Germany is the number one exporter in the world:

http://www.german-embassy.org.uk/building_..._of_tomorr.html

Germany's technological performance and capabilities are still outstanding. Our universities, research institutions and industry are internationally competitive. Germany is now once again the world's number one exporter.

In 2002 we achieved an export surplus of €132 billion in the advanced technology and high-tech sectors. Germany is also the world champion in key sectors like electrical engineering and the motor industry. These achievements are the result of unique, innovative work by highly-qualified engineers, technicians and scientists. The number of students enrolling for these subjects is on the increase, and we are once again registering more patents. These positive developments are due to the uncompromising policies implemented by the German Government.

Low wages are usually the excuse given by American companies as to why the US is not keeping up with exports- but this is not the case with Germany- were wages are very high- but, to be fair, unemployment is pretty high too!

I am sorry, I have not been able to find the median wage numbers for germany- but I think everyone here can say they are high by any first world global standard?

So my question is this:

Why is a developed country like Germany able to compete and create the largest exporting country in the world while maintaining the high wages that are supposed to be the reason we are exporting jobs?

How does the US combat this on a large scale?

Germany is the biggest economy inside Europe, it is centrally placed and can move its goods to any where in Europe, Arabia or Asia with relative ease.

It has access to a lot of Eastern European nations for cheap labour and is supported by investors from most of the richer European nations.

It has a highly educated work force and a culture of hard working engineers, designers and other workers more or less obsessed with building quality goods. As we say over here, Germany makes the best cars and the best guns.

But... its not all milk and honey in Germany. My brother lives there and he's getting ready to leave 'because it sucks'. His wages are poor compared to what he could make in Denmark and despite having an impressive precision engineering education he can't find any work beyond the lowest factory work that pays peanuts.

I've also heard from others that unemployment is rife in Germany and those jobs that are open are all low income, maximum input.

Given what I've learned then, I think Germany is doing well because of its location and its low income, highly trained work force.


I don't really understand this question.

Well I have read differently..that Germnay no longer enjoys a large trade surplus and that her exports are starting to slow down. Edited to add..I think it is mostly as a result of increasing oil prices.

I don't really understand the questions. Germany exports jobs too.


Also it should be discussed in this debate that currently all of Germany's recovery and growth is based on it's exports..it is all export led. There is no rise in consumer consumption amongst Germans, no job creation, still high employment and low consumer confidence. So even if people outside Germany are buying German products..no one in Germany is.

Possibly by graduating engineers and training craftsmen instead of spewing out lawyers and "liberal" arts majors?
I recently saw a bio about a local person in the newspaper who has spent 16 years in various institutions and ended up with some vacuous "ethnic something-r-other-studies" doctorate. How much do you think he'll contribute to the GDP? If he'd spent that long in chemical engineering perhaps he might have developed a more efficient fuel cell, making a real contribution to the country and society as a whole. It also probably helps the Germans that they also only spend about 1/3 the time we Americans do watching TV


Why on earth would we want to combat it? Germany may have a net trade surplus, but they lag in productivity by some 19%. If their taxes weren't about 10% higher and they didn't spend so much time on holiday, perhaps they'd have more disposable income to buy goods. But if they're happy, I'm happy, whatever works for them.

I'll echo bucket's sentiments - So what.

Go to Germany and you may notice that there are Mercedes-Benz (plural = benzes? benz'?) parked outside of Aldi. That people stay in school until they are 32 not because they really want to learn, but because there are no jobs for 26-year-old university grads.

This is not a healthy economy. People are hurting, they have something close to the stagflation that Japan has experienced over the past 15 - 20 years. High unemployment, exacerbated by the difficulties of integrating Eastern Germany, an impending pension crisis much worse than the US (due to less immigration and lower birth rates) ...

Maybe they have relatively high exports, but if you're saying that the US should emulate the "success" of German economic policy - no thanks.

I understand that Germany has it's problems with it's economy as well, but they still seem to be exporting more than anyone else, despite it having the problems it has- that is what puzzles me the most- and at least SOME of the unemployment issues, perhaps not all, but at least some, is due to the hardcore unemployable nature of much of the aging east german work force- and then the glut of workers from east germany that CAN work in that modern work force- it will take a generation to meld that work force into the western workforce-

but, despite all the problems, they still manage to stay #1.

I am not wanting to imitate a European economy, I am more interested in our weakness, which is a trade deficit, and the fact that a highly paid workforce (and Moif, what you consider "coporate peanuts" over in that skilled workforce, lot's of folks over here would line up to take LOL) can complete with third world countries on exports.

I suspect some of it has some marketing skills in foriegn markets- when I travel, it seems you see german products eerywhere.

Without getting into the complex nature of a first world economy- the question still stands, despite all the problems, they are still kicking butt on the global export scale.

carlitoswhey

What is Aldi? Do you mean the super market chain?


CruisingRam

Yeah, sorry, I meant, peanuts compared to what is considered an average wage in Denmark.

