The German Model & Works Councils

December 27, 2010 9:41 AM

Wondering at the route US vs. German unemployment has taken, I found some clues here and there, but the overriding factor seems to be the German model^[1] and works councils.^[2]

Under the German model, unions are organized at the industry level and co-exist with works councils at both the plant and company levels. These unions negotiate wage determination with employers' associations. The strength of this setup is the cooperation among unions and management councils. This is unique among Western countries, which have been marked by either substantial weakening of union powers (such as in the United States and United Kingdom) over the last twenty years, or consistent union conflict (such as in France and Italy, where unions have remained strong)...

The system of vocational training is perhaps the most important component of the German model, and is still very prevalent in the German educational system. In Germany, there is a much heavier emphasis on apprenticeships for skilled positions, taught by expert worker/instructors. As such, there is a lower percentage of university students in Germany when compared to other Western countries, and a much lower percentage of persons entering the workforce for on-the-job training.

Not quite the same thing as your typical year-end review/evaluation + bonus, cf. other alternative corporate structures that better align labor/management relations and incentives, such as co-ops & employee ownership, oh and also btw wrt lenders and borrowers.

posted by kliuless (34 comments total)

If your suggesting that the German model is superior; I'm unsure the data bears you out. The current unemployment is unquestionably lower for Germany. I however would not trade our employment numbers over the last 18 years. The current crisis is the first time our unemployment has been over 6.5 percent in 15 years. Unemployment in Germany is currently 6.7%. That is not to say there model isn't interesting.
posted by Rubbstone at 10:02 AM on December 27, 2010 [1 favorite]

But...Germans are godless socialists and suffer under the thumb of the oppressive and anti-innovation unions!!!
posted by Thorzdad at 10:04 AM on December 27, 2010 [4 favorites]

The system of vocational training is perhaps the most important component of the German model, and is still very prevalent in the German educational system.

Yes, and it works well. However, what isn't mentioned is that the schooling stream which a student will attend is determined by age 10 or 12, meaning that a child's academic performance up until 4th or 6th grade (in US equivalent) determines the path a person takes through the rest of their life. It is certainly a good system if you're looking for maximum educational bang for your buck, but the limiting factors for slow bloomers early in life have pretty large life consequences down the road.

Whether this is actually worse than the US system where we push everyone through a one-size-fits-all system and ultimately have students demanding high grades in college "because we paid for them" rather than merit.... that remains to be seen.
posted by hippybear at 10:09 AM on December 27, 2010 [6 favorites]

Thomas Geoghegan has written a lot about this (see his book Were You Born on the Wrong Continent?). He's in love with the German model (which is a no-brainer for a former labor lawyer), and from the sound of what they get, I want me some.
posted by jng at 10:14 AM on December 27, 2010 [2 favorites]

Yeh very timely post, thanks very much. Germany is rock solid at the moment, no doubt about it. Lots of it has to do with the simple fact that Germany has undergone a forced twenty year austerity programme, funding the reunification of East & West. And I just published some market commentary for our clients at Deep Opportunity, asking the rhetorical question "Was this the opportunity of a lifetime to invest in Europe?". Here is the argument:

Strident and incessant headlines constantly remind us of debt problems in Portugal, Greece, Ireland, Spain & Italy. These are driving European sovereign bond prices lower due to the risk of default perceived by investors. But an interesting question to ask would be "are all these countries impacted the same way? To the same extent?"

Obviously the answer is NO.

German sovereign bonds (“Bunds”) have lowest yields in Europe, therefore German bonds are perceived by investors as safest debt in the Eurozone.

So where is the risk coming from?

Its obvious. Greek & Irish sovereign debt have highest yields in the Eurozone, and these are perceived by investors as riskier debt. The spread is close to and has been flirting with record levels; the markets view of the relative risk is pronounced.

But keep in mind Deep Opportunity is about looking at the markets differently and bond spreads don't tell the entire story. In Europe we're seeing historically low company valuations. There is good value out there and here is what most investors miss:

The problems are EUROPEAN
But European multinationals are GLOBAL.

Yep. LOCAL problems. GLOBAL revenue. Let's look at valuations: (source:Lombard Odier Private Bank)

• German stocks are trading 20% below their long run average
• French stocks 44% below
• Spanish stocks 49% below
• Italian stocks 67% below

And other metrics such as price / earnings tell us many European equities are undervalued.

