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Ear to the Ground

What’s Germany’s Secret?

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Posted on Jun 16, 2011
Flickr / Kheel Center, Cornell University

A mural by Diego Rivera depicts figures important to the struggle for worker’s rights in America, including Daniel De Leon, Eugene Debs and William Haywood.

In the decades immediately following World War II, U.S. wages steadily rose in step with productivity at a time when one-third of American workers belonged to labor unions. Today, union membership stands at 7% and wages are in decline, and conservatives are saying the two aren’t connected.

They claim the great prosperity that middle- and working-class Americans enjoyed in the mid-20th century was attributable not to the strength of unions, but to the fact that the United States’ greatest competitors were crippled by the aftermath of war, Robert Reich reports. But a glance at Germany’s recent economic history, with an unemployment rate of only 6% and productivity on the rise, suggests otherwise. —ARK

Robert Reich:

What’s Germany’s secret? In sharp contrast to the decades of stagnant wages in America, real average hourly pay has risen almost 30 percent there since 1985. Germany has been investing substantially in education and infrastructure.

How did German workers do it? A big part of the story is German labor unions are still powerful enough to insist that German workers get their fair share of the economy’s gains.

That’s why pay at the top in Germany hasn’t risen any faster than pay in the middle. As David Leonhardt reported in the New York Times recently, the top 1 percent of German households earns about 11 percent of all income – a percent that hasn’t changed in four decades.

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By Lew Ciefer, June 20, 2011 at 11:01 am Link to this comment

@ Inherit The Wind, June 19 at 7:25 pm Link to this comment

It’s simple: When unions have been strong, American has been prosperous and the world leader.  When unions have been weak, the nation has been weak.
Strong workers who feel like they “own” America, make America strong and prosperous.
Weak workers who feel voiceless and at risk, can’t keep America strong and prosperous.
Just look at our history since the Civil War.

“...................”  [<- expression of blank unbelief.]

“An economist is an expert who will know tomorrow why the things he predicted yesterday didn’t happen today.”—Laurence J. Peter

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By Lew Ciefer, June 20, 2011 at 11:00 am Link to this comment

@ mrfreeze, June 18 at 7:43 pm

Do you use hallucinogenic drugs?  I ask because once again you are fighting a straw man of your own invention.

Who asked you to apologize? Not me.

Who said America was the center of the universe? I didn’t. It’s not even possible. The planet is located in a far off corner of the universe making it impossible that America—I prefer the U.S.—which is a national population located on a geographical land mass on the planet Earth—the third from it’s star—could be at the center of the universe.

The U.S., while not located at the center of the universe, is the major political, economic, and military big dog on the block. And only a twit would deny it. 

You really should stop assuming things about people you know absolutely nothing. One doesn’t have to live outside of the U.S. to know what is going on economically in the world. Reich doesn’t have any extensive outside the U.S. experience and you appear to accept his dribble as gospel. Before accepting any Reich advice you might want to review his comments on Iraq at around the outset of conflict.

Another correction for you ... I never conflated unions with socialism; the subject of my comments were Reich’s tripe, which is socialist and pro-union, that is to say; typical, unenlightened, democrat delirium.

There’s nothing in my statement that accuses unions or union members of being evil commies and/or evil socialists; albeit many unions and union members are evil commies and socialists. Evil commies and socialists love and need—for a time—unions because they usually always back the political left. But as soon as evil commies and socialists grab power they first annihilate the political opposition groups then repay the unions for their faithfulness by disbanding and outlawing them, and almost always imprisoning and/or hanging the leadership as traitors. There’s a reason they’re called evil commies and socialists.

By the way, I never said that I was against unions, but I will state now that I’m not keen on public unions and smile every time one is neutered.

FYI: I’ve got union-busting members of my family who would kick the arses of your union family members—who you said would kick my ass—just for their being ugly and not brushing their tooth.