Yes. Aldi is the super-cheap supermarket chain that (mostly) doesn't even stock name brand products. Over the past 5 years or so, it has become necessary and almost fashionable for Germans to shop on price. Historically, this had not been the case - Germans bought high-quality above all, whether food and drink to their cars. In other words, you would never see a Mercedes-Benz parked outside a discount, generic grocery store. But today, you do. There is no longer a stigma, which is a dramatic shift in the last several years.

I guess I can't speak for their "kick butt" exports, but their economy has imitated ours just a bit in that German manufacturers have been setting up shop in ex-Communist Eastern Europe. Sort of like our manufacturers moving to Southern states.

Why is a developed country like Germany able to compete and create the largest exporting country in the world while maintaining the high wages that are supposed to be the reason we are exporting jobs?

I'll take a different tack.

The German domestic economy is indeed in some trouble, and probably wasn't helped by the lack of any definitive outcome of the recent elections.

BUT they have regained their position as the world's larger exporter.

Specifically comparing them to the USA, and thinking about the automobiles and consumer durables that form a large part of the German exsport market, I'd say that this is, at root, because Germans make goods that appeal to consumers outside their domestic market, and America doesn't.

This is a generalisation, of course, but not an unjusfitifed one.

AUTOMOBILES: Very few cars made for the US domestic market sell in any quantity aborad. The only ones I can think of offhand that have even been launched outside North America recently are the Chrysler Crossfire & Neon, neither of which have set the world alight. More usually, US manufacturers don't even attempt to market their cars outside the Americas.
Generally, I think this is because the default production mode in the US is for big, thirsty vehicles with automatic gearboxes, with drivetrains and suspensions aimed at long-distance, straight line travel. Performance tends to be driven by engine size. Europe and Japan (currently the biggest non-US car markets) prefer smaller, manual transmission cars more suited to cornering, where performance is more driven by tuning and increased efficiency. "Green" concerns are a much bigger factor in car purchasing outside the USA, though that's more driven by the much higher fuel and vehicle taxes than through innate environmental awareness (though that too is a factor).
Germany - in VW Audi, Mercedes and BMW - makes and sells cars that are sought after everywhere. Ford make entirely different models for the two markets, and generally, they manufacture locally so not all the revenue can be counted towards international trade figures. Try buying a Dodge, an Oldsmobile outside North America, and you'll either end up importing it yourself, using a specialist imprt agency, or buying it from someone who did. There are no dealerships for these brands here.

DOMESTIC APPLIANCES: Refrigerators, Freezers, washing machines, dishwashers, etc. are generally much much larger and more energy-intensive in the USA. Plus (as we've heard on the Rags to Riches thread recently) American homesare typically much larger than foreign coutnerparts. Consequently, there isn't a big overseas market for US white goods, because they cost too much to run (and are less environmentally friendly - that green thing again) and, just as critically, they are too big to fit in most non-US homes.
Germany, on the other hand, makes ranges (e.g. Bosch) that can fit into either market.

These are just two examples, and (like anything else) there are exceptions.

Intuitively, though the central point - that Germany is a big exporter because they make things consumers and businesses in other countries want to buy, and America is a not becasue they don't - has to be the main reason for Germany's comparative export success, regardless of any wider economic weaknesses they may have.

Other minor factors might include grumbling low-level anti-Americanism, though I think that is only minor.

Why is a developed country like Germany able to compete and create the largest exporting country in the world while maintaining the high wages that are supposed to be the reason we are exporting jobs?

Probably because they offer corresponding high quality for their higher cost, and people will pay for quality when they can. Keep in mind, Germany just usurped the US as the largest exporters in the world. We're not far behind. We have a vast trade deficit because we import so much, not because we export so little.

How does the US combat this on a large scale?

No need to combat the German market. Why would we do that?

Mrs P comeone.

This has nothing to do with Per Capita (%), so i will compare this to pure numbers. United States has around 300 million people (give or take), Germany has around 80 million people. Yet, they manage to be Number One. Why is this?

Germany has always been a editted to remove profanity country. Whatever you think of them, whatever you do, Germany, editted to remove profanity. During the 30 years war, Germany was crushed, humilated, and literally, Destroyed. They managed, they built, and once again, become Number one. After WW2, they where crushed, humiliated, and treated like dirt, and guess what ladies and gents, you said it, they became number One.


The answer to the Question is because Germans as a people, are strong. They manage and always will. The reason they are "number One", is because they are the second biggest country in population in the western world, and as a nation & people strong.

The question i would ask, not being all anti-american as you guys know i am, Why does not United States kick editted to remove profanity? They are a population of 300 million, and yet, as "anti-american" this will sound, does not really export anything. United States are importing almost everything . Someone (cant find the person) even pointed this out. The U.S simply does not export anything of worth (except a few things,) which are in reality, not anything to be proud of.


The answer to the second question given, i cant answer. More then giving a question: What do you mean? Combat what?

In 2004, we exported 1.15+ trillion dollars in goods and services. Seems like an awfully high number for items of no worth. I admire the Germans, they do a lot of things well. That's why I said they are likely the export leaders due to the quality of their products.