But is share price everything? No. Many big European multinationals have very strong balance sheets. Starting in 2007 many multinationals aggressively cut debt and cost while cash accumulated in fact.

"Average cash of European companies is about 10% of assets" -- Adrian Lowcock, Bestinvest

So no doubt many European multinationals are good buys given historically low valuation. But at Deep Opportunity we seek exceptional returns; let's take a closer look at Germany then.

German unemployment is only 6.7% compared to 9.7% EU wide (source: FT), we're seeing labour shortages in part of Germany (e.g. Bavaria, sources: NYT) and German 2010 GDP growth of 3.6% is anticipated compared to 1.7% for the EU (source: Fitch).

What are the drivers then? Simple: a weakening euro, a reputation for excellent craftsmanship and global appetite for luxury goods

AND IS THERE MORE TO THIS STORY?

YES. The long term picture. At present valuations we feel Europe is a good opportunity and Germany representss exceptional value for the long term investor.
posted by Mutant at 10:26 AM on December 27, 2010 [13 favorites]

eh german industrial production is a derivative of the global commodities bubble.

US labor model/German labor model both have pluses and minuses. Depending on where you are in the economic cycle one will look better then the other. On average the german model is better for workers, the US model better for owners but the difference isn't as great as proponents of either will claim.
posted by JPD at 10:48 AM on December 27, 2010 [1 favorite]

Germany is also benefiting massively from the low Euro at the moment, at the expense of the periphery of Europe, which is being forced into a punishing austerity. It's very unlikely to happen, but if either the periphery left the Euro (or forced Germany & France out to form their own new currency) the strength of the resultant German currency would make their exports far less competitive than they are now.

In effect, having stuffed cheap money down the throats of the (all too willing admittedly) periphery, Germany is now forcing them to pay all the costs of the debts they incurred without being able to devalue their currencies to regain the competitiveness of their exports. It's a great deal for Germany & a terrible one for the periphery.
posted by pharm at 10:51 AM on December 27, 2010

- The unemployment numbers in the US an Germany are both highly screwed, nearly meaningless, and can hardly be compared. Germany is doing better than many other countries but it did not had the economic boom before like other countries nor did it have the real estate boom. Real estate values in Germany basically have been flat since 1993.

- Labor shortages in Germany are a myth and just lobbying efforts of companies to bring very low labor costs for engineers etc. down even further. Not surprisingly for a country that takes proud in exporting its wealth instead of consuming it. Not taken into account the millions of unemployed German, German companies are able to draw from a pool of 400 Million Europeans.

- The German industry is doing not doing bad since the major strength of Germany is nor consumer goods but B2B, produced by companies your likely have never heard of, like Heraeus, Evonik, Symrise, Freudenberg, Bosch etc.

- What does Germany get in exchange for the tremendous export surplus? Basically nothing but Lehman debt certificates, bad Hypo RE loans and the obligation to finance EU bailout obligations, nearing a trillion.
posted by yoyo_nyc at 10:54 AM on December 27, 2010 [1 favorite]

Germany is also benefiting massively from the low Euro at the moment,

Well, everybody who thinks the Euro is low must have a short memory. I suggest looking at a US/EUR chart for the last ten years. And based on the BicMac Index - of all flawed exchange rate valuations this is IMHO the least flawed - the Euro is still overvalued compared to the dollar.
posted by yoyo_nyc at 10:58 AM on December 27, 2010 [1 favorite]

Germany is doing better than many other countries but it did not had the economic boom before like other countries nor did it have the real estate boom.

The "boom" was only a boom for the few. Median real wages have been flat in the US all through the alleged boom; only upper-percentile wages and income really grew. And in a market like real estate where most market participants are purchasing for utility rather than investment, surely price stability is a positive from a public policy standpoint. Are you really saying Germany would be better off with greater real estate volatility?
posted by enn at 11:04 AM on December 27, 2010 [3 favorites]

The unemployment numbers in the US an Germany are both highly screwed [skewed?], nearly meaningless, and can hardly be compared.

I don't know if they are skewed or meaningless, but I was curious how well they could be compared. The data for the first two links come from the U.S. Bureau of Labor Statistics and Eurostat. Here's the definition for "unemployment" that I found at Eurostat:

Unemployed persons are persons:

* aged 15-74 (in ES, SE (1995-2000), UK, IS and NO: 16-74),
* who were without work during the reference week, but currently available for work,
* who were either actively seeking work in the past four weeks or who had already found a job to start within the next three months.

