offered $ 100 to dig a 10 foot ditch. That ditch takes you and your hand shovel 5 back-breaking days to dig.

In a year you make $ 5200, assuming that you survive.

Then you get smart and walk over to the bank, borrow $25,000 and buy a used backhoe. Monthly payment $ 425 (5 year loan).

With your productivity increase gained by using the backhoe you can dig a 10 foot ditch in one hour.

Your wages just increased from $5,200 to $ 1,700,000 including the loan payments.

http://www.machinemart.com/used-equipment/backhoeloaders.cfm

[-] 0 points by 1sealyon (434) 2 years ago

We produce 85% of the goods and services that we consume or sell abroad. 85%. Germany only manages to produce 66%, it gives the rest of its jobs away to other nations.

As a % of GDP German manufacturing has been flat since 1995.

Today manufacturing in Germany is dropping while it is increasing in the US.

US manufacturing output has grown 300% since 1980. Germany's output is nearly flat over that same period.

It is not that manufacturing has declined in the US; we have just enjoyed incredible growth in other areas like high tech, bio-med, software, and energy.

I do not understand cheering section for US failure.

http://www.markiteconomics.com/MarkitFiles/Pages/ViewPressRelease.aspx?ID=8991

http://www.washingtonpost.com/politics/manufacturing-output-jumped-last-month-on-big-gains-in-production-of-autos-machinery/2012/02/15/gIQAaArbFR_story.html

http://www.industryweek.com/articles/u-s-_manufacturing_output_up_-7_in_january_26629.aspx

http://www.federalreserve.gov/releases/g17/current/

http://investing.curiouscatblog.net/2010/06/28/manufacturing-output-as-a-percent-of-gdp-by-country/

http://www.tradingeconomics.com/germany/manufacturing-value-added-percent-of-gdp-wb-data.html

http://blog.american.com/2011/01/the-demise-of-america%E2%80%99s-manufacturing-sector-has-been-greatly-exaggerated/

http://germaneconomy.blogspot.com/

http://www.inc.com/inc5000/welcome

[-] 1 points by francismjenkins (3713) 2 years ago

Manufacturing output has not grown since 1980, or the increase has been nominal (in inflation adjusted dollars), rather, output per manufacturing worker has grown i.e. productivity (while employment in manufacturing has decreased, and real wages have remained stagnant or have decreased, depending on the segment of the workforce we're talking about).

The problem should be obvious. When you have a stagnant manufacturing sector (notwithstanding productivity increases), and rising GNP, it means our manufacturing sector is eroding (not merely in terms of employment, but in terms of output relative to GNP). Yes, new industries have emerged. The internet, software, biotech, etc. (and I'm certainly not complaining about these developments), however, employment in these industries has not been robust enough to pick up the slack from our declining manufacturing sector. Additionally, the more profound problem is eroding quality of life.

[-] 1 points by 1sealyon (434) 2 years ago

US manufacturing is not stagnant. It has grown 300% since 1980. Look at the numbers in $.

[-] 1 points by francismjenkins (3713) 2 years ago

You're wrong, and if you have an authoritative source for this claim, then post it (along with a link). I'm not going through a dozen links to find a data point (which doesn't exist).

[-] 1 points by 1sealyon (434) 2 years ago

USA manufacturing output has grown substantially: over 300% since 1980, and 175% since 1990.

Look at total GDP increase vs the decrease in manufacturing as a % of GDP. Positive slope to the tune of 300% since 1980. The manufacturing growth is being masked by the incredible US growth in other sectors.

http://investing.curiouscatblog.net/2010/06/28/manufacturing-output-as-a-percent-of-gdp-by-country/

[-] 2 points by francismjenkins (3713) 2 years ago

This is misleading, because it's not inflation adjusted. According to the fed reserve bank of Chicago, manufacturing output increased at an average rate of 2.2% per year between 1980 and 2009, while inflation during the same period increased at an average rate of 3.7% (and growth in the broader economy also outstripped growth in manufacturing output).

