Germany is not realistic about EU?

I read today at Americans Affairs (Germany's Trade Surplus: Causes and Effects, Vol. I Number 3)



Words from Heiner Flassbeck, who was chef macroeconomist in the German Institute for Economic Research in Berlin from 1988 to 1998, and Director of the Division of Globalization and Development Strategies at UN Conference on Trade and Development from 2003 to 2012.

Some links and quotes, reasoning would help?

JANFU said:

Some links and quotes, reasoning would help?

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Actually, Flassbeck is a real heavy weight. But professor Sinn who ran the Ifo Institut, one of the most important economic research institutes says similar. And Vosskuhle who presides over the German constitutional court said in a public meeting at the beginning of the year that with respect to the EU the court can often no longer find on the basis of law and that treaties had to be interpreted very widely. I don’t know, if Sinn or Vosskuhle has spoken on the topic in English, but I suspect Sinn probably has.

JANFU said:

Some links and quotes, reasoning would help?

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Well, if there is a kind of self censoring culture among people and media that recognize the austerity, fiscal deficit and government debt policies has not helped make EU more resilient, with people noticing that something has to change but in Germany usually people avoid self criticism... does it means that Germany is not able to actually be realistic and therefore prepared to actually leadership the EU?

The original text is long and talk deeply about but I bring this quote as start point of the discussion.

Among many other things the original text says, he talks that Germany is totally reliant on export surpluses than actually successful economic polices at home (which make sense to me since Germany's money comes from the two big industrial exporting regions that economically support the entire country). The contrast between the rhetoric of Germany leadership and the reality of its dependence on a mercantilistic economic approach "could not be greater". Making it short, the Germany view of the world is as narrow as any mercantilistic view can be. By forcing his conservative policies ideas to EU or to the world, expecting other contries to take this mercantilistic idea sold as "success formula", is actually the big EU problem to overcome the crises and make the block strong. Because the austerity is killing intern economic demands that countries like Greece, Italy, etc need in order to overcome their economic problems, since they don't have the mercantilist export industry like Bavaria to economically support their countries as Germany have.

joG said:

Actually, Flassbeck is a real heavy weight. But professor Sinn who ran the Ifo Institut, one of the most important economic research institutes says similar. And Vosskuhle who presides over the German constitutional court said in a public meeting at the beginning of the year that with respect to the EU the court can often no longer find on the basis of law and that treaties had to be interpreted very widely. I don’t know, if Sinn or Vosskuhle has spoken on the topic in English, but I suspect Sinn probably has.

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I found Heiner Flassbeck talking exactly what he wrote to american affairs Journal in this 23min video.

C R O I X said:

Well, if there is a kind of self censoring culture among people and media that recognize the austerity, fiscal deficit and government debt policies has not helped make EU more resilient, with people noticing that something has to change but in Germany usually people avoid self criticism... does it means that Germany is not able to actually be realistic and therefore prepared to actually leadership the EU?

The original text is long and talk deeply about but I bring this quote as start point of the discussion.

Among many other things the original text says, he talks that Germany is totally reliant on export surpluses than actually successful economic polices at home (which make sense to me since Germany's money comes from the two big industrial exporting regions that economically support the entire country). The contrast between the rhetoric of Germany leadership and the reality of its dependence on a mercantilistic economic approach "could not be greater". Making it short, the Germany view of the world is as narrow as any mercantilistic view can be. By forcing his conservative policies ideas to EU or to the world, expecting other contries to take this mercantilistic idea sold as "success formula", is actually the big EU problem to overcome the crises and make the block strong. Because the austerity is killing intern economic demands that countries like Greece, Italy, etc need in order to overcome their economic problems, since they don't have the mercantilist export industry like Bavaria to economically support their countries as Germany have.

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Do you think much of this is the result of American occupation since WWII? Subservient to USA/NATO viewpoints and policies? Joined at the hip with USA military policies because of the ongoing presence and actually creating many mercantile benefits on the side. Able to concentrate on their business interests instead of overwhelming military agendas. Huge Industrial empires that create Banking power and influence. Holding down the German military freed huge amounts of money for social areas. Will the ECB squeeze Germany or will Germany squeeze the ECB?
/

DaveFagan said:

Do you think much of this is the result of American occupation since WWII? Subservient to USA/NATO viewpoints and policies? Joined at the hip with USA military policies because of the ongoing presence and actually creating many mercantile benefits on the side. Able to concentrate on their business interests instead of overwhelming military agendas. Huge Industrial empires that create Banking power and influence. Holding down the German military freed huge amounts of money for social areas. Will the ECB squeeze Germany or will Germany squeeze the ECB?
/

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I really don't know.