At the blog Socrates’ Academy, the diminutive Reich was summed up nicely and succinctly:

“Shorter Reich: A never works, B has worked before, and there is no C. Let’s do A.”

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By Inherit The Wind, June 19, 2011 at 7:25 pm Link to this comment

It’s simple: When unions have been strong, American has been prosperous and the world leader.  When unions have been weak, the nation has been weak.

Strong workers who feel like they “own” America, make America strong and prosperous.

Weak workers who feel voiceless and at risk, can’t keep America strong and prosperous.

Just look at our history since the Civil War.

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By mrfreeze, June 18, 2011 at 7:43 pm Link to this comment

Lew Ciefer - I don’t apologize for going ad hom on commentators, especially those as shallow and simple-minded as you and rico suave. I’ve grown tired of the “America-at-the-center-of-the-universe” perspective, especially from those who have obviously never lived anywhere else (or if they did, had their head up their ass along with you).

One other thing:

To conflate unions and socialism is ridiculous. I have union members in my family who would kick your ass for suggesting they had anything to do with “socialism.”

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By Lew Ciefer, June 18, 2011 at 12:03 pm Link to this comment

@ mrfreeze, June 17 at 5:34 pm:
Obviously you didn’t read my comments on this thread…If you can’t argue your point without including the “magic-capitalist-dust” term “socialism/socialist,” then your IQ is in question.
Why don’t you go argue with some Jr. High kids?

Who appointed you chief cook and bottle washer?

Why would I want to read your dribble comments?

The very fact that you come at me with nothing but ad hominem pretty much proves that there is at least one junior high dweeb kid here and that would be: YOU! 

Robert Reich is part and parcel of the neo-mercantilist, centrally planned, economic system that has grown increasingly more gratifying for those that constitute it and ever more detrimental to the well-being of those coerced into financing it. And now we should accept his ‘keep it simple stupid’ (KISS), erroneous, pro-union biased, summation of causality for low wages in the U.S.; which is a very complicated economic/political problem caused by a myriad of influences? I think not!

His use of Germany is a clue to his bias; it’s apples to oranges.

How intelligent is it to think that the same deleterious poltroons responsible for the present economic woes are going to fix it? It’s like trying to cure obtuseness by injecting the patient with a mega dose of stupid.

”Ask five economists and you’ll get five different answers - six if one went to Harvard.” - Edgar R. Fiedler|

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By mrfreeze, June 17, 2011 at 5:34 pm Link to this comment

Lew ciefer - Proof that you have your head so far up your ass, it’s come back out again…your words:

“This piece is nothing more than socialist pro-Union KISS propaganda.”

Obviously you didn’t read my comments on this thread…If you can’t argue your point without including the “magic-capitalist-dust” term “socialism/socialist,” then your IQ is in question.

Why don’t you go argue with some Jr. High kids?

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By Lew Ciefer, June 17, 2011 at 3:26 pm Link to this comment

Mike3, June 17 at 10:33 am:
First off: hay Ciefer you need a massive reality check. The Americans WANT to stay in Germany. Do you get that? They WANT to stay in Germany. So don’t come on with any of that “appreciation” crap. America did very well with its relationship with Germany. The aim is a HQ for moving its ARMY into Easter Europe. You’ve got a lot to learn sunny.

Yeah I’ve got a lot to learn all right, don’t deny that.

American presence in Germany is about a three billion dollar annual big deal. And certain Americans—like the MIC—want to stay in Germany. Germany didn’t do so bad with its relationship with the U.S. either. You might want to think how well Germany would have done under the Eastern Bloc –think East Berlin. There’s a lot of appreciation due the U.S. How many years have all the NATO nations profited by American taxpayer funded research on fighter aircraft and other weaponry? Funding that the American taxpayer will never be repaid ... sonny (<- note the ‘o’)

Germany, as well as many other countries, profit from the dollar being the world’s reserve currency. Part of the reason the U.S. has to continually print dollars is to maintain world supply because nations are increasing their dollar reserves—Japan and China being two of the biggest—to maintain currency value and prevent from going south like all those Asian Tigers in the 90s. There’s a reason Keynes wanted the world reserve currency switched from the pound Sterling to the dollar and that was to relieve Britain from the burden. And controlling surplus countries is one the problems he was never able to work out. Having the world reserve currency is a double-edged sword that cuts both ways. How about we let the Euro take the burden for a while and let’s see what happens to all that manufacturing when the price of German products goes through the roof and prices began to inflate due to the E.U. having to print more Euros to maintain world supply?