And from the US Bureau of Labor Statistics:

Who is counted as unemployed?

Persons are classified as unemployed if they do not have a job, have actively looked for work in the prior 4 weeks, and are currently available for work

This looks to be the "U3" defintion of unemployment, which I think is what is usually reported, so probably what appears in the graph.
posted by -jf- at 11:10 AM on December 27, 2010

In short, these measures seem to b pretty similar.
posted by -jf- at 11:13 AM on December 27, 2010

The measurement issues center around determining what "looking for work" means
posted by JPD at 11:17 AM on December 27, 2010

The current unemployment is unquestionably lower for Germany. I however would not trade our employment numbers over the last 18 years.

Seeing as Germany re-unified 20 years ago, I wouldn't really consider that a fair comparison. I am not familiar with the numbers, but I would suspect that the greater share of unemployment was occurring in the former East.

I live in Germany and work for a small company here, and just this summer we formed a worker's council (Betriebsrat). It's fascinating. It's like a mini-union. It's not industry wide, but rather just for our company (we are not members of any union). Apparently any company over a certain threshold (20 or 30 employees) is legally entitled to a worker's council, so long as all the workers vote in favour of its creation.

My coworkers explained the introduction of worker's councils in Germany as a reaction to what was going in Britain in the 1970s, I believe. Essentially, they were afraid that large and powerful unions would cause economic disruption, but they also believed that fighting or limiting union power would cause social disruption, or agitate people and provoke a problem where none currently existed. So instead, worker's council's were introduced. They have slightly limited powers (for example, they cannot strike for political reasons, or out of solidarity with other unions) but still provide some basic protections and rights to the council members. Our main reason for creating our worker's council was mainly to formalize communication between the employees and the boss, but also to give us some leverage in case our current good times turn into bad times in the future.

It amazes me that Germany is able to maintain such a strong economy, while giving out a minimum of 25 days paid vacation to all full time workers. 25 minimum!

pharm: In effect, having stuffed cheap money down the throats of the (all too willing admittedly) periphery, Germany is now forcing them to pay all the costs of the debts they incurred without being able to devalue their currencies to regain the competitiveness of their exports. It's a great deal for Germany & a terrible one for the periphery.

Enh, Germany is pretty much paying for the Greek bailout and they are none too happy about it.
posted by molecicco at 11:39 AM on December 27, 2010 [3 favorites]

Nebraska, Kansas, and Iowa seem to have small and level unemployment figures. So do Austria and Norway. I would roast in the Midwest summers, freeze in their winters, also in Norway. But Austria! All that gorgeous food! Do they still waltz?
posted by Cranberry at 11:54 AM on December 27, 2010

The measurement issues center around determining what "looking for work" means.

Well, as long as the stated definitions are being used, here again they seem to be pretty similar. U.S. Bureau of Labor Statistics:

Actively looking for work may consist of any of the following activities:

* Contacting:
   An employer directly or having a job interview
   A public or private employment agency
   Friends or relatives
   A school or university employment center
* Sending out resumes or filling out applications
* Placing or answering advertisements
* Checking union or professional registers
* Some other means of active job search

And Eurostat:

For the purposes of [actively seeking work], the following are considered as specific steps:

* having been in contact with a public employment office to find work, whoever took the initiative (renewing registration for administrative reasons only is not an active step),
* having been in contact with a private agency (temporary work agency, firm specialising in recruitment, etc.) to find work,
* applying to employers directly,
* asking among friends, relatives, unions, etc., to find work,
* placing or answering job advertisements,
* studying job advertisements,
* taking a recruitment test or examination or being interviewed,
* looking for land, premises or equipment,
* applying for permits, licences or financial resources.

Ok, I guess if you read on in the US definition, it specifically excludes "passive methods of job search" like "studying job advertisements". That's the only obvious, substantive difference that I see.
posted by -jf- at 12:04 PM on December 27, 2010

pharm: In effect, having stuffed cheap money down the throats of the (all too willing admittedly) periphery, Germany is now forcing them to pay all the costs of the debts they incurred without being able to devalue their currencies to regain the competitiveness of their exports.

