German success, UK/US failure: “Proof one again that our longterm economic plan is working”

A higher percentage of workers earn less than two thirds of the median for full-time job salaries in the UK than in most other developed countries.

This is a comparative statistic and an unarguable fact….unless you think the OECD are just another gang of liars, and for myself, I don’t think that. Here is the OECD chart that makes the point, via the site Inequality Briefing:

oecdwages7615It sort of speaks for itself: the two most neoliberal States on the planet have the highest proportion of low wage/part time employees. So when Osborne says we have growth, Cameron says we have higher employment, and Obama says the US economy is “normalizing”, it’s bollocks – and they know it. The UK is calling something ‘a job’ which isn’t a proper job, and the US is happy to watch the desperate LTUs fall off the statistical charts. This is about as far from normal as it gets.

By contrast, Germany is now, officially, the biggest exporter of manufactured goods on Earth. But it has 15% fewer low pay/part time workers than the UK, and 28% fewer than the US. Its economy is massively less dependent on daft pieces of derivative financial paper (that could be worthless next week) than the Anglo-Saxon twits on either side of The Pond. Germany is by far the biggest exporter of premium-priced cars in the world, and has a huge lead in high quality engineering products. It makes vehicles, machines, organic chemicals, pharmaceuticals, hi-tech electronic goods and planes at higher margins and volumes than any other State.

Compared to the US’s Wall Street and the UK’s City, Germany’s dependence on Frankfurt as a financial centre is minute. It is the one Western country for whose products Asia, the US and Australia have a seemingly insatiable desire. This is because it has invested in technical leadership, strong brand values, and product reliability/durability.

Germany never had Thatcher and Reagan – and it shows. It never embraced Friedmanite economics – and it shows. Although its national debt soared after reunification (the cost of modernising and welfare in the former DDR), all things are relative: its debt to gdp ratio went from 55 to 80%, but since 2012 it’s been falling ….and now stands at 75%.

Since the banking crisis of 2008-9, Britain’s debt to gdp ratio has gone from 52% to 90%. Unlike Germany’s ratio, ours is still growing like topsy. Four reasons: bank bailouts and subsidies, greedy Civil Service self-awarded pension liabiities, debt servicing costs,  and lousy export performance.

Over the same period, America’s debt to gdp ratio has gone from 76% to 102%. It too is still climbing. Three reasons: initial bank bailouts, falling share of world trade, and cost of debt servicing….despite Zirp, and falling US bond yields.

So to sum up, the Thatcher-Reagan-Friedman school of economics has increased the national debt, increased wealth inequality, unbalanced the economy on a way that proved costly, reduced investment in products to be exported…and as a result, lost share of world trade for America and Britain. But the German Bundesrepublik – despite having to take on a bankrupt former Communist State – eschewed neoliberal claptrap, did an open deal with German trade unions to get a wage freeze for two years, and went from strength to strength.

Thus we can see that – quite obviously – there is no alternative to the Friedman Model, nothing to be gained from ending neolithic class war rhetoric, and a solid statistical foundation for financial service dominated economics.

Well quite. Stands ter reason, dunnit?

Last night at The Slog: Dementia viewed through the medium of song lyrics and fresh water

33 thoughts on “German success, UK/US failure: “Proof one again that our longterm economic plan is working”

  1. Note the recent photo-op of Cameloon with the Engineers on the punch thru’ of the massive Crossraill tunnel at Farringdon. The massive and hi- value, 10 x boring machines were built by the German mining Equipment manufacturer Wirth. These machines when finished boring .remain underground,never to be used again.
    The UK supplied the pick and shovels and Polish labourers.
    Cameloon and the Draper could not run a Chippy and are clueless regarding a balanced Economy.

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  2. There are 4 big population countries in the table, USA, UK, Germany and Japan, in descending order of workers earning less than two thirds of the median income. Japan (which I visited for 2 weeks last year) does not do immigration. All those Northerners in the UK, who voted UKIP, had spotted something, without access to the OECD!