Anyone taking Robert Reich’s advice is in for a long day. This piece is nothing more than socialist pro-Union KISS propaganda. There are many variables involved in why wages in the U.S. are as they are today and it’s a hell of a lot more complicated than he’s making it out to be.

Why shouldn’t all the nations of the world pay the U.S. for its roll as the world’s police force? Don’t you pay your policemen? Many American taxpayers are tired of taking it on the chin for the rest of the world.

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By Mike3, June 17, 2011 at 10:33 am Link to this comment

First off: hay Ciefer you need a massive reality check. The Americans WANT to stay in Germany. Do you get that? They WANT to stay in Germany. So don’t come on with any of that “appreciation” crap. America did very well with its relationship with Germany. The aim is a HQ for moving its ARMY into Easter Europe. You’ve got a lot to learn sunny.
mrfreeze: all I cam say (just between you and me you understand), is that this crisis with Greece could be what brings those European politicians that matter France and Germany together. Thus stabilizing the European Dream. The American Dream is dead, long live the European Dream. Without dreams we have nothing. This is America’s tragedy, but I don’t have to tell you that. Sorry it wasn’t more. Just hook up more with what’s happening over here.

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By Nancy, June 17, 2011 at 9:44 am Link to this comment
(Unregistered commenter)

True. The right-wing demagogue working for the rich to destroy our gov. clearly states and once argued with me, that they HATE democracy by totally ignoring it and using ‘Republic’ for the name of our nation. They said we are NOT a democracy. They have been working a very long time to destroy us. And morals. Made me feel really sick when I discovered the KKKs are right-wingers too.

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By mrfreeze, June 17, 2011 at 8:49 am Link to this comment

Mike3 - Thanks for that observation. That’s why I (sarcastically) stated that the only criticism that our self-proclaimed political-economic gods here in America can come up with is the lame “they’re socialists.”

Whilst we wallow in the shit-storm of Anglo-American capitlaism (“almost-everyone-left-behind” capitalism), the Germans are moving far more gracefully into the 21st Century.

I’d sincerely like you to comment more on the general state of Germany and what you think they’re doing right (and equally as intersting) and perhaps what they seem to have trouble with. Most of my friends, colleagues and relatives know virtually NOTHING about life in Europe.

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By Lew Ciefer, June 17, 2011 at 8:42 am Link to this comment

Sounds like it’s time we pull all those troops that contribute about 3 billion annually to the German economy and have them do our defense for us for about 50 years as a sign of their appreciation for all that U.S. aid since WWII.

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By Mike3, June 17, 2011 at 8:34 am Link to this comment

The Germans are not socialists, (although Germany did produce Marx), that’s Karl not Groucho, they have what is termed egalitarianism and that’s different. Germany, apart from its rather unfortunate flirtation with fascism, has always been so. Egalitarianism is a common understanding that everyone should get a fair slice of the cake. This is changing a little in Germany recently (I live there), because of the unfortunate influence of America. But then America is polluting the world so no one is free from that. But they (the Germans) are beginning to see that their system/way is working and America is failing. But BOTH are capitalist its just they have a different understand of what capitalism can do and what it cannot. Even Continental bankers are perhaps a little weary of the Anglo-American bankers/mobsters, captains of disaster.

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By Lafayette, June 17, 2011 at 4:25 am Link to this comment

NO SOCIALISM PLEASE, WE’RE YANKS

mrf: The only real criticism we can muster against the Germans (Eurpoeans in general) is that [they’re] “socialists”.