What I know (so far) is that Germany own industry development after war started with a very strong D-Mark. So exporting goods (or average goods) was a hard task for Germany since they could not compete with American and Japanese prices (and many German business closed their doors because of that). So what Germans industrial business did was using their strong currency to import machinery from America and some other countries, learning how to manufacture such machines and developing industries for machine manufactures and components, developing along that their own technology and niche industries since Germans have always being so enthusiastic about engineering. Like that they were able to have products to export for an high value with lower competitiveness from abroad. This match the theory that says industry diversity is what makes economies grows and generates new other industries. Against the classical theory of industry specialization of nations.

Take the example of developed countries with their top exportation are a bunch of products from many different industries that support no more than 50% or 60% of their economy, while in pour countries they have fewer export industries that usually support more than 70% or 80% of their economy. Meaning that specialization is good in the individual business level, but is the diversification of business/industries the key for a strong economy.

But I have no idea about what caused the strong currency that made it possible for German business import machinery for low cost and develop their niche industries and technologies.

Now Germany export niche industrial machinery and own technology to industries all over the world. As far as I know, most of these industries are in Bavaria and Baden-Wüttenberg. Many other regions in Germany has a fail policy and have increasing internal debts, specially in the east and Berlin itself, but they receive money from Bavaria and Baden-Wüttenberg, meaning the rest of the country and even the money that Germany send to Greece and other EU members are actually Bavaria and Baden-Wüttenberg industrial expost money, and not from a successful German economic police that they try are impose to others EU members, which is actually a failure even in Germany.

C R O I X said:

Now Germany export niche industrial machinery and own technology to industries all over the world. As far as I know, most of these industries are in Bavaria and Baden-Wüttenberg. Many other regions in Germany has a fail policy and have increasing internal debts, specially in the east and Berlin itself, but they receive money from Bavaria and Baden-Wüttenberg, meaning the rest of the country and even the money that Germany send to Greece and other EU members are actually Bavaria and Baden-Wüttenberg industrial expost money, and not from a successful German economic police that they try are impose to others EU members, which is actually a failure even in Germany.

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Simply not true and you can change the names to any country. The UK is fully dependent on London.. the US is as dependent on California and a couple of other states and so on. My own country is dependent on Copenhagen, France is dependent on one or two cities, Spain is dependent on Madrid and Barcelona.. and so on and so on.

Also German exports are far more than niche machinery and own tech. They are world leaders in chemicals, plastics, energy, finance, technology (computers, high tech, software.. you name it) and pharma.

As for the idea that Bavaria and Baden-Wüttenberg supplement the rest of the country... actual facts talk against that. The to richest states are Hamburg and Bremen. Hesse comes in at a 4th place when talking GDP per capita. The biggest state GDP in total is North Rhine-Westphalia. As for companies being primarily in Bavaria and Baden-Wüttenberg.. also not exactly true. Frankfurt, the German financial capital is in Hesse for example. Siemens is HQed in Berlin.. and so on and so on.

While there are "poor" states in Germany, namely in the East, and places like Saarland, and these do somewhat receive transfers of wealth from the richer areas.. it is not as bleak and bad as stated in this thread.. especially when compared to other countries. For example, the transfer of wealth in the US from a handful of states to the 30 poorest states is massive. Just as the transfer of wealth from London to Wales/Scotland and NI is very high as well.. one of the biggest arguments against independence btw.

C R O I X said:

I really don't know.

What I know (so far) is that Germany own industry development after war started with a very strong D-Mark. So exporting goods (or average goods) was a hard task for Germany since they could not compete with American and Japanese prices (and many German business closed their doors because of that). So what Germans industrial business did was using their strong currency to import machinery from America and some other countries, learning how to manufacture such machines and developing industries for machine manufactures and components, developing along that their own technology and niche industries since Germans have always being so enthusiastic about engineering. Like that they were able to have products to export for an high value with lower competitiveness from abroad. This match the theory that says industry diversity is what makes economies grows and generates new other industries. Against the classical theory of industry specialization of nations.