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  3. What is a proper job?

    If you mean a job for life, a cracking pension, etc etc; then a time machine is in order. Besides the fact that the country is broke and that our western ‘lead’ on the rest of the world is quickly diminishing, there is the small matter of technology. A 3-d printer printed a 3-d printer for the first time the other day. The population has historically risen according to the needs of the day. Agrarian revolutions, the Industrial Revolution and so on. Robots now man the production lines. Technology is making the concept of work as we knew it obsolete.

    The world needs a big old think, and a reset. I doubt it has the will, or the brains to pull it off

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  4. One ray of hope, the Germans do have Deutsche Bank. We can always give Scotland independence and get rid of HBOS and RBS that way.

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  5. Normally, things in Europe take a very long time to get done. It is out of character for the European Commission to rush to get something like this done so quickly but the European Union says that any nation within the EU that does not enact “bail-in” legislation within the next two months will face legal action. This includes Italy and France. So clearly the European Union wants everything to be squared away by the end of the summer.
    http://wakeupfromyourslumber.com/why-is-the-eu-forcing-european-nations-to-adopt-bail-in-legislation-by-the-end-of-the-summer/

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  6. This chart just proves that the US and the UK are on the cutting edge of creating a third world labor force. We will know that they have succeeded when they start sending workers to Bangalore to man call centers.

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  7. John, what do you think of the £12 billion given to foreign states by President Cameron? And the £12 billion cuts he intends to make to Welfare? Has he ‘got it’? Or is he just thick as a plank…..

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  8. I suppose the inequality gap and the mass of the UK population living standards falling is causing the reduction of migrants, both EU and non-EU, not to mention asylum seekers and the like.
    Next phase of the plan reduce benefits to the mass of the UK population to the lowest possible level and in the quickest time. Then we shall see a mass exodus from the UK?
    Would that be the real reason for the EU trying to set quotas for migrants to come to the UK? Migrants just want to stay on the EU mainland?
    I think we should remain within the EU, well at least till the tide of immigration turns? Otherwise we shall be stuck with a large population living on benefits that we can’t afford to pay?
    Just a thought.

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  9. Wholeheartedly agree with all of that JW, I believe Thatcher thought we could all metaphorically speaking, be a great nation by washing each other’s shirts . Just to temper your reasoning though, Germany’s exports have benefited hugely from the currency. If they still used the DM your BMWs etc would cost 20 or 30 % more than they do now, but no denying its good kit that people want or aspire to.

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  10. But it has 15% fewer low pay/part time workers than the UK, and 28% fewer than the US

    It’s all about regulations. The Germans like regulating things, and the Anglo-Saxons like deregulating things. Mind you, when I lived in Stuttgart in the 80s, it was reckoned that there were 10,000 British engineers working in the region. That is to say, highly qualified and highly trained individuals putting their shoulder to the wheel of the German economy. Give an engineer a measure of security and a reasonable salary, they’ll be eating out of your palm.

    I was a designer, not an engineer, by the way and my salary was nothing like an engineer’s. Even so, if you’ve got a Leitz hole-punch, there’s a good chance it started life on my drawing board. You can’t buy the feeling of “was that really my design??”

    There are plenty of British engineers with comfy salaries and fully paid up houses who get to have the same feeling.

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  11. Problem Germany has, John, is that it has to export to countries that have the ability to buy their quaity products. If no one in the West or China can afford to buy them Germany is in just as bigger trouble as anyone.

    If you look back to when the SHTF, the two economies that had the biggest drop in GDP og teh G7….Germany and Japan.

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  12. I think you’re confusing engineers with brickies and their apprentices….more like 1000 qualified engineers….
    Was your drawing board around in the 1950’s..? I don’t think so. The hole punch is a British invention – Leitz is just another version of ‘improvement’ ripped off by the sausage eaters.

