Why Germany Has It So Good — and Why America Is Going Down the Drain
As we struggle through the worst economic crisis in almost a hundred years other countries have avoided our fate and are thriving. How do they do it? Here’s a clue they don’t do it by rewarding those who created the disaster like we have in this country.
These quotes are from a fascinating interview with labor leader and author Thomas Geoghegan who ran, and lost, in the Democratic primary to replace Rham Emmanuel. Who has written a new book called Were You Born on the Wrong Continent?
“Geoghegan: Of course, low income sectors do better too. Nonetheless, it could be said, there’s a growing amount of poverty in Germany. Especially during the 1990’s and the early part of the last decade, there was a scaling back of social democracy. For a while the bubble of casino capitalism in the US and the UK led to an allocation of capital into the US and UK looking for hot returns. Since the collapse of casino type capitalism in 2008, money has shifted back where it should have been in the first place, to the virtuous economies of the world like Germany, based in manufacturing.
McNally: I recall Kevin Phillips pointing out in his book Bad Money that year after year the US shifted more and more of our money and our best and brightest young people into finance. When the casino seemed to be paying off, other countries also shifted in our direction, but when it broke, we didn’t have the manufacturing and export base a country like Germany has to fall back on.
Geoghegan: The Germans had a certain amount of schadenfreude about the whole thing. They’re basically a very pessimistic people by temperament, and when they saw a world debacle that they weren’t responsible for, they actually became a little more upbeat.
They had what they call a good recession. The German government was very quick off the mark, and immediately put in place what they called kurzabeit. Through this short work-week program, the government paid people to stay on the job when they otherwise might have been let go.
We got ahead of the curve,” one German labor minister said, “employment didn’t drop here the way it did in the US.” When the economy recovered, there was no incentive to hold off hiring because the people were already on the job. Their unemployment is now significantly lower than ours and the economy is booming.
McNally: When asked why Obama didn’t pursue a similar policy to stem the economic bleeding, Larry Summers dismissed the idea, saying the White House wanted to create new jobs not preserve old ones.
Geoghegan: A pretty lame answer.”
“McNally: You point out that as globalization grew, the US chose to compete on the basis of cheap labor by outsourcing. We kept the marketing and executives here and moved the manufacturing elsewhere. We’ve been playing that game for 20-30 years now. Germany chose to play the opposite game.
Geoghegan: 30 years later the Germans are making money off of China, and China is making big time money off of us. One thing I really try to get across in the book: Many Americans think that we’ve got a trade deficit because we can’t compete with China. We’ve got a trade deficit because we can’t compete with Germany in selling things to China. Until people wake up and look at the kinds of things that the Germans are doing to keep their manufacturing base, we’re going to continue to run deficits which leave us in the clutches of foreign creditors and compromise our autonomy as a country.
McNally: This is something that the right wing should be up in arms about.
Geoghegan: Absolutely. And they’re clueless. They are mortgaging this country’s future and they’re too stupid to realize it.”
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