Germany has the economic strengths America once boasted

From a macroeconomic perspective, Germany is "successful" because it kept real wages low relative to other Eurozone countries. In the old times this would have lead to a strong appreciation of the Mark. This balancing out via exchange rates is no longer possible within the Euro, which is why German exports are priced very competitively in the international market. This leads to high German net exports, while the Eurozone as a whole has a more or less balanced international trade.

It is immediately obvious, though, that not every country can be a net exporter. Somebody has to be a net importer, and so Germany cannot be taken as a role model for the world as a whole.

The other dark side of the German approach is that it makes the internal imbalances in the Eurozone, and hence the crisis, worse, and the majority of the German population doesn't really profit from it as real wages have been stagnant and even decreasing for the last decade or so.

I'm only familiar with the automotive part of it, but companies like INA Schaeffler (70k own employees + 220k Continental) are effectively owned by a mom and son team. Bosch (300k+ employees) is owned by a charitable foundation and a family. Volkswagen Group (400k employees) is for a large part owned by the state and had until recently a law protecting their voting rights. (I seem to recall the unions own part of it too, but I couldn't find a good reference. Maybe it was another carmaker?)

Outside the automotive industry, conglomerates like Siemens (>360k employees) also seem to have been family businesses for the longest times, judging by all the von Siemens that served as board members or CEO.

I'd hazard to say that these ownership structures allow German businesses to plan for long term growth rather than quarterly earnings and current stock values.

I have no idea why or how that situation came to be though.

These kind of politics are probably the main reason, why Germany is currently relatively well economically. They permit to avoid large overhead costs in economically uncertain/fluctuating times.

Why companies do that? Large companies in Germany are run 50% by the unions and only 50% by the stockholders. If you want to lay of people, the union representatives have to agree. That avoids that the CEO takes simple shortcuts like mass layoff to save some money shortterm for the upcoming quarterly report. They are forced to considder the wellbeing of the employees as well, because the employees' union partially run the business.

What's interesting is the article on Germany provides a more positive message. "Just a little less consumerism, a little bigger social net, and more vocational training, and everything will be all right." The article on China was, "It ain't coming back."

My bias is the New York Times article more accurately captures the truth for high tech. It's a game of systems and clusters, and it's hard to see us winning. There's little competitive advantage any more, except at our top engineering schools. Perhaps we're better off becoming the world's best farmers?

I live in a house somewhat newer than the house the Kruger family lives in in Germany, also a house that is contiguous with the neighbors' houses (and rented, in my case). I am surprised to see that the article, and the comments posted so far as I post this comment, do not mention even more prominently that one of the big lifestyle differences, which drives HUGE economic policy differences, between Germany and the United States is housing preferences. The United States government has federal policies and many state and local policies that provide incentives for people to take out long-term mortgages to buy single-family houses on lots that are quite large by worldwide standards. Local zoning regulations in the towns near where I live are such that thousands of houses are on lots more than one hectare (2.47 acres) in size within ten kilometers of where I live, and a typical lot would look very large to most people from Germany. Culturally, for a very long time Americans have liked to be "land poor," tying up many of their family assets in the barely liquid form of a house and lot paid for by long-term debt. Many American economists over the years have bought into the idea that real estate investment by the masses is a productive form of investment for the national economy, but other economists have long criticized an American overemphasis (promoted by federal tax policy and local land-use regulations) on houses that are as big as public buildings in most countries, built on lots that are as big as whole farms in the other country I have lived in (Taiwan).

Several of the newly industrialized countries in east Asia, and several countries in Europe, have family spending patterns that devote much less money to housing, at a given level of income, than families spend in the United States. I recall one American friend I knew a decade ago in Taiwan who described a middle-class neighborhood of walk-up apartment buildings in Taipei as a "slum," although to my eye it looked like a fine place to live, and indeed was cleaner and more spacious than the neighborhood I then lived in in a suburb of Taipei. Spending less money on a grassy lawn allows spending more money on family travel during vacations (as the German family in the submitted article does) or on supplemental education for children (as my family does or as many families in east Asia do). Either the German pattern or the Taiwanese pattern of spending appears to result in more effective development of young people's skills (investment in "human capital") than the current United States pattern, and investment in a skilled next generation tends to promote steady national economic growth.

So to me, the sad thing about this interesting submitted article is that many Americans are going to look at the photograph of the Krugers' "Tudor-style house in" a middle-class town, and say, "I would never want to live like that," and not think through the implications of polices that nudge Americans to buy ever bigger houses, built on ever bigger lots, for ever smaller families generation after generation. One reason that the American housing market collapsed a few years ago is that most Americans didn't recognize the housing market bubble as a bubble--rather, they genuinely couldn't imagine a world in which people would do anything other than continually overspend on housing and underspend on developing employment skills. Perhaps some Americans will happily adapt to a more German lifestyle (as my family has done), but the United States as a whole is unlikely to have a strong national economy to the degree that Germany does unless millions of voters change their individual purchasing decisions and views on appropriate governmental policies.

Plus sides - I have never seen so many big cars, Mercedes etc obviously being driven by ordinary people, in the UK would be upper middle class. Doesnt seem to be rows of closed down shops on high streets like in the UK - most shopping streets in UK are like ghost towns these days.

Down sides. Looong hours at work. Most people live in apartments and not big semi or detached houses.

America ran trade deficits during the fastest period of its growth, almost the entire 19th century. So how did we accumulate so much real wealth and production while running trade deficits?

Answer: because the profits being generated domestically outstripped the import imbalance. We had no real national debt. Debt being a killer if you have a trade deficit (countries like China end up buying up your debt as a place to park their imported dollars, then you become beholden to their interests).

Peaked?