Mrs P

Compare this to how much you IMPORT. And then compare it to other Nations import & Export. (in %).

You will see that the U.S is so extremely dependent on import that its .. well, crazy.

Of course that wasn't really the claim Mrs. P was responding to. Clearly contrary to your previous belief the US exports valuable products at an enormous rate. Germany just exceeded the US as the #1 exporter.

Many, if not most rich countries have a trade deficit. Japan for instance.

It doesn't mean the nation is somehow "losing" the economic war. Just that has enough money to buy more than it sells and that labor prices make foreign goods cheaper.

The EU just had it out with China over that very issue.

Ah, but this is a totally different area. The U.S has huge problems with the Chinese, most of it is not in the papers. I guess the EU business is more known of because the European States are more open about the problems (whiles the U.S tries to hide them?).

EU and U.S has the same problems with China. The main thing is that Chinese business's can kick our hines. Cheap labour, and more. And this is a huge problem for us, because we cant win over them. We cant have companies paying the same salaries as the Chinese, because then we would live in misery.

And we cant do anything about this really, except population reduction ofcourse, and that wont happen anytime soon

Ha!

Our trade deficit with China is frequently mentioned in US papers. "Made in China" complaints have been a running gag in America for years.

..I myself believe the concerns are somewhat overstated and overshadow the more important issue of working conditions for Chinese laborers.


..again you are think of trade in adversarial terms, a mistake that people and especially politicians make frequently.

The US is a bigger exporter than China. That's right, even with China's population they are only #3 in exports.

It is expected they will pass both the US and Germany in five years, but even then it doesn't mean the US and Germany have gotten any weaker.

Trade deficits just mean a country buys more than it sells. On an individual level this means very little.

It's a global market and thinking of thing as a competition between nations is a mistake. The competition is between individual companies in a certain market.

Once again we see this very persistent but inaccurate view that America makes nothing. Come on Julian I am from the UK you are going to tell me you don't see all those Fords on the roads? And when I lived in Switzerland it was very very trendy to have an American car specifically the Jeep wagons. Now according to my sister who still lives in London it is Hummers. Then there are all the American movies that show in the cinemas across the world and the American music that is listened to across the world. I just find this statement so removed from any any unbiased observation that I have to suspect it isn't an observation it is an attempt to slander.



Oh sure intuitively..but in reality what is happening is Germany makes things like cars and appliances.. things or products that are easily measurable and not so easily stolen or taken without transaction whereas many American exports are now not as easily measured or controlled upon transaction..like Microsoft..ever heard of them? Would you consider Microsoft another product America makes that nobody wants to buy outside America? You have any idea how much China steals from America in regards to intellectual property?

Perhaps if the American market was more traditional and tangible like the German one and less focused on intellectual property and research and development we would not suffer as much and be so dependent upon others to enforce the laws we need for these products to be exported honestly.

Also Germany went on a a bit of a buying frenzy not too long ago when it comes to car manufacturers...how much did that effect her export levels?

How many of the Fords driving around on UK and European (and Japanese, Asian, African and Australian) roads are US models made in US factories? More than a tiny handful? NO, because the US car market does not generally make more than a very few models that have any kind of chance of selling in any numbers anywhere else.

The Hummers your sister tells you about are a classic example. Sure, they're glamourous and exclusive. "Trendy", even. But - since you've lived in Britain - you'll be perfectly well aware that the price of fuel here will limit them to being a rich man's plaything, and the their size and (non)manoevrability on the narrow winding British road network means that they are effectively useless on all but about 5% of the roads here. They may be "trendy", and all the best people simply must have one, dahling, but many US cars also have appalling build quality by European standards (especially inside the cabin).

This is not the basis of mass market success. America pretty much invented the mass car market - everyone in the world wanted a Model T, but since then you've disappeared up a gas-guzzling blind alley.

Hummers and Chrylser Jeeps are not the type of vehicle that is going to knock the VW Golf or BMW 3 series off their mass market dominance, so don't tell me that suggesting the American automotive industry needs to learn from German (or other successful) carmakers is slanderous.

German car-makers make mass-market vehicles that can sell as easily in Birmingham AL as they can in Birmingham UK, because their production lines and supply chains are flexible enough to cope with right or left hand drive, stick shift or auto, etc. They can also build big 4X4's that can shift volumes in the somewhat unique USA market. American car makers in modern times have yet to crack a single model that can sell equaly well inside and outside the USA. The sports cars are too focused on straight line speed, and compacts and mid-sized family saloons are just too big to have much appeal. In the last 20 years, it's ONLY been the likes of Hummers and Jeeps that have been able to gain much of a foothold (and that's about all it is) in non-US markets.

In manufactured goods (which is what must be talking about here, since - as you rightly point, out the US market is not overwhelmed with German films and software, so the leading exporter status of Germany must be based on something other than intangibles, right?) Germany are capable of making products with wider international appeal than America (currently) is. Not by all that much - the USA is still number 2, no doubt based in large part on the products of Hollywood and Seattle. (Interesting you should mention music, where the dominance of American music forms is matched by the fact that, more often than not, the music gets played on equipment made by Asian or European companies. The notable exception being the Apple iPod, but that's outsourced to Asian factories too, isn't it?)