Take the example of developed countries with their top exportation are a bunch of products from many different industries that support no more than 50% or 60% of their economy, while in pour countries they have fewer export industries that usually support more than 70% or 80% of their economy. Meaning that specialization is good in the individual business level, but is the diversification of business/industries the key for a strong economy.

But I have no idea about what caused the strong currency that made it possible for German business import machinery for low cost and develop their niche industries and technologies.

Now Germany export niche industrial machinery and own technology to industries all over the world. As far as I know, most of these industries are in Bavaria and Baden-Wüttenberg. Many other regions in Germany has a fail policy and have increasing internal debts, specially in the east and Berlin itself, but they receive money from Bavaria and Baden-Wüttenberg, meaning the rest of the country and even the money that Germany send to Greece and other EU members are actually Bavaria and Baden-Wüttenberg industrial expost money, and not from a successful German economic police that they try are impose to others EU members, which is actually a failure even in Germany.

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Thank you and PeteEU for thoughtful and comprehensive replies.

PeteEU said:

Simply not true and you can change the names to any country. The UK is fully dependent on London.. the US is as dependent on California and a couple of other states and so on. My own country is dependent on Copenhagen, France is dependent on one or two cities, Spain is dependent on Madrid and Barcelona.. and so on and so on.

Also German exports are far more than niche machinery and own tech. They are world leaders in chemicals, plastics, energy, finance, technology (computers, high tech, software.. you name it) and pharma.

As for the idea that Bavaria and Baden-Wüttenberg supplement the rest of the country... actual facts talk against that. The to richest states are Hamburg and Bremen. Hesse comes in at a 4th place when talking GDP per capita. The biggest state GDP in total is North Rhine-Westphalia. As for companies being primarily in Bavaria and Baden-Wüttenberg.. also not exactly true. Frankfurt, the German financial capital is in Hesse for example. Siemens is HQed in Berlin.. and so on and so on.

While there are "poor" states in Germany, namely in the East, and places like Saarland, and these do somewhat receive transfers of wealth from the richer areas.. it is not as bleak and bad as stated in this thread.. especially when compared to other countries. For example, the transfer of wealth in the US from a handful of states to the 30 poorest states is massive. Just as the transfer of wealth from London to Wales/Scotland and NI is very high as well.. one of the biggest arguments against independence btw.

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Thanks. I feel better educated about German economic strength.

PeteEU said:

Simply not true and you can change the names to any country. The UK is fully dependent on London.. the US is as dependent on California and a couple of other states and so on. My own country is dependent on Copenhagen, France is dependent on one or two cities, Spain is dependent on Madrid and Barcelona.. and so on and so on.

Also German exports are far more than niche machinery and own tech. They are world leaders in chemicals, plastics, energy, finance, technology (computers, high tech, software.. you name it) and pharma.

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I didn't mean to say that a country being financially dependent on few rich states is unique to Germany, I know it is the norm. I talk about it only to explain that it is not the the police that Germany sell as successful that makes Germany rich, and the reason that imposing the same police to other countries is not working as it doesn't work even in Germany.

I also didn't mean to say that Germany has only niche industry in their export. I talk about it to explain how Germany was able to compete with high value and expensive goods and services against cheaper products from America e Japan. As I have said, on contrary of the classical theory of nation industry specialization, the industry diversification is the key that makes nation rich and develop more industries and technology (As Germany which is a heavy industrial diversificate country).

PeteEU said:

As for the idea that Bavaria and Baden-Wüttenberg supplement the rest of the country... actual facts talk against that. The to richest states are Hamburg and Bremen. Hesse comes in at a 4th place when talking GDP per capita. The biggest state GDP in total is North Rhine-Westphalia. As for companies being primarily in Bavaria and Baden-Wüttenberg.. also not exactly true. Frankfurt, the German financial capital is in Hesse for example. Siemens is HQed in Berlin.. and so on and so on.

While there are "poor" states in Germany, namely in the East, and places like Saarland, and these do somewhat receive transfers of wealth from the richer areas.. it is not as bleak and bad as stated in this thread.. especially when compared to other countries. For example, the transfer of wealth in the US from a handful of states to the 30 poorest states is massive. Just as the transfer of wealth from London to Wales/Scotland and NI is very high as well.. one of the biggest arguments against independence btw.