In other words, they lent a lot of value to those other countries, and you think it's a bad thing that those countries actually have to repay their debts at something approaching par value? And 'forced' is ridiculously strong language for an entirely voluntary transaction.

You are, in essence, arguing that it's a very bad thing that those countries can't cheat their creditors.

It's a great deal for Germany & a terrible one for the periphery.

It's the deal that was originally made, as opposed to a new one where they get repaid in confetti instead of value.
posted by Malor at 12:12 PM on December 27, 2010 [3 favorites]

Looking for work isn't just looking for work. Is someone who is frustrated with finding work in the US the same as someone who is frustrated in germany? how do the quality of unemployment benefits impact the desire to find work? Underemployment or unemployed etc, etc.

There is a pretty big pile of lit on the issue. the differences don't make one side look better than the other, just different.
posted by JPD at 12:26 PM on December 27, 2010

One mans wealth is another mans debt. The banks kept lending and lending and the more you lend, the more your assets grow, even more due tot the interest. The problem is that this is a "virtual" wealth since the debt of the European "olive-countries" can very likely never be repaid. The problem is that if Germany allows them to default then most of the German (and foreign) banks would collapse. Hence the people who had the biggest advantage, investors and banks, get not bailed out and the tax payer eats the bill. Have you seen the state of Germany's schools, banks, and infrastructure? It is in shades.

The better solution would have been, instead of bailing the other countries and German banks out, to let both collapse, reinstate the Deutsche Mark and found and capitalize some new banks. Reset the whole system. It will reset itself sooner or later anyway.
posted by yoyo_nyc at 12:30 PM on December 27, 2010

I think hippybear has identified the main difference: the German educational system shunts most of its students away from college preparatory courses and towards vocational education in middle school.

Hauptschule is where more than 50% of students end up. This is the bottom tier of the educational system. It completes at age 15/16 with the expectation that most graduates will either take a low-end service job or go on for full-time vocational training.

Realschule is the second tier and while it does permit students to go on to university, graduates are not permitted to apply to every subject.

Gymnasium is the highest tier and the smallest. These graduates can go on to any university subject they like.

As might be assumed, there are distinct class associations that go along with this tiered system. The American public would collectively shit a brick if it was proposed that there be some formal, official sorting method saying that little Johnny just isn't cut out for college. I mean, he probably isn't, but we seem more willing to simply flunk him out of high school than give him a viable alternative, because that would suggest that he is somehow deficient.
posted by valkyryn at 12:45 PM on December 27, 2010 [7 favorites]

the differences don't make one side look better than the other, just different

Well, I can't disagree that conditions might be different and that these different conditions would affect unemployment rates. That seems reasonable to me. But that doesn't mean that they "can hardly be compared" (quoting yoyo_nyc).

I'm about to mix what yoyo_nyc and JPD are saying, which means I might not be responding to anyone in particular. Anyway, if I mix what is being said, it seems that the position is that these numbers can't be directly compared because the environments that produce them are different and that makes the unemployment rates different.

In fact, the entire point of taking unemployment figures -- using a consistent definition -- is to compare them, either one country to another's, or now vs in the past, or now vs the ideal, etc. If the environments that produced these unemployment rates were exactly the same, then the unemployment rates would be exactly the same, by definition, and there would be no point in comparing them. Or, to say it a little differently, if the unemployment figures did not depend on the environment in which they were taken, they would be useless.
posted by -jf- at 1:08 PM on December 27, 2010

Its not the environment, its the methodology that's the point. They are comparable to their own history, and that is what they are designed to do. Directionally as well they can be compared across borders (to a reasonable degree but not exactly) Nearly every macroeconomic indicator that is derived from surveys rather than empirical data is going to have issues when used in cross border comparisons.

The only way to make them exactly comparable is to use the exact same surveys using the same sampling methodology.
posted by JPD at 1:18 PM on December 27, 2010

I can't disagree with anything you've just said, but to say that results differ based on survey design and sampling is different from saying that results differ because of "what 'looking for work' means". At least in my interpretation. I take the latter to be a question of definitions, and the former to be a question of implementation.