Saying that is an unbiased observation - Germany is the world's biggest exporter again, which must be based on something. That isn't any kind of slander, and it bothers me that you would say that.



Heavens, bucket. For one thing I've already stated that I was oversimplifying to illustrate the case.

For another, even with Microsoft and News Corp and all the other producers of intangible goods, America is still overtaken as the leading exporter by a country (Germany) with less than a third of the workforce, with unemployment rates nudging past 10%, with a stagnant domestic economy and no clear political direction.

If I were in American business I would be taking a cold hard look at what the Germans are doing that the Americans aren't (or vice versa) and asking myself what will happen when the debt-fuelled American consumer that fuels the largest world market market eventually goes quiet and my only way of continuing to grow was to export.



Now it's my turn to ask you to come on! - Is it is your contention that the whole reason for Germany's export leadership over the USA is intellectual property theft? I don't disagree that this is a huge problem in IT, pharmaceuticals and the media (German companies like BASF, Bertelsmann or SAP must be as worried about that as their American counterparts), but I can't see that it's the only handicap that stands in the way of American export success.

Indeed, I'm more worried by the idea that America is perfect but beset by outside baddies, and that is the only potential obstacle to continued American success. (It's this hubris - in all areas of life, not just business - that I find most frustrating about America. It's not that I think the Emporor has no clothes at all, just that they're rather more threadbare than he or any of his courtiers think they are.)

And I'm not just worried for America - when America sneezes, the rest of the world catches a cold, Britain more than most. If you continue on your current course, I don't see how you can avoid plunging into a deep and prolonged recession the next time that an inevitable cyclical downturn comes along. And because you're the biggest economy, you'll drag us down with you.

I absolutely disagree with the assessment that the trade deficit simply means the United States just "buys more than it sells." I suppose on a very, very fundamental level that can be considered correct, but it mischaracterizes why we currently have a deficit:

Our current trade deficit has been created by the large sums of money we borrow abroad. As such, it carries with it a price tag similar to any other loan:

Congressional Budget Office (CBO)

That being said, I completely agree with the sentiment Turnea expressed that, ultimately, the trade deficit doesn't mean the US is losing some economic war. On the contrary, some might consider the trade deficit a positive thing because it suggests a large amount of profitable investment opportunities within the United States (Foreigners want to get in on our profits). The CBO states:

And my favorite:

Of course, many might be concerned when large government organizations borrow money from abroad, go on a binge spending trip, wake up with a huge credit card bill and realize that they spent all that money on things that don't provide an economic return.

But then again, the US is immune from defaulting (Though the alternatives to strong policy will result in heavy inflation (No free lunch)).

Lets just say, disregarding exceptions of gross incompetence, the current deficit is always manageable.

Oversimplifications abound I guess.



Debt at controllable levels is almost always considered a valuable financial instrument. In fact, debt leveraging is arguably the foundation of the American investment economy. However, at a certain point that debt DOES become uncontrollable, and when it does, there is the potential for disaster.

What is often overlooked when discussing the trade deficit is the actual physical reality of such an arrangement; specifically, foreign currency holdings. We tend to think of the trade deficit merely in terms of the individual transactions, but in reality the key issue is the debt incurred. At present the trade deficit is being financed primarily by Asian governments looking to keep the value of the U.S. dollar high. However, this financing comes at a price for the U.S. economy, which is basically paying 5.1% interest accruing in foreign account holdings. When those debts reach the point where lenders are no longer willing to extend them, the value of the U.S. dollar will plummet, creating a major disruption for the global economy. Source.

On the contrary, I seem to find myself in the rather complicated position of agreeing with you both!

The root cause of US trade deficit

However, I am starting to realize a distinction when foreign borrowing is blown away for frivolus purposes:

And when a trade deficit is used to fuel investment. Since this is starting to get extremely off topic, I recomend continuing this via PM or another thread.

What is your point with this comment...somehow I doubt you are making reference to trade within multinationals. No no no that doesn't help prop up this flimsy idea that America makes nothing. Well how many of the VWs on American roads were made in Mexico?
And is there something wrong with specializing for your intended market? The Fords being driven around in the UK are not the same Fords being driven around in the US..why is that a bad thing?

As for the Hummers they are fairly exclusive here too...and just as clumsy and gas guzzling. They are not a product that has mass appeal or need..again they are specialized.


This one comment here explains to me you just don't really get my point at all..or maybe you don't want to. All America did was invent how to mass produce cars..pppthhhpptt and then nothing. Well tell me which you feel is more of a valuable contribution...the idea of how to make a product or the product itself?
I was focusing on intellectual property and R&D for a reason....because I happen to feel they are more important. Why don't you? Sometimes..no more than often it is the intangibles that we value the most but like I said before it is harder to put numbers on them.