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Sure there are other industrial and rich states in Germany but they are deep in debts. And the police that Germany sell as recipe to success is actually what make most of its cities increase their debts. Here a news from 2013: https://www.thelocal.de/20131210/german-cities-pile-up-mountain-of-debt

Debt per head was highest in western Germany, with Oberhausen in North Rhine-Westphalia, Offenbach in Hesse and Saarbrücken in Saarland, among the areas worst affected.
Essen had the largest amount of debt of the cities in the study standing at €3.2 billion – four times greater than in 2010.

I don't know exactly the economic numbers now a days. After 2008 some changes may have happened. Hamburg is where there are more rich people and the most rich people in Germany as far as I know. But looking at wikipedia:

Bavaria has long had one of the largest economies of any region in Germany, or Europe for that matter.[31] Its GDP in 2007 exceeded €434 billion (about U.S. $600 billion).[32] This makes Bavaria itself one of the largest economies in Europe and only 20 countries in the world have a higher GDP.[33] Some large companies headquartered in Bavaria include BMW, Siemens, Rohde & Schwarz, Audi, Munich Re, Allianz, Infineon, MAN, Wacker Chemie, Puma, Adidas, and Ruf. Bavaria has a GDP per capita of over U.S. $48,000. Meaning that if it were its own independent country it would rank 7th or 8th in the world. - https://en.wikipedia.org/wiki/Bavaria


Although Baden-Württemberg [...] is among the most prosperous[8] and wealthiest regions in Europe. [...] The region is heavily industrialised. In 2003, there were almost 8,800 manufacturing enterprises with more than 20 employees, but only 384 with more than 500. The latter category accounts for 43% of the 1.2 million persons employed in industry. The Mittelstand or mid-sized company is the backbone of the Baden-Württemberg economy.[13] Medium-sized businesses and a tradition of branching out into different industrial sectors have ensured specialization over a wide range. A fifth of the "old" Federal Republic's industrial gross value added is generated by Baden-Württemberg. Turnover for manufacturing in 2003 exceeded 240,000 million, 43% of which came from exports. The region depends to some extent on global economic developments, though the great adaptability of the region's economy has generally helped it through crises. Half of the employees in the manufacturing industry are in mechanical and electrical engineering and automobile construction. This is also where the largest enterprises are to be found. The importance of the precision mechanics industry also extends beyond the region's borders, as does that of the optical, clock making, toy, metallurgy and electronics industries. [...] In 2001, more than a fifth of the 100,000 or so persons working in R&D in Germany were located in Baden-Württemberg, most of them in the Stuttgart area.[14] Baden-Württemberg is also one of the Four Motors for Europe.

A study performed in 2007 by the PR campaign "Initiative for New Social Market Economy" (German: Initiative Neue Soziale Marktwirtschaft (INSM)) and the trade newspaper "Wirtschaftswoche" awarded Baden-Württemberg for being the "economically most successful and most dynamic state" among the 16 states. - https://en.wikipedia.org/wiki/Baden-Württemberg

C R O I X said:

Sure there are other industrial and rich states in Germany but they are deep in debts.

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And so is most of the western world. Cities in debt is not exactly new, or unique to Germany. Nor is it as bad as it sounds. The article is from 2013, just after the worst economic crisis since the great depression. Of course cities and countries put on debt.

In my opinion there is way too much focus on sovereign debt or public debt. The article quotes that Düsseldorf has a debt of 228 million euros. Okay.. lets look at that. The city has an annual GDP of 40 billion Euros. Suddenly 228 million in debt does not sound that bad eh? Of course GDP of a city is a misleading. So how is it relative to the budget? Budget is 2.7 billion from what I understand. So the tax income should be near that as well.. kinda small debt to GDP so to say.

Point is, it sounds bad if the debt has shot up so fast in no time.. but is the debt so large? From what I can find out, not really. Of course ANY debt for Germans is bad, so there is that.

The fact that the article claims that cities are going bankrupt.. not much proof in the article though. Would be nice to see the report itself. It would not be the first time Thelocal got it wrong btw.

PeteEU said:

And so is most of the western world. Cities in debt is not exactly new, or unique to Germany. Nor is it as bad as it sounds. The article is from 2013, just after the worst economic crisis since the great depression. Of course cities and countries put on debt.