So while there obviously has been increased output in nominal dollars ... that's not a proper way to look at this issue (we look at real dollars).

Furthermore, I'm merely suggesting we impose a value added tax. For one thing, we need the revenue. But more importantly, our trade deficit is completely out of balance, because we're the only industrial economy that does not impose a value added tax. Additionally, yes, I support growth in labor unions, and employee owned organizations (for all the reasons stated in my OP).

[-] 2 points by francismjenkins (3713) 2 years ago

Your message, no matter where you put it, is empirically wrong. Noway (3.3% unemployment rate), Germany (5.5% unemployment rate) both have a value added tax. China has a value added tax, Canada has a value added tax, indeed, virtually "all" of our trading partners have a VAT. So your regurgitation of republican economic mythology is laughable quite frankly.

[-] 1 points by francismjenkins (3713) 2 years ago

You don't add "supply side" factors when considering manufacturing as a percent of GNP, because those factors "have always existed" (in the US and other nations as well). Unfortunately, you're ignoring even basic economic facts (like the offsetting effect of inflation in this context). I mean, if we were producing one million loaves of bread 20 years ago, 1.2 million loaves today, yet inflation doubled during that same time period, if we ignored inflation, we would think we were actually producing 2.4 million loaves of bread today. This is economics 101 (and no economist would deny this without getting laughed at). This is the sort of pseudo-economics that got us in trouble in the first place.

Oh and btw, a VAT does not need to be charged on manufacturing, it could operate similar to a sales tax (as Canada does it), while also imposing the tax on imports.

[-] 1 points by 1sealyon (434) 2 years ago

The number is actually better than 300% if you include inflation but also include supply side factors like:

  • Add the technical improvements that have lowered manufacturing cost ( we build more but it costs less to produce)
  • Add price pressure from foreign manufacturing
  • Add scale efficiencies enjoyed as production increases ( we build more but it costs less to produce)
  • Add mix changes that favor high technical content goods like Boeing aircraft instead of Happy Meal toys.
  • Add capability improvement of the product over the same period. The ASP of the average car is about the same now as it was in 1980 (inflation adjusted). But the product is 10 times better and more capable. More reliable, better fuel efficiency, air bags, anti-lock brakes, front-wheel drive, safer, etc.

Please, no value added tax. If you tax something you get less of it (think smoking). If you tax manufacturing you will get less of it.

The one tax change that would help is to get rid of the corporate profit tax. It is a hidden regressive tax on the consumer that hurts the poor more than anybody else.

Why are you such a cheerleader for US failure?

http://ncf.uschamber.com/wp-content/uploads/Made-in-the-U.S.A.1.pdf

http://mjperry.blogspot.com/2011/01/we-should-take-more-pride-in-our-global.html

[-] 0 points by 1sealyon (434) 2 years ago

Can we live without the insults.

[-] 0 points by 1sealyon (434) 2 years ago

The VAT tax (no matter where you put it) will reduce production, hurt manufacturing, and cost jobs. A tax on a thing discourages consumption of that thing.

[-] 1 points by epa1nter (4650) from Rutherford, NJ 2 years ago

Manufacturing’s contribution to gross domestic product — roughly equivalent to national income — has declined to just 11.7 percent last year from as much as 28 percent in the 1950s

In 1955, manufacturing jobs accounted for about 16% of the jobs in the USA. In 2011, manufacturing employed about 5%.

Output has increased, making greater profits for business owners, while jobs have been bleeding out of the country and wages have been stagnant for the last 20 years.

[-] 1 points by francismjenkins (3713) 2 years ago

Right, but impact on "people" apparently doesn't make its way into the calculus of self-appointed economic guru's. We get superficial rhetoric. like hey, we didn't have iphones or flat screens 50 years ago (as if we need that explained to us). But the worse part is, upon critical examination, even the economic statistics they cite fall apart.

Wages have stagnated, yet purchasing power appears to have increased. This might create the impression that wages have in fact not stagnated, until we learn "why" purchasing power appears to have increased. Debt accumulation! We've been living on borrowed money for 30 years, and now we're beginning to see the cracks in our armor.