Right except for all those Fords.
Ford enters 2005 as the best selling car brand in Wales over the last 12 months.
Ford's Focus, Fiesta and Ka models dominated the Welsh sales charts, taking the top three spots respectively both for the full year and December 2004.
source
You should know better then to say this ..and even keep on saying it after I questioned you out on it. That is why I feel it is not from any form of actual observation.

Also didn't someone mention Caterpillar recently...as I have read that they are one of the US' largest exporters of manufactured stuff.


We are discussing exports. Not just manufactured goods but exports. Why all of a sudden are you becoming so selective on what qualifies as an export and what does not and why are you claiming that the US does not export goods with mass appeal? Obviously they are..because a lot of people complain about how prevalent American culture has become through the internet, movies, music, restaurants, drinks, fashion etc.
And your insistence to keep bringing up the fact that we now live in a global market where goods are often produced outside the borders they are invented, marketed, researched, developed and invested in is actually a far stronger argument for my side of the debate then your own.

This article which I have found in pdf form because it is subscription required..states..
Forty-two percent of all U.S. trade in goods, $950 billion last year, occurs between arms of the same companies, including U.S.-based companies trading with their foreign divisions as well as foreign companies trading with their U.S. arms. Nearly 90% of U.S. imports from Ireland are such "related party" trade, as are 74.6% from Singapore, 62.1% from Germany and 61.1% from Mexico.

Did you see that little piece about Germany at the end? 62.1% of German exports into the US are related party trade.
So in reality with all these multinational corps..or we can just say globalization ..how effective are these export numbers in telling the true story?



You do realize that if the American consumer stops buying Germany would be in a LOT of trouble....right? As I already stated the German economy is currently only being kept afloat by exports. And the US does have other things going for her. Again sorry to keep bogging down the debate with all this intangible talk but what do you think the numbers for R&D have been in Germany as of late? It is a very well practiced corporate maneuver to cut back R&D in times of trouble to still keep the profit lines up. What do you think the R&D comparisons look like between the two nations?


Yes that is my contention..so prove me wrong.

The problem: Although Microsoft's software is by far the most popular, with 60% of China's computers running on Microsoft operating systems, few consumers or businesses shell out for the real thing. Microsoft's China revenue was only $85 million last year, estimates International Data Corp. Microsoft should have taken in nearly $400 million, had it been paid only for its share of software in brand-new computers.

source

Rampant piracy in the Asia-Pacific region cost Hollywood's leading studios more than $896m (£475m) in 2004, according to official figures just released.

An estimated 97 percent of Western drugs sold in China are fake. Many genuine products are not sold here simply because manufacturers fear they will be copied. Inadequate IP protection also discourages drug companies from spending on research and development (the cost of developing a new drug: about US $800,000)
source

The U.S. Chamber of Commerce has estimated U.S. companies lose more than $200 billion in China each year because of sales of counterfeited and pirated goods.
source

Here are some WTO figures on exports, taken from their website here. You'll need to select the USA and Germany, but once you do you'll get the most recent breakdown (year 2003) upon which the German Number 1 export status, and therefore this debate, is based.

The first thing to mention is that in "Commercial Services Trade" Germany is still only the number 3 exporter in the world. Britain is number 2 exporter in this type of trade, and the USA is still number 1 by some distance. Germany is only number 1 in "Merchandise Trade" which is based on customs figures, and is about mining products and manufactured goods. "Stuff", for want of a better word.

"Commercial Services Trade" is based on balance of trade statistics and includes "communication, construction, insurance, financial, computer, information, other business, and cultural and recreational services, and royalties and license fees"

That - pretty obviously - covers the computer software and artistic property rights of Microsoft and the Hollywood studios. Given the debate topic's specific reference to Germany's number 1 status, they are not part of the debate here. Copyright theft is a big problem, and if you were to start a thread up to discuss it we'd probably find oursvles more or less in agreement on what a bad thing it is.

Unfortunately it is not really relevant here, except in so far as you mentioned drugs and consumer goods are counterfeited, and there is no reason to believe that German (and British and Japanese) goods are less likely to be faked by unscrupulous Far Eastern businesses than American ones. Prove ME wrong (a pointless exercise - by nature it's illegal, so we don't know how much of it goes on, only how much is caught.)



There's nothing wrong with specialising for your intended market, but isn't it preferable to make something with universal appeal? Because you can then shift the same number of units without the cost of separate design, tooling, etc.

And yes, you're right (up to a point) that the Fords made in Europe, which sell so well in Wales apparently, contribute towards Ford's overall sales. But they also count towards the exports of whichever nation the factory is actually sited in - that's part of the appeal of getting a big foreign company to open a factory in your country in the first place, as well as the jobs and general investment they bring.

And is it a bad thing? Well, it isn't good for American factories and American jobs and American managers, because none of THEM are learning anything from the exercise. Except perhaps that foreigners are better at making cars for foreign markets.


I'm not he one that cited them as an example of how popular American-made cars are in Europe. You did that.


*sigh* If I can again refer you to my earlier post - it has never been my point that America is some kind of busted flush that passed its best when Henry Ford died. PLEASE understand that. The debate topic is about how Germany can be the number one in exporting manufactured goods, even though their wages and benefits are much higher than those in the USA. They must be doing SOMETHING right - what do YOU think it is?