Well put.

The Rabid Right in America trots out the word “socialist” as if it were an epithet. They make an amalgam with Communism and, since Ronnie beat the Commies, of course the Socialists are were beaten as well.

European socialism came out of WW2 well intact. In fact, it was bolstered by Communists who were actively part of the underground war against the Fascists.  In the post-war years Socialism gradually replaced Communism as a preferred political party. Europeans, who were right next door to the Russian Bear, saw the failings of a Unworkable Economic Theory that was maintained, not out of good reason for there was nonesuch, but by autocratic rule.

To the point today where the Communist Party in Europe is almost moribund. It no longer exists in Italy where it was, once,  the most virulent of political forces on the Boot. It still exists in France, but has only a tiny percentage or representation in France’s unicameral elected legislature. 

So Europe has come to terms with Social Democracy. It is comfortable with a two-party system, one that is a handful of parties on the Right and the Social Democrats on the Left. They swing between the two and that shifting means that both parties tend to look like the “center” of the spectrum to win elections. Which is happening in most functional democracies around the world. (The US being a curious exception.)

And, I submit, is the same phenomenon that is moving America back Leftwards. The challenge of the Democrat Party is start looking like a Social Democrat Party. But is extremely difficult, given that its composite contains BlueDogs who should not be there.

LITMUS TEST

The litmus test of a Social Democracy, I suggest strongly, is a Public Option National Health Service. The evidence of its preference over the presently mindless concoction in America is plain, undisguised and self-evident. If Americans will continue to have faith in BO & Co, his administration will bring about a National Health Service – and by this sole measure save the lives of millions of Americans who will otherwise die for lack of Preventive Health Care – rampant in our nation.

If they do not, otoh … well, stupidity is as stupidity does. Americans will have to live with the consequences that they have chosen. Frankly, Americans living in Europe should care less. We have coverage by a National Health System and our taxes pay for it - no problem, thank you very much. (Yes, at 35% of GDP the European Union tax-take is 8% higher than the American tax-take. So be it.)

POST SCRIPTUM

We simply cannot realize why fellow Americans in the US are so willing to keep Private Insurance, which is such a failure by almost any metric one might devise as regards Universal Health Care.

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By Lafayette, June 17, 2011 at 2:40 am Link to this comment

GERMANY – A GOOD EXAMPLE

Reich: How did German workers do it? A big part of the story is German labor unions are still powerful enough to insist that German workers get their fair share of the economy’s gains.

That’s why pay at the top in Germany hasn’t risen any faster than pay in the middle

Germany is certainly a good example of Social Democrat Policy Making. The SocDem party in Germany understood full well that milking the Cash-Cow was far better for the Germany than owning the Cash-Cow. And this works very well in Germany where the industrial structure is much, much more integrated than in the US. Banks in Germany own parts of industries that no American bank would even touch. German governments, both Federal and the Lander (Germans states), often have representative on the Board of German banks.

I think there is also one more important attribute of German corporations that was instituted by a Socialist government that mistrusted deeply the captains of German industry. They passed legislation that required the Boards of corporations above a certain size to reserve two chairs for representatives elected by the rank-and-file.

This gave these to Members of the Board an overview of operations that greatly benefited in understanding where the company was going and why. It also helped management to negotiate with the unions, because the latter had information that was once a privilege only of the BoD.

That is, the unions understood the business context in which the company existed.

Moreover, when it comes to the Compensation Committee - which is the most important of all Board Committees (I submit) - these two rank-and-file members are likely never members of such a committee. The committee decides management salaries, bonuses and stock options. But the committee does report their decisions to the entire Board. So, the rank-and-file reps have a very good idea of what level of Comp & Ben management is being paid - though perhaps not exactly.

This almost certainly mitigates the amounts, often hallucinatory in the US, that are paid to German Top Management and from that level spill down below. It thus helps the unions to negotiate salary rates within a certain business context. Meaning what?