[-] 0 points by 1sealyon (434) 2 years ago

The average wage for US workers in the manufacturing sector has gone up 23% since 2002.

If the corporations do not make a profit will that increase or decrease the number of jobs?

Do you want to increase the number of manufacturing jobs? Get rid of the corporate profit tax. It is a hidden regressive tax on the consumer that hurts the poor more than anybody else.

Also, follow the Presidents suggestion to cut the capital gains tax for small business manufacturing. This will make the manufacturing sector attractive to investors.

http://mjperry.blogspot.com/2011/11/wage-gap-with-china-continues-to-shrink.html

[-] 1 points by arturo (3169) from Shanghai, Shanghai 2 years ago

Then why is our economy doing so poorly?

[-] 0 points by 1sealyon (434) 2 years ago

Maybe we would have better GDP growth if we out-sourced more jobs like Germany does? Could it be that unlike the Germans the American CEO's care more about keeping jobs in the US than profits?

[-] 1 points by arturo (3169) from Shanghai, Shanghai 2 years ago

If American CEO's are so concerned about keeping jobs in American, then why are so many American workers unemployed? Are you saying we would be better off if we employed less Americans?

[-] 0 points by 1sealyon (434) 2 years ago

The goal of any CEO of a for profit business is just that. Profit. Jobs are incidental.

The point is that the US has out-sourced fewer jobs than Germany. And we have experienced better GDP growth than Germany because CEOs selected the right mix of domestic and international production.

Another factor, the US worker is amazingly productive, and has been especially over the last 20 years. Germany and the rest of Europe could not keep up over the same period.

http://bradyuselman.com/wp-content/uploads/2010/10/The-Goal-Book-Review.pdf

http://www.bls.gov/bls/productivity.htm

http://data.bls.gov/timeseries/PRS85006092

http://www.indexmeasures.com/dc2008/papers/vanark_productivity.pdf

http://faculty.washington.edu/te/papers/er.pdf

[-] 1 points by arturo (3169) from Shanghai, Shanghai 2 years ago

What is GDP growth though, if ours is supposed to be superior, yet so many people here are suffering, being unemployed or having lost their homes? Are we perhaps measuring the wrong thing? Perhaps GDP growth is really an indicator of the rich getting richer and the poor getting poorer.

[-] 1 points by 1sealyon (434) 2 years ago

I agree with you. By every measure I can find poverty is growing in America.

Out of the top 153 nations the US is number 22, ranked best to worst; while we are 7th in GDP per capita and we are basically tied with number 4.

The question is what to do about it?

http://en.wikipedia.org/wiki/List_of_countries_by_GDP_(PPP)_per_capita

[-] 1 points by arturo (3169) from Shanghai, Shanghai 2 years ago

More good points you have, but part of the idea of classical education is that it would be intended to teach children to "love" learning. Somehow, they pull this off in Catholic schools. A Catholic high school student had posted something about it here recently.

I think there is a method to classical education, by showing the connection between science and art, for example, that helps to make learning a beautiful experience for students. There is something about classical music, for example, that develops both senses of peace and harmony, as well as attentiveness in students.

Of course, transforming our own culture back into a classical culture would be a big part of this. We want to recreate a Renaissance as the model of economic development.

Confucius did this as well, in a time of corruption, he developed a system to educate future government officials to be not only smart, but good people. His system included education in the arts, and for China, this particularly meant calligraphy.

He taught his future officials how to write beautifully, and through the distribution of their writings established beauty and artfulness as the standards for the culture.

As a result, common people in China improved farm tools and distribution methods, and developed high quality products, like fine "China" which were desired around the world, not for being cheap, but for being the best quality.

[-] 1 points by 1sealyon (434) 2 years ago

Standby.

I am looking at this problem, but it is a big time suck. The more I look at it the bigger this education problem appears to be. It could be the best use of US resources for the next little while.