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  13. I am sorry you do not believe the figures I gave, but that is forgivable in the case of an Anglo-Saxon. It was an engineer who told me about it, not a brickie or a hoddie – Stuttgart is a large industrial city, and has need of good engineers. It’s Germany’s secret weapon that they employ so many Brits. That the British don’t realize this can’t be laid at my door, for it’s not for the lack of telling, it’s for the lack of believing.

    As to the hole punch being a British invention, it didn’t stop Leitz from wanting a better design. Now, what did happen to the British producers of hole punches? Or did they go the same way as the British car industry?

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  14. Yes, there is. I’ve been living in Berlin for about 15 years now and can attest that Germany gets far better press than it deserves. The minimum wage of €8.50 was just introduced this year, unemployment in the East is very high, schools here in Berlin are very underfunded with something of an education crisis well underway, Hartz IV (social welfare) borders on the criminal, health insurance contributions via state-private companies are high for low earners (especially hard on the self-employed and small employers who have to pay half), and city roads need a lot of work. There’s more, but that should do to give an idea…

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  15. Another significant difference between Germany and the US/UK is that houses are seen as somewhere to live in Germany and not a speculative asset.

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  16. It helps that they’ve got masses of reasonably priced social housing – and there’s no snobbery about living in one, as there is in Britain.

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  17. As an American I think it should be explained to Europeans, though the English may understand this a bit, that it is the goal of Conservatives to have a large lower class. That is the only way to have what they consider a properly ordered society. Having widespread prosperity is antithetical to their ideals for prosperity makes people forget their place, act uppity, disrespect their bettors.

    American Conservatives, the entirety of its elites now, does not want a prosperous European populous or even a prosperous American one. Disabuse yourself of any other idea. They like all Conservatives throughout history want a tiny elite, an aristocracy if you will.

    http://examinedlife.typepad.com/johnbelle/2003/11/dead_right.html

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  18. Madam,
    The Rexel hole punch is the global market leader, and is made in Buckinghamshire…..
    The British car industry is in excellent form, and exports all around the world. Toyota, Honda, Datsun, BMW mini, to nanme a few, not to mention the parts that go to France, Germany, and South Africa.
    Please brush up on your factual information before posting again.

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  19. And here we are with the usual problem: what a person chooses as their evidence.

    Rexel, whilst outwardly British, and was indeed owned by British firms until 1997 is now in American hands. What a pity it went the way of the jet engine and the British car industry.

    What is more, your choice of “British” car companies made me laugh out loud. You do seem to have a tendency to identify what is British with a generous amount of lattitude. The car companies you mention are mainly screwdriver operations like the Romanian car plants; they are easy and cheap to set up because they employ cheap labour and slack regulations rather than expensive machinery. BMW’s main plants are in the Munich area, and are highly capital intensive.

    It is not the facts that count, it is the quality of those facts.

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  20. The US and UK are soufflé economies. Puffed up on a diet of debt and ‘financialised’ assets. All these financial transactions make the GDP figures look good. Nothing is being produced except a massive paper/digital money shuffling exercise. When the debt merry go round collapses so will the economies of these countries.

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  21. @ gemma
    I read your postings and think:
    Why do you always argue the lost cause?
    Maybe you could see a psycho analyst or is it just pmt and on the rag again.?

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  22. Uncle Rob,

    Is the German economic model a “lost cause”? Or are the British motorcar manufacturers clearly better, as was suggested by Mr. Metwetwe? Perhaps it’s his inability to believe those people who are not in his immediate circle that is your ‘lost cause’?

    As to psychoanalysts, I deal only with those who can give me a straight answer to the nature of the subconscious. But I guess that is the kind of question that would lead these esteemed professionals to think of as me being pmt and on the rag again…

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  23. What a lovely description! “Soufflé economies”!!

    The only problem is that when these economies do implode, it will affect everybody else as well, just as the crash of 2007 did.

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  24. That is exactly what will happen when the financial system falls. The start of this is the recent HSBC elimination of 20k or 50k staff. The financial sector will contract rapidly in the UK, US, Australia, etc.

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