Anyway, again, I can't disagree with what you've just said, and my argument is meant to be concerned with the question of definitions, which seem to be pretty similar.
posted by -jf- at 1:56 PM on December 27, 2010

Other points we considered but didn't drop into this version of the research report: as usual once the media gets involved the story gets distorted and some points overshadow the really interesting issues, one of which is this - the Eurozone bailouts are isomorphic on many levels to a routine business practice - vendor financing; Germany is indeed providing the bulk of the financing bailout, but they can borrow at nominal rates of between 2% to 3% to do so.

By lending to other Eurozone countries at sharply higher rates, approximating 7% or so, they're not only being compensated for risk on the deal, but they are also protecting a very large component of their export market. We believe this to be a particularly shrewd move, not totally appreciated in the heat of the moment by their domestic population (who indeed overwhelmingly disapprove) nor folks looking externally. But consider this - if Germany were to let the Eurozone export market collapse, either en masse or one country at a time, their own economy would be in serious decline now; instead its doing the opposite, with low borrowing costs, stable / expanding exports and GDP forecast at 2.4% in 2011.

And this data is straight from IFO, if you read the story further you'll see that capex investment is buoyant; equipment spending projected to grow by 8.7% in 2011, construction investment forecast to grow by 2.1% in 2011 and investment not captured in these categories forecast to grow 5.6% in 2011. These investments represent the building of industrial capacity that will be accretive to nation's GDP over time, hence the long term perspective we stress.

Think about this as well: if countries were to exit The Euro their own domestic inflation would skyrocket since their currencies would crater in value while Germany's (Euro / Deutschmark, it wouldn't matter) soared. Again we'd see the German export market collapse and they would join the rest of the Eurozone in a strong recession, if not deep depression. Big mess, and one that would clearly impact not only America but no doubt spread globally.

That's not to say that Germany shouldn't have the means to forcibly eject non-compliant nations from The Euro; I did an FPP about one year ago entitled The Other Exit Strategy where the case was outlined that some member states might be ejected if and when it suited.

We're talking specifically of a paper published by the ECB in December 2009 as part of their Legal Working Paper Series (No. 10), entitled Withdrawal and Expulsion from the EU and EMU [ .pdf ].

Page 32 introduces the concept of "collective right of 'expulsion' from the EU or EMU", while outlining what they call "indirect avenues of explosion" and then concluding with this gem from page 38 (which perspective allows us to finally understand) : "marginalising a Member State, even if not formally expelling it, would be not be impossible, but none of the avenues for achieving it would be ideal. Persuading a Member State to withdraw, by making use of the proposed exit clause or resorting to the regular Treaty revision procedure, may be the better option".

And what is this perspective I mentioned? Well, based on what we now know it's clear Germany is gonna do pretty much whatever it takes to preserve the Euro.

SO, it wouldn't surprise us to see a dual track Eurozone; two sets of risk free rates (Germany / Netherlands / few other robust nations) and the remainder. Not sure if they'll take it to parallel currencies, but should be interesting to watch.

Still, the long term view still favours some of these Eurozone companies. Incredibly low valuations, far below long run average stock prices, robust balance sheets carrying large amounts of cash and large exposure to developing nations.

But in any case I think we can all agree that its very clear (and love it or hate it), we're in the early stages of a coordinated, reflation across the G7. Very few are using that phrase but it precisely describes what we're seeing.

Given the powers that be are determined to reflate the only question really is how to position your capital and assets accordingly so you don't lose out.
posted by Mutant at 2:03 PM on December 27, 2010 [4 favorites]

The American public would collectively shit a brick if it was proposed that there be some formal, official sorting method saying that little Johnny just isn't cut out for college. I mean, he probably isn't, but we seem more willing to simply flunk him out of high school than give him a viable alternative, because that would suggest that he is somehow deficient.
posted by valkyryn at 3:45 PM on December 27 [+] [!] No other comments.

There is such a system; it's called "tracking," and we've been doing it for generations. The problem is that the sorting happens in primary school, based on your ethnicity or SES, and has nothing to do with what you might actually be capable of.
posted by toodleydoodley at 2:27 PM on December 27, 2010 [3 favorites]

the german model has plenty of issues, rest assured. we also have had a lot of really high unemployment in our eastern states over the past decade. just imagine what happens to a town of 40,000 when your state collapses and the only outfit in town suddenly drops its 15,000 employees.

yet Rubbstone is mistaken in the assumption that unemployment numbers can be compared. germany, unlike the US, has vastly fewer working poor or underemployed. everyone working has full health and unemployment insurance and retirement benefits are automatically accrued. the downside is that you just can't hire a guy to bag groceries or greet your customers because those $10 an hour will end up costing you another $10 in benefits you're required to pay by law. wal-mart failed spectacularly here for that very reason.