[-] 1 points by arturo (3169) from Shanghai, Shanghai 2 years ago

That's a good point you make about education, but in a sense, it would be included under "infrastructure".

To be more specific, what I would like to see is a return to "classical education" combined with tracks to direct students towards either white collar or blue collar work.

Classical education would emphasize languages, sciences, classical arts such as painting and music, but would also emphasize how the arts intersect with the sciences for example, in the areas of perspective or acoustics.

Also, important would be the study of the "classics" the greatest literature that's been around for thousands of years. These studies would prepare students for citizenship, as well provide them with a common language allowing people to work effectively together.

This sort of education, combined with further education in the "trades" track would be intended to prepare students to become the sort like Benjamin Franklin, who was a combination of a tradesman - a printer, as well as a scientist and political philosopher.

[-] 1 points by 1sealyon (434) 2 years ago

Work is another good educator. Instead of making it increasingly difficult for kids to get summer and part time jobs we should be increasing opportunities. And yes these can be rudimentary jobs that expose kids to trades. Why do we spend six months teaching a kid the functioning structure of a volcano and yet they have no clue how a car works.

[-] 1 points by 1sealyon (434) 2 years ago

There may also be a problem with forcing schools to do too much. The increase in school responsibilities may be reducing the efficacy of the prime charter.

[-] 1 points by 1sealyon (434) 2 years ago

Ah, but while cost per student for education in the US is among the top three nations in the world we rank 27 th in math and science. This statistic is even sadder when we realize that the poorest among us are subject to the worst schools. The rich can afford private schools that go out of business if they fail to educate (The Obama children go to Sidwell Friends at $32k per year) .

Something else is wrong with an education system that fails the poor and may be the main cause in the increasing poverty rate. I have searched but can find no data on this one. No study on the correlation between crappy schools (or maybe just failure to learn or value education) and poverty.

[-] 1 points by arturo (3169) from Shanghai, Shanghai 2 years ago

Ok, then I'll tell you my opinion, and you tell me yours.

I think we need to go not back, but forward to being a productive country. We need to rebuild our D rated infrastructure, and our manufacturing base as well.

We don't need to manufacture cheap consumer goods like the Chinese, but rather high tech industrial goods such as machine tools, which we can use for ourselves and sell to the Chinese to balance our trade deficit.

We need to build for ourselves first class infrastructure, and manufacturing capabilities. We could put Detroit back to work manufacturing the components to a national fast rail system, like the Chinese have.

There are many worthy projects like this, that would put millions back to work at good paying jobs, while improving the country, and increasing our revenue without increasing the tax rate.

Of course, to go along with this basically Democratic style program, we would also want to close most of the foreign military bases, like Ron Paul proposes.

But first we need to reform our financial system. The first step would be passing Glass Steagall and following that to establish a national bank which would create credit for such projects.

[-] 1 points by 1sealyon (434) 2 years ago

I agree with almost all of what you propose.

It occurs to me though that if we do everything that you propose it will not substantially reduce the poverty level.

Americans are already among the most productive workers in the world. So what is wrong?

What key metric has declined as the poverty level has increased?

Test Scores.

Our educational system has declined over the past 30 year organically and relative to the rest of the world; and the poor have been hurt dis proportionally.

http://4brevard.com/choice/international-test-scores.htm

http://www.usnews.com/opinion/articles/2011/09/27/why-math-and-science-education-means-more-jobs

http://www.freakonomics.com/2011/12/21/how-is-a-bad-radio-station-like-our-public-school-system-a-freakonomics-radio-podcast-encore/

[-] 0 points by Pujete (160) from New York, NY 2 years ago

The secret to Germany's success?.... That's easy, just don't pay war reparations... Ask the Greeks.

[-] 1 points by francismjenkins (3713) 2 years ago

Respectfully, this is not exactly relevant to my point. The important part of this is how the German economy works, and what lessons we can derive from it. Whether or not the Germans should pay war reparations is another issue entirely (and obviously not within the scope of my post).