In my opinion there is way too much focus on sovereign debt or public debt. The article quotes that Düsseldorf has a debt of 228 million euros. Okay.. lets look at that. The city has an annual GDP of 40 billion Euros. Suddenly 228 million in debt does not sound that bad eh? Of course GDP of a city is a misleading. So how is it relative to the budget? Budget is 2.7 billion from what I understand. So the tax income should be near that as well.. kinda small debt to GDP so to say.

Point is, it sounds bad if the debt has shot up so fast in no time.. but is the debt so large? From what I can find out, not really. Of course ANY debt for Germans is bad, so there is that.

The fact that the article claims that cities are going bankrupt.. not much proof in the article though. Would be nice to see the report itself. It would not be the first time Thelocal got it wrong btw.

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Again, I didn't mean to say it a unique characteristic in Germany. I am talking about it to explain that the police that Germany sell as success formula and impose to others UE members is the very same police that made Germany's cities internal debt skyrocket. In other words it is not a successful formula at all.

You are right that their GDP is high enough to make their big debts sound not that a big issue, but as I have said on the beginning, countries like Greece doesn't have such high GDP to compensate their deep debts. Meaning that if Germany policies doesn't work in Germany it is not a big problem for Germany, but because they have high GDP they say that their police works when in fact doesn't work at all. And if Germany doesn't start to recognize the problem and be realistic about it the EU will not get the strong recovered block as Germany promise.


Also, it wasn't TheLocal who said the Germans cities are bankrupt but Peter Busson from Ernst & Young. TheLocal only quotes the guy who represents one of the largest professional services firms in the world and is one of the "Big Four" accounting firms according to wikipedia.

And he explain it: "He said that many towns and cities had not benefited from increased taxes as Germany’s strong economy helped areas which were already doing well, while those areas which were in debt before 2010 had to cut back on services making them even less attractive to investors.

“Wealthy cities can court [firms] with offers attracting businesses and newcomers – and get even more investment,” he said.

National checks on debt mean cities are required to reduce spending when they get into the red, which makes the situation worse, Spiegel reported."

C R O I X said:

Again, I didn't mean to say it a unique characteristic in Germany. I am talking about it to explain that the police that Germany sell as success formula and impose to others UE members is the very same police that made Germany's cities internal debt skyrocket. In other words it is not a successful formula at all.

You are right that their GDP is high enough to make their big debts sound not that a big issue, but as I have said on the beginning, countries like Greece doesn't have such high GDP to compensate their deep debts. Meaning that if Germany policies doesn't work in Germany it is not a big problem for Germany, but because they have high GDP they say that their police works when in fact doesn't work at all. And if Germany doesn't start to recognize the problem and be realistic about it the EU will not get the strong recovered block as Germany promise.

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Greece was and is a very unique situation. Constantly bringing it up does not help a debate. As for transferring German policies abroad.. well the basics do work, but the specifics need to be molded to the area they are targeted. Does it work always? Of course not, since there will always be resistance to change, and then of course there is the political BS that comes with it all.

Also, it wasn't TheLocal who said the Germans cities are bankrupt but Peter Busson from Ernst & Young. TheLocal only quotes the guy who represents one of the largest professional services firms in the world and is one of the "Big Four" accounting firms according to wikipedia.

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I know.. but all I want is the source material.

And he explain it: "He said that many towns and cities had not benefited from increased taxes as Germany’s strong economy helped areas which were already doing well, while those areas which were in debt before 2010 had to cut back on services making them even less attractive to investors.

“Wealthy cities can court [firms] with offers attracting businesses and newcomers – and get even more investment,” he said.

National checks on debt mean cities are required to reduce spending when they get into the red, which makes the situation worse, Spiegel reported."

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Again you are talking about pretty much every city in every country and it is not as simple as that. Dusseldorf... as mentioned in the article. There are some large employers there... Metro AG for example.

The economy of a country is very vibrant, and during booms some parts grown, others decline. The problem of Germany is, and always has been that certain areas have historical industries that are in massive decline, and then there is Eastern Germany. Fixing this kind of stuff does not happen overnight, or maybe never.

PeteEU said:

Greece was and is a very unique situation. Constantly bringing it up does not help a debate. As for transferring German policies abroad.. well the basics do work, but the specifics need to be molded to the area they are targeted. Does it work always? Of course not, since there will always be resistance to change, and then of course there is the political BS that comes with it all.

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How bringing it up does not help the debate when the debate is about it? And no, the basics doesn't work at all as we can see countries and cities losing their competitiveness and piling on debts.