Germans are godless socialists
clearly you haven't been to bavaria or heard of a guy by the name martin luther.

the schooling stream which a student will attend is determined by age 10 or 12, meaning that a child's academic performance up until 4th or 6th grade (in US equivalent) determines the path a person takes through the rest of their life

that is not completely true. you are right in that after fourth grade you are going to attend either a Hauptschule, Realschule or Gymnasium. only the last one of those lasts 12 or 13 grades and enables you to attend college but both the other ones enable you to continue your education at the next higher (and more difficult) kind of school. it's not unheard of for kids to change schools a year in and if you decide that your Realschul-education, which finished after grade 10, isn't enough, you can choose to attend an evening high school (Abendgymnasium), a Wirtschaftsgymnasium or a technisches Gymnasium, both of which are high schools that are a bit specialized but get you the same degree, allowing you to attend college. you can even take some time off after getting your school education and do a three-year apprenticeship and they will automatically hand you a higher degree upon completion of your mandatory trade school classes, which are also taught by the state, not a private company. there are plenty of ways you could bloom late in germany and the choices made in fourth grade, let's not forget that, are not made by teachers. it's your parents who decide what school you should then go to.

oh yeah - and we make kids repeat every year where they fail one or two classes. that happens A LOT. I know more kids who had to repeat seventh or eighth grade than I know kids who never had to do that victory lap. summer school is for wimps against that.

Real estate values in Germany basically have been flat since 1993.
the real estate market in germany works vastly different than in america. the average german takes out a mortgage when he's got 20-30% cash, pays off his property and lives in it for twenty years on average. americans flip properties and move. it's a cultural thing. I tell people amazon has 22 shipping addresses for me for the last ten years and conversations stop.

am not familiar with the numbers, but I would suspect that the greater share of unemployment was occurring in the former East.
look to rural areas and small cities. check out the numbers for Schleswig-Holstein. Flensburg, my home town of roughly 85,000 has 13,6% right now. that's because all the rural communities like to shove their unemployed towards the city but it's still a staggering number. I know of places with 18%. alas, it's usually a few hot pockets per 100skm.

happy to answer any other questions once I get up tomorrow.
posted by krautland at 4:25 PM on December 27, 2010 [3 favorites]

JPD: "On average the german model is better for workers, the US model better for owners but the difference isn't as great as proponents of either will claim."

Really? I suggest the difference is substantial:

US GINI: 45 (CIA version)
Germany GINI: 27

This turns on the question of exactly who is making the financial decisions discussed above. Is it the wealthy elite, or is it the "workers" - in quotes because in terms of who pays for/benefits from the financial ups and downs of the marketplace, it's probably reasonable to think that in Germany those decisions are made by a population with a much higher participation rate than in the US. (/naive theorizing)
posted by sneebler at 4:38 PM on December 27, 2010

"wal-mart failed spectacularly here for that very reason. "

Wal-Mart failed because of three reasons (wages was none of them):

1. Germany has one of the most competitive food markets in the world. Aldi, Lidl, to name a few, sell food to one of the lowest price possible (Trader Joes in the US is owned by Aldi). Hence it was not possible to Wal-Mart to cut these prices. They were offering nothing new or better that the market was already offering. They tried price dumping for a while but this did not work either.

2. Real Estate. They were just not able to open a decent number of stores in good locations. Often inner-city business is regulated, the green field shopping malls are not as popular in Germany as they are in the US.

3. German are used to buy they food in food-only supermarkets (like Key food etc.). The only exception that comes to my mind is Karstadt, with an more or less up-scale food supermarket.

This are the reasons why Wal-Mart failed. Not high wages. And Germany has their working poor too. Many low paying jobs don't pay more after taxes than financial aid that covers your apartment, health insurance and a few hundred bucks per month.
posted by yoyo_nyc at 4:52 PM on December 27, 2010

the only question really is how to position your capital and assets accordingly so you don't lose out.