Because they are off-topic.


Interesting that you should cite Welsh sales figures - I didn't know they were broken down on that basis. Maybe Wales is seen as important by more than just the people born there . Thank you .
But those Fords were likely made in Britain, Belgium or Germany. Most of the export value of these cars will be attributed to the trade figures of these countries, like sales in most multinationals. The profits will still make their way back to the place where they are headquartered (in Ford's case the USA), but this money will show up in the "Commercial Services Trade" figures and not the "Merchandise Trade" figures - nothing goes through customs, so it cannot appear there. So (again) this isn't relevant to why Germany is "number 1" in "exports" and America isn't.


I'm sure they are. What are they doing right? And why do they still make a lot of their tractors and dumptrucks and cranes and what-not in the USA?


We are discussing "exports in the context of Germany being number 1 in them, and the only type of export they are number one is in "merchandise trade" i.e. stuff, and not movies, R&D, intellectual property, or anything else that you cannot physically handle.


Only if "exports" includes the WTO's figures for Commercial Services Trade. I've been debating all along on the assumption that since Germany is only number 1 in Merchandise Trade, that's what we're talking about. It looks like you've been looking at total "exports", and therefore that we've been buttting heads while talking about two distinctly different things.

You can spank me for being literal-minded if you like . Sorry for any misunderstanding. But, if my interpretation of the debate topic is correct (and I'll go blue before I admit it isn't ) most of the counter arguments you've given, which refer to trade within multinationals, intellectual property, and so on, are not really addressing Merchandise Trade, and so don't really acount for how Germany can be number 1 exporter of "stuff" and yet have some of the highest wages, longest paid vacations, biggest worker (and unemployment) benefits, and so on, in the developed world.


Yup - that is why I am so worried about potential pitfalls for the American economy.


And the American economy is only being kept afloat by debt. Who wins that one?



A good question, and one that is entirely relevant to merchandise trade. The WTO statistics I linked to don't have much to say on this subject (and there's only so much Googling I felt like doing ) but it does give information on the number of patents and trade marks filed, borken out by residents and non-residents. This is interesting in itself, since more non-residents than residents file patents and marks in both countries. I'd read that to mean that foreign companies want to be able to copywright their ideas and sell their goods in both markets.

The figures are much bigger for America, because it's a much bigger market. But just for fun, I looked at the "residents" category, and compared it between the USA and Germany, along with the population.

America has about 260 million residents, and Germany has about 80 million, a ratio of 3.25:1. On patents, America files 3.84 for every German one. On trademarks, America registers 2.59 for every German one. This is all rule of thumb stuff, but let's say, for the sake of argument, that patents measure innovation and creativeity. We can say on these figures that Americans are more creative and innovative than Germans are, because they file more patents per head than Germans do. No surprise there, perhaps.

However, a patent is aboutt he first thing you do when you come up with an idea - often before a working prototype, even. There are literally hundreds of patents for perpetual motion machines, but nobody has ever made one.

No, the first thing you do when you've taken an idea and tested and engineered it to the point where you can go into production and start selling it to real live customers is put a trademark on it. On this measure, the Germans are a little ahead. They may be less imaginative, but on this rule-of-thumb evidence, they are better at turning their ideas into commercial reality. Which might help to explain why they can sell more German-made "stuff" than America does.


Does proving you irrelevant count ?

Julian,

I'm not sure how accurate your assessments are.

Many foreign countries, especially Europe, have very strict import duties, especially on US products. Which is why US firms find it advantageous to set up companies in those countries to sell from. Of course, within the EU, these tariffs are waived for EU members. This set up a huge protectionist barrier for US entry into European markets. That explains your observation of relatively lacking numbers of US cars there.

This entire thread is a slanted numbers game. The argument cannot be boiled down to superior products. The US has its largest trade deficit with China (around $25 billion) and I don't think anyone would argue that it's because of high quality, high value merchandise--quite the opposite in fact.

The US sets up subsidiaries in foreign countries to exploit either lower wages or to circumvent import taxes. This downplays the numbers on the US side.

What plays into Germany's favor is its reliance on the auto industry. Germany makes more cars per year than any other country but Japan. Over 5 million in 2002. Germany exports 45% of those cars.

From this US-German Fact Sheet


And this Sheet



It's no wonder that Germany's largest trade partners are: France 10.6%, US 9.3%, UK 8.4%, Italy 7.4%, Netherlands 6.2%, Austria 5.3%, Belgium 5.1%, Spain 4.9%, Switzerland 4% (2003) according to Nationmaster

The real answer here is that the US is isolated. It costs a lot of money to import or export to the US. The US has money, so we pay for imports. However, our exports are limited by the competitiveness of local markets. If we are competitive in making a car with Germany (for example), we then have to overcome the barriers of transportation costs (significant) and trade barriers (also significant). In other words, to sell into Germany we must be super-competitive.

The same is true in reverse, of course. Germany, however, exports mainly to other EU countries. In those cases, there are no trade barriers (thanks to the EU) and the transportation costs are low (comparatively).