I talk about Greece because it is the EU member in the worst situation and most effected by Germany rules imposition, but the same applies to any EU member including Germany as I have said.

PeteEU said:

I know.. but all I want is the source material.

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Sorry, you didn't seem to know when you blamed TheLocal to be the source. So I just clarify so you can find it if you want go for it.

PeteEU said:

Again you are talking about pretty much every city in every country and it is not as simple as that. Dusseldorf... as mentioned in the article. There are some large employers there... Metro AG for example.

The economy of a country is very vibrant, and during booms some parts grown, others decline. The problem of Germany is, and always has been that certain areas have historical industries that are in massive decline, and then there is Eastern Germany. Fixing this kind of stuff does not happen overnight, or maybe never.

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Exactly as said on the paragraph you quoted:

many towns and cities had not benefited from increased taxes as Germany’s strong economy helped areas which were already doing well, while those areas which were in debt before 2010 had to cut back on services making them even less attractive to investors.

“Wealthy cities can court [firms] with offers attracting businesses and newcomers – and get even more investment,” he said.

National checks on debt mean cities are required to reduce spending when they get into the red, which makes the situation worse,





@PeteEU
You sound exactly like the description on the text in the photo of the first post that I used to open the topic.
Like in Germany, when we talk about a problem usually somebody comes with the very same saying that "in other countries is like this as well". We hear that saying "in other countries as well" very very often, as to avoid to recognize and really see the problem but just accept it as a kind of hidden patriotism.

It doesn't matter if other countries has the same or similar problem. The point is that 1) it is a problem, 2) it has to be solved and not ignored or pretend that everything is fine, 3) what politicians says is the solution has not solve the problem, and politicians has not recognize that they don't have a solution to offer and pretend they are solving the problem.

The only way to actually solve the problem is to be realistic about it and deal with it. Otherwise no matter how much we like the EU or Germany. The EU will not become the resilient economic block that we wish without recognize and deal with its problem. Otherwise we keep living in a fairytale.

I agree in some way with your stand that our System is not really fair to 2nd world countries but I think thats fact with all succesful western countries.

Germany was not founded after the war - there was much know how wich went to Amerca and not the other way round. ;o) The winner countries took the old Industries as reparations and so Germany could build up completely new and modern one with the aid of the Marshall money for example. So after the war we had more modern industry than the countries wich won the war.

Bavaria was an agricultural land in these times - they got a lot of money from here (NRW) from the profits of the heavy industry. They used the money clever and built up the industy you mentioned. Since around 20 or 30 years they are payers and NRW became poor because of the downfall of the heavy industry. (may be similar to Detroid) And since they are payers, they are clamoring around how unfair the system is wich takes them "their wealth"

Baden Würtemberg were always payers since the war.

@Pete: Hamburg and especially Bremen are two of the poorest regions in Germany

Whatever the premise is that this thread attempts to present, it seem to me as doing a pretty bad job of even formulating it concisely.

For one thing, picking, as the opening post does, a particular excerpt from a a more substantial paper to try and posit that "in Germany usually people avoid self criticism..." (post #4) provides not only an over-simplification but also leads away from the more in-depth thesis that the paper presents overall.

I suggest that one acquaint oneself with the whole thing:-------------------->

https://americanaffairsjournal.org/2017/08/germanys-trade-surplus-causes-effects/

Beyond which it remains a mystery how the (immediately or in medium term) post war DeutschMark could be considered a strong currency (in relation to, for instance, both sterling and dollar) when over 4 DM were needed to buy a buck in 1950 (DM 11 to the pound) and when these exchange rates didn't change much until the mid-to-end 1960s, with the DM strengthening more considerably (the other two currencies weakening) by the mid 19970s.

As such the thesis (presented by the OP in post #7 of "What I know (so far) is that Germany own industry development after war started with a very strong D-Mark. So exporting goods (or average goods) was a hard task for Germany since they could not compete with American and Japanese prices (and many German business closed their doors because of that)." simply couldn't be more off the mark.

Equally mysterious remains the thesis of Germany having prospered due to "niche industries" and just as mysterious the (implied) understanding that she didn't become an industrial power until the end of WWII.

There's plenty to be said on Germany's impact upon general EU policy, yet this here thing appears to be so much all over the place as to merit a totally new thread on that topic.