Mutant, I'd be interested to know your thoughts on what the right position is?
posted by cell divide at 5:21 PM on December 27, 2010

sneebler you can't just generalize income distributions from the way a labor market functions. Indeed a huge huge huge huge proportion of the income inequality is driven by taxes, especially preferential taxation on certain forms of income.
posted by JPD at 6:13 PM on December 27, 2010

Do guest workers, like the Turks, count in the unemployment surveys?
posted by Ideefixe at 7:36 PM on December 27, 2010

I take an utterly contrary position on the German educational system. Yes, it is great for turning out excellent craftsmen and engineers, but its higher educational system - graduate schools and post, loses compared to the U.S. (and the U.S. of course is the pits in comparison in primary ed) - I haven't followed things very closely for the last 10 years or so, so there probably are some areas where Germany is doing well even at the highest levels (chemistry?), but overall, the great scientific leadership of Germany pre-WWII is history. Take one of best they have - Heidelberg (#1 in Germany according to the 2010 U.S. News / QS World University Rankings) and decent as it is today, it cannot match the storied history pre-WWII, when the leadership in physics and math moved across the ocean, never to return.

Today Heidelberg is ranked as follows: "In 2010, U.S. News / QS World University Rankings[41] ranked Heidelberg 1st in Germany, 14th in Europe, and 51st overall in the world, moving up six places from its position in the 2009 THE-QS World University Rankings. Based on the overall academic peer review score of 2005, Heidelberg ranked 6th in Europe and 28th in the world. In the separate THE-QS rankings of broad subject areas, Heidelberg ranked globally between 17th and 43rd in life science and biomedicine, between 22nd and 45th in science, between 41st and 61st in arts and humanities, and between 54th and 78th in social sciences. In 2010 its subject rankings were: 24th in natural sciences, 36th in arts & humanities, 45th in life sciences and biomedicine, 82nd in social sciences, and 172nd in Engineering & IT.[42][43][44][45][46]
The Shanghai Jiao Tong University's Academic Ranking of World Universities ranked Heidelberg between 2nd and 3rd nationally, between 12th and 18th in Europe, and between 58th and 66th in the world.[47]
The Performance Ranking of Scientific Papers for World Universities (HEEACT Ranking), issued by the Higher Education Evaluation and Accreditation Council of Taiwan, placed Heidelberg 2nd in Germany, 12th in Europe, and 61st globally.[48]"

This, ladies and gentlemen, constitutes a drastic decline relative to other nations from before WWII. And one cannot lay all the blame on the war and the exodus of Jewish scientists during WWII - as universities in nations across Europe experienced even worse (except Britain) devastation (directly due to actions by the Nazis). What is to blame is the way the educational system is set up - though that's a subject for a much, much longer post. I just wanted to chime in here with a strong caveat to the general hosannas directed at the German model of education. It's great up to a point, but it rapidly weakens at the top.
posted by VikingSword at 11:51 PM on December 27, 2010 [1 favorite]

yoyo_nyc: the difference in labor costs meant wal-mart needed a vastly different business model. they couldn't employ people the way they were used to. and you're right, the food market is cut-throat to the extend that germans will go to one supermarket to pick up your marked-down items but then go and buy the rest some place else, but it is not true that we are not used to buying nonfood items in suopermarkets. I could show no less than six Real,- and Edeka markets with vast nonfood sections, some even selling large amounts of flat-screen tvs.

the green field shopping malls are not as popular in Germany as they are in the US.
I'm so-so on that statement. the mall itself is less popular, though it exists. the large supermarket next to a home improvement store and perhaps six or seven other stores at the edge of your little town is quite common.

And Germany has their working poor too. Many low paying jobs don't pay more after taxes than financial aid that covers your apartment, health insurance and a few hundred bucks per month.
the key difference is that they are covered. their retirement is covered, their children's education is covered, their unemployment benefits are covered and their health costs are, too. have a car accident and get paralyzed does not mean for a working poor person here that they are about to lose everything they own to a hospital. the same cannot be said for the US, which is why I drew the distinction to the working poor there.

Do guest workers, like the Turks, count in the unemployment surveys?
any resident counts, citizen or not.
posted by krautland at 3:57 AM on December 28, 2010

Looking at the graph German unemployment hits a floor in October 2000. If your concerned about reunification compare past that point. I'll concede the point surely I was utterly mistaken when I provided you with these links.
posted by Rubbstone at 5:41 AM on December 28, 2010