It doesn't mean a whole heckavalot. The US is by no means any weaker than Germany simply because we do not export as much.

The debate topic or questions are poor. They are unclear and I tried to address them earlier with little success. I really did not know what was supposed to be debated. Then you came along and said..
I'd say that this is, at root, because Germans make goods that appeal to consumers outside their domestic market, and America doesn't.

Intuitively, though the central point - that Germany is a big exporter because they make things consumers and businesses in other countries want to buy, and America is a not because they don't - has to be the main reason for Germany's comparative export success, regardless of any wider economic weaknesses they may have.


I made it very clear from the start of engaging you in debate that it was those specific views/comments that I took great exception to....and still do. America does make things people around the world want to buy yet as I stated in my early post they are less traditional and tangible like the German market. Why do you feel Americans need to learn from the Germans when Americans have been very successful in their own arenas of trade? And why won't you acknowledge this success and admit that Americans do make things people outside America wish to buy,,,like movies, music, art, fashion, software, medicines etc.? And that because multinational companies, trade between arms of the same companies, outsourcing and outright theft accounts for a lot of what America trades or sells around the world her trade appears smaller than it really is with traditional methods of tracking. Germany's ranking here is in no way an indicator that America lacks in it's ability to trade and needs schooling from the Germans.



What is this learning thing? Why do you feel America is in some sense inadequate and in need of proper education? This is a constant theme in your debate.

This is globalisation that you seem to have a problem with..the very basics of it's mechanisms. I don't understand why having an American company expand into the European market and keep production affordable..as Amlord pointed out shipping is costly..and being able to retain the top three sales of vehicles in a region would be bad for America. Perhaps the reason Germany is doing so badly economy wise is because she has been too slow to adapt to the new changing economy? It seems that way if you pay any at all attention to their business news..with all the layoffs, outsourcing and relocations.
Perhaps the question the author of this debate should have asked was how long can DE retain her number one status and still offer good paying jobs in her country. There is a reason unemployment is so high and is not dissipating.


That is such an inaccuracy but way off topic. The US economy is strong for many reason debt is not one of them.


I didn't cite patents..I said R&D spending two separate things. I could care less about patents my lunatic cousin who just rides his rollerblades high up and down the Kent coast has several patents..you think he is bringing in much trade or capital into the UK?..I can tell you he isn't. And is currently stranded in Cyprus because they confiscated his passport ...ahhh ..but he is way off topic too.

R&D spending is a better indicator I would imagine. And like I said is often one to get slashed or greatly reduced in times of trouble..especially true in the private sector.


I believe in regards to the new economy and the transition to high-tech that the US is without question leading the pack...from R&D spending, to FDI, to entrepreneurship, to immigration policies that pull the brightest minds together. I think this is a far better indicator for a far brighter future and stronger economy and yes higher paying jobs..and more of them! I don't feel that Germany will be able to retain this position and high paying jobs at home..one of them has got to give because being this is DE's only current means of support she has no choice.



When was 200 billion ever irrelevant? yet you are right it has nothing to do with manufactured goods..but it was the "America makes nothing" argument I was focused on.

Now..for that spanking you requested...

Not much argument there. It was clear to me that for several posts that you were including Commercial Services Trade in what you thought of as "Exports" (which is a perfectly reasonable position in this thread), while I was excluding them and thinking only of Merchandise Trade (which is also a reasonable position, given it's what Germany is number 1 in, as my WTO links showed).



Yes, and immediately after the first paragraph you quoted I said "This is a generalisation, of course, but not an unjusfitifed one. "

What I thought I meant when I said that was "I know I am exaggerating, but there is a central nub of truth in here that I would like to explore".

It seems you took this very literally, because you



Because this whole thread is about what Germany is doing that America isn't (or vice versa). Need I repeat the debate questions again?

"Why is a developed country like Germany able to compete and create the largest exporting country in the world while maintaining the high wages that are supposed to be the reason we are exporting jobs?" The "WE" being America.

"How does the US combat this on a large scale? " The "US" being America.

So this whole thread is basically about what, if anything, America can learn from Germany's export success, and what, if anything, America should do about it.

Or at least, that's how I read the debate questions, but you're right - they are certainly open to different interpretations.


Because all these sorts of trade (except the physcial export of clothes, DVDs, celluloid stock, pills potions & lotions) are classified as "Commercial Services Trade" by the WTO and not as the "Merchandise Trade" that Germany are number 1 in.

So, my interpretation of the debate questions leads me to think that patting America for being number 1 in this area of trade, while it might make you feel good, is off topic.



If you really think that America already knows everything it is ever going to need to know about all aspects of trade, I give up. If it's also the way American business thinks, I'm afraid that makes me think American trade really is doomed to fall to the exaggerated zero that I first (knowingly and admittedly) exaggerated in my opening post.

Businesses die when the think they've no more need to learn new things. That isn't just true of learning things from Germany, and it isn't just true that American business needs to keen learning.


Well, it isn't good for American factories and American jobs and American managers, because none of THEM are learning anything from the exercise. Except perhaps that foreigners are better at making cars for foreign markets.