One that sets off from a clear position would help.

german hick said:

I agree in some way with your stand that our System is not really fair to 2nd world countries but I think thats fact with all succesful western countries.

Germany was not founded after the war - there was much know how wich went to Amerca and not the other way round. ;o) The winner countries took the old Industries as reparations and so Germany could build up completely new and modern one with the aid of the Marshall money for example. So after the war we had more modern industry than the countries wich won the war.
Bavaria was an agricultural land in these times - they got a lot of money from here (NRW) from the profits of the heavy industry. They used the money clever and built up the industy you mentioned. Since around 20 or 30 years they are payers and NRW became poor because of the downfall of the heavy industry. (may be similar to Detroid) And since they are payers, they are clamoring around how unfair the system is wich takes them "their wealth"

Baden Würtemberg were always payers since the war.

@Pete: Hamburg and especially Bremen are two of the poorest regions in Germany

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Actually (wrt the bolded) German industry was nowhere near as much in a shambles by 1945 as many would have us believe. The "equipment plunder" taking place primarily in the East by Russia and no competitive industry ever having formed there again. Not just by plunder but by subsequent communist policies.

By contrast the German (West) industry was merely "halted" by the occupying powers post 1945,

https://www.noz.de/deutschland-welt/wirtschaft/artikel/573207/deutsche-wirtschaft-war-am-kriegsende-keineswegs-kaputt

the German article above in summary stating that the greatest damage by bombing was done to the big cities but not so much to industrial plants as such, biggest effect having been the destruction of the traffic infrastructure (bridges, rail and road).

With production already running nicely again by 1947, except that goods were stockpiled in expectation of the currency reform from Reichsmark to Deutsche Mark, industry not wishing to sell before in a currency that was worthless.

That's why with currency reform "the shelves were all of a sudden miraculously full again".

@Chagos,
I posted the video where Flassbeck summarize what is in the text (that I didn't know it was available online).
My point was to agree with him, that despite people see and feel that something is out of the rail, such recognition has been avoided leading people to an unrealistic view about the politics done in the EU and its results.

The value of the D-Mark may be questionable at that time, but what matter is the fact that Germany could not compete with lower costs and lower prices markets on the exports like EUA e Japan. Following by what @german hick have described... Old heavy industrial areas in the North decaying economically (maybe similar to what happened in Detroit as @german hick reminded us as well as in some industrial English regions). Despite Germany had a massive strong and modern industrial plants, since Germany was probably the most industrial country before the wars.

The main point is that politics towards helping the old industrial regions that became poor failed, their debts increased as well as the social inequality and they remained poor. Now, thanks to the industrial development of Bavaria, and their development on new technologies and niche industries supplying machinery, components and technologies to industries all over the world, following by the growing diversification of industries in the region, Bavaria together with Baden-Wüttemberg became rich enough in order to economically sustain the entire country by their own and also the EU. And because Germany have such money from these two rich regions they claim to have a successful economic policy when it is not true.

Now, the poor regions in Germany, including Berlin with its massive debts and poverty receive money from Bavaria without being in debt with Bavaria. Meaning that they don't ever have to pay back. So they can have any fail economic police as far as they have Bavaria and BW sending money to them.

But when Germany try to apply the same to the EU than it is different, because they impose failing polices to broken EU members, sending money to them and making these countries in debt with Germany (or with the EU). So these broken countries doesn't have the luxury to have a failing police and receive money without have to pay back like the poor regions in Germany. And while Germany doesn't recognize it, things will keep going downhill.



Now talking about history for the history sake, the countries that occupied Germany after the war limited the industrial production and development, imposed massive bureaucracies and did some other things because they were afraid that any hidden remain of Nazism could rise back. So they wanted to rebuilding the country and help Germany go back the track, but not giving Germany the confidence that they can do what they did before. Also as a kind of punishment.

C R O I X said:

~..................The value of the D-Mark may be questionable at that time, but what matter is the fact that Germany could not compete with lower costs and lower prices markets on the exports like EUA e Japan..................~

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This is all really pretty much all over the place as I've addressed previous posts as being.

Applies to all the rest here as well.

With your assumptions thus being as full of holes as they appear, not much point in our exchange continuing.

C R O I X said:

Well, if there is a kind of self censoring culture among people and media that recognize the austerity, fiscal deficit and government debt policies has not helped make EU more resilient, with people noticing that something has to change but in Germany usually people avoid self criticism... does it means that Germany is not able to actually be realistic and therefore prepared to actually leadership the EU?