Meaning that when business is good and company is not only earning profits but Top Management is being paid very handsomely, then the rank-and-file can claim similar rewards. Alternatively, when the profits are meager, Management then has the edge when it comes to downsizing or resale of the company.

[Of course, the Board can “buy” these rank-and-file members. In fact, a scandal a few years ago at Volkswagen involved the compromising of one of the rank-and-file members of the Board who had accepted unjustified payments from the company.]

MY POINT

Germany is a collective nation. America is an Individual nation. What does that distinction mean?

It means that as a national attribute, people in collective nations understand the meaning of “all being in the same boat”. In America, that notion is not so pronounced – unless someone attacks us. We are far too individualistic in motivation – meaning often, “I’ve got mine and f**k the rest of you nerds!”

Which is pure selfishness in a nation where there is more than enough to go around.

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By Nancy, June 16, 2011 at 5:25 pm Link to this comment
(Unregistered commenter)

The rich of America act nothing short of Hitler. Repentance seems to have done well for Germany. One day America’s rich will have to eat their own children.

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By mrfreeze, June 16, 2011 at 3:13 pm Link to this comment

that last line should read: “they’re socialists.” Sorry…..Americans obviously can’t spell either….

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By mrfreeze, June 16, 2011 at 3:10 pm Link to this comment

A couple of thoughts:

Last summer I met some good German friends for a long-overdue reunion in N. Italy. In the 15 years since I had seen them, my German friends and their children exuded a sense of both national pride and personal accomplishment that was very different from the “big hat no cattle” mentality (to borrow a Texan metaphor) of the average American. They spoke of their democracy being strong, of their government working for the people and that the future looked “ganz gut.” They also acknowledged problems, but felt that Germany was working to resolve issues and they know that things won’t get better without everyone working together. Their children were smart, worldly and had a great sense of humor. My friends aren’t in a mountain of debt and they don’t live with a sense of impending health care doom every minute of the day. If the “brand” wasn’t so over-used one would think that these German friends were living “the American Dream.”

Here in the U.S. we have become a nation of non-participants. Here, we call union members or immigrants who want a piece of the pie “uppity.” How dare they actually want a share of that mysterious “pie” that the wealthy seem to enjoy so much of. Here, we speak of unity but practice regionalism and class warfare that would make the most condescending British aristocrat blush. We have become mediocre, and base, and crass, and uninspiring.

Face it people, we’ve allowed wolves and cheats and liars and sociopaths to run this country for far too long. We’ve also forgotten that running a big place with hundreds of millions of people takes money and work and a common purpose. And you know the funny part? The only real criticism we can muster against the Germans (Eurpoeans in general) is that their “socialists.” Oh my….......

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By Ralph Kramden, June 16, 2011 at 12:27 pm Link to this comment
(Unregistered commenter)

Repeal Taft-Hartley Act. Nothing will happen until we do except the continuing slow death of unions. Also, I’ve noticed lately with power tools, many of the high-end are made in Germany. Many of the high-end hand tools are made in Switzerland. Try to find power tools or hand tools made in the USA. The corporations have shipped our jobs overseas. This is unpatriotic. I mention tools because that is what I know most about.

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By Jeff, June 16, 2011 at 12:04 pm Link to this comment
(Unregistered commenter)

A lot of the story is missing.  For instance, as the
economy becomes more global, what are Germany’s real
wages as compared to the US, and what have they been
since 1970ish when Europe began to compete again
against the US.

The quick blurb above doesn’t give nearly enough
information to even basically understand why, and
simply looks like a shoddy attempt to make unions look
like the reason.

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By gerard, June 16, 2011 at 10:57 am Link to this comment

Contributing reasons:
  An awareness of history and the importance of learning from it (democracy versus fascism)
  A broad cultural respect for craftsmansmen/women
  Willingness to take responsibility for helping to unite a continent of disparate nations peaceably

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