German Capitalism:Are You Listening Mr.Romney,President Obama

Germany is the biggest country in Europe with 83 million people.It isn't sexy like France or solve their labor problems in the street through strikes.Compared to France,the state in Germany is weak.It pushed social democracy internally within private corporations without American style regulation.The check on private corporations are built into the structure of the workplace.Since 2003,Germany has been in a dead heat with China as the leader in export sales(1.2 trillion..China moving ahead recently)The European Union,"socialist kingpins", will still sell far more than China.It's a net creditor,not a net debtor,like the U.S.who has $3 trillion in net external debt to the world at large.For most of the recent past,Germany has lead the world in exports with workers who get six weeks off for vacation and  have high wages to spend accordingly.They have been out competing us with one hand tied behind their backs.

Germany is successful because they keep their wages high unlike America and Great Britain who look to compete by reducing labor costs(The World Is Flat /Friedman).How does Germany succeed in a globalized economy? First, wage cost in manufacturing is a very small percentage of the finished product(2-4%).Second,Germany doesn't have the illusion they have to compete on cost.They also don't have the illusion that they have to bust unions as a way to compete with China.Social democracies,Sweden,France and Germany,which kept high wages,now have more industry than the U.S. or the U.K.We smashed our unions because we believed labor cost must be low to compete and that perspective ended up wrecking our industry.Germany is competitive in high-end precision machinery,made by people with high skills.They even have a shortage of people to fill high-skill,high-paying jobs,especially engineers.The growing demand for for high-end specialty goods from developing countries are filled by Germany throughout the world.Germany makes it difficult for a company to shut down a plant while the U.S. makes it easy.The German employer must have a closing plan for taking care of people,paying severance,etc.,making it easier to just keep going.Germans never come close to spending more than they produce.High levels of public spending tends to hold down private consumer spending.The U.S wants the E.U.middle class to run up big debts like us to buy our products but their systems are efficient in delivering public goods and people are much less likely to spend.

Education,skilling people up,is important in Germany because they have industry.We have lost ours and their is no opportunity here so what is the point of trying in this area.Geoghegan(Were You Born On The Wrong Continent)believes democracy dies without an industrial base.An industrial base makes it easier to organize a labor movement.A labor movement makes it easier to keep a social democracy in which people have a stake.Citizens need shared decision making in the workplace to have a stake which creates interest and self worth and a genuine respect for the goals of a country.German workers are at the tables making the decisions with employers. They check businessmen because their system has created an internal structure to do so.They have created work councils,co-determined boards and unions that control wages through "multi-bargaining".

Work councils(500,000workers) make decisions with management who to hire and fire,opening and closing times,what shift someone gets,etc.Management has to make an agreement with the council.The workers get the right to stir the pot like shareholders or the leadership class.The co-determined board,supervisory role,makes decisions like any board in the U.S. of a major company(2,000 employees).It is made up of 50% workers,50% shareholders,capitalists).A CEO can't make decisions without the co-determined board oversight.They are guardians who read files while looking over management shoulders.The unions do the bargaining over wages and pensions at a macro level with an employer federation.They set wages in a determined area for everyone in that job sector.This process is also transparent.The point is that no company should compete with another company based on wages.Egalitarian wages is the ideal to avoid discrimination and income disparity.

More from Geoghegan in the near future.