The original text is long and talk deeply about but I bring this quote as start point of the discussion.

Among many other things the original text says, he talks that Germany is totally reliant on export surpluses than actually successful economic polices at home (which make sense to me since Germany's money comes from the two big industrial exporting regions that economically support the entire country). The contrast between the rhetoric of Germany leadership and the reality of its dependence on a mercantilistic economic approach "could not be greater". Making it short, the Germany view of the world is as narrow as any mercantilistic view can be. By forcing his conservative policies ideas to EU or to the world, expecting other contries to take this mercantilistic idea sold as "success formula", is actually the big EU problem to overcome the crises and make the block strong. Because the austerity is killing intern economic demands that countries like Greece, Italy, etc need in order to overcome their economic problems, since they don't have the mercantilist export industry like Bavaria to economically support their countries as Germany have.

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It is pretty clear that Germany's recipe for economic success is not a one-size-fits-all solution for the EU at large. It also stands to reason that Germany can do a very good job of neglecting to check their blind spot, though i wouldn't say that this is terribly unique to Germany (see: China, USSR, ... USA, etc.).

Absentglare said:

It is pretty clear that Germany's recipe for economic success is not a one-size-fits-all solution for the EU at large. It also stands to reason that Germany can do a very good job of neglecting to check their blind spot, though i wouldn't say that this is terribly unique to Germany (see: China, USSR, ... USA, etc.).

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I don't think it is a problem particular to Germany. I believe every nation, specially the ones doing well economically for a certain long time, has such tendency.

It reminds me a podcast I was listening about "business running out of new ideas". They were saying that successful business have the strong belive that they are doing everything very well, with no mistakes and for this reason they are successful, when in fact sucessiful business usually is very good at one single thing or a couple of things that make them successiful, so they have room to do many other things not very well and still run fine. And they will neglect their problems until the thing that they were doing well doesn't work anymore.

Chagos said:

This is all really pretty much all over the place as I've addressed previous posts as being.

Applies to all the rest here as well.

With your assumptions thus being as full of holes as they appear, not much point in our exchange continuing.

Click to expand...

I was just clarifying what you called as "bad job to do it concisely". What you call as holes doesn't actually matter to the talk, like the D-Mark value and Germany industrial history. The point is only about a fail police being used as standards of success for EU and people seeing it but wanting to believe otherwise.

C R O I X said:

I don't think it is a problem particular to Germany. I believe every nation, specially the ones doing well economically for a certain long time, has such tendency.

It reminds me a podcast I was listening about "business running out of new ideas". They were saying that successful business have the strong belive that they are doing everything very well, with no mistakes and for this reason they are successful, when in fact sucessiful business usually is very good at one single thing or a couple of things that make them successiful, so they have room to do many other things not very well and still run fine. And they will neglect their problems until the thing that they were doing well doesn't work anymore.




I was just clarifying what you called as "bad job to do it concisely". What you call as holes doesn't actually matter to the talk, like the D-Mark value and Germany industrial history. The point is only about a fail police being used as standards of success for EU and people seeing it but wanting to believe otherwise.

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Yes, i believe you are very accurate at describing big businesses here in the US. We have been relying on a big merger/acquisition method for growth that is really good for the big companies because they snuff out any threat of competitors that can do things better than they can.

It doesn't matter how badly the big companies screw up if they're so flush with cash that they can buy any competitor. So they can grow to a certain saturation of market share, where they can simply leverage their economic momentum to retain control. Their growth model then becomes dependent on slowing or stopping competitors, perhaps even through regulations that favor their businesses.

@Croix: I think you really overestimate the differences. There are well doing Companies in any Country of Germany - may be a Little less in the east.

And I think the "Länderfinanzausgleich" is rather a succses Story than failed policy. As you can see in the case of Bavaria, wich became as I said "payer" in the 80 and was "getter" all the time before. So may be one time the wheel turns around again

Not in the near future, because the strukture for example in the Ruhr area is not made for a quick solution. All the steel and coal working Areas have to find new income, that does not work in a year or two.

I could blame our politicians for a lot of things but not the Länderfinanzausgleich - thats a success story in my eyes.

Europe is another poinz and Relations to third world countries a third. But to be honest: I´m not clever enough to say how ist could work better...