It's a constant theme in this debate because it's about what America can learn, or do about, Germany being number 1 in merchandise trade. Would you like me to ignore the debate topic so I can be more complimentary about the USA??



It's not bad for America in the sense that America gets a big chunk of the money that gets made (which goes into the "commercial services trade" WTO category, and helps to explain why the USA is number 1 there).

Where I'm coming from in this vein is that it isn't Ford America that is learning how to make and sell vehicles that appeal specifically to European markets. It's Ford Europe, and the (largely) European designers and manufacturers that produce the Focus, Fiesta and so on. At the same time, Ford Europe is completely ignorant of the American market.

BMW or Volkswagen don't really have this problem in selling to the US market, because, although the models sold there are built in US or Mexican factories (the Amlord's logistics argument works both ways - the Altantic isn't any narrower going West), they are essentially the SAME models that BMW and VW sell in Europe, Asia, and everywhere else. (Except the old style VW Beetle.) So they only need one design team, one engineering lab, and so on, giving them some economies of scale that Ford cannot have in its business model. In the car industry - designing and tooling up for the production of a new model is the most expensive thing they do. So Ford is doubling their costs when it isn't absolutely essential for them to do so (if it were, VW & BMW would be doing it too).


Firstly, do you think there are no German multi-nationals? Didn't you yourself talk about the VW car plant in Mexico that makes most of the VW cars sold in North America?
The biggest single economic problem Germany has is the hangover of unification (yes, even after all these years - imagine if the USA merged in Mexico and went about funding the upgrade of the entire country to US standards in every area. Health & Safety, Social Security, the lot), followed by sluggish domestic consumer demand. These are certainly big challenges that they do have to face.

But we're talking here about German's exporting manufacturing sector, which is under similar pressures of outsourcing as the US, with the additional high wages and "restrictive" labour laws their social democracy puts in place. Under those conditions, to regain the global number 1 spot in merchandise trade, even when faced with the same cheap Chinese manufacturing that is gutting the US factory sector - that's something of an achievement, isn't it?

So why are you so keen to downplay this German achievement? Why won't you "acknowledge this success and admit that Germans do make things people outside Germany wish to buy"?

I don't remember you ever qualifying your criticisms of the German export success story, which boil down to variants of "they are cheating" and "they aren't really winning anyway", as generalisations or exaggerations, as I have with my criticisms of the American export "success story" (you're still number 2 even on mechandise trade alone, so it's hardly a failure).



Ha-HA!! At last we can wholeheartedly agree on something.



Record trade and federal defecits, record non-mortgage personal debt levels, and a bubble house market (fuelled by mortgages = debt). These are definitely giving money to the US consumer, and domestic consumer demand is one of the main strengths in the US economy. So debt certainly is ONE of the reasonds for the strong US economy, and one that will HAVE to stop sooner or later.

And what other factor is more important? (I'd could ask the same about the British economy, 'cos we're in the same situation, only less so)

American productivity growth is great, for sure, but it has the same self-limiting effects as German wages; it's based at least as much on longer working hours as on investment in automation and training, and there are only 24 hours in a day.



Yes, I know, that why I cited trademark activity, too. You can't say that isn't relevant to a discussion on trade, can you?


I don't disagree, I just couldn't find any comparative national R&D figures.



No argument that the US is leading the pack in this direction. I just wonder if it's the right direction. Who's going to make all the stuff US consumers want to buy if China has dissolves in a chaotic revolution (a remote possibility, but still a possibility)? Answer: Most likely, GERMANY.


True, but I don't think that abandoning all it's manufacturing and outsourcing it all to China so it can concentrate on software, management consultancy and moviemaking instead, as America has done (it seems), is necessarily the right way to go about it. This is what you seem to be saying.


**GASP** "you are right"?? I knew you loved me really **swoon**




Edited to fix tags. For some reason nested quotes didn't work this time
Edited to add - I give up. I can't get the quote tags to work
Edited to add - Third time lucky! Wheee!

Even if you made “generalisations” you still intended to make a point or support an argument with it. So I am not off topic or blubbering about my feelings by taking excpetion to your argument and the points and generalisations you used to exemplify it. I am disagreeing with you.

Also I don’t think I am any way near as off topic or irrelevant as you keep on reprimanding me for.
CD sales are merchandise, as is a DVD or a pill, packaged software or a book. All of which rely heavily on IP laws to be traded and sold and accounted for. I gave evidence that the US claims that 200 billion is lost because of a lack of IP laws and protections...that 200 billion surely must account for some merchandise don’t you think?



Well that is your interpretation and it was actually combat not learn that was asked. I don’t have to agree with the questions or the conclusion they make do I ? I am allowed to disagree and make an argument to support my disagreements without being considered “off topic”. Just because I don’t agree with you or the author of the debate doesn’t mean I am misinterpreting the debate or avoiding the topic.
I just dont think the US has to do anything to combat Germany’s success as I don’t feel it is aggressive in nature and as I have shown that over 60% of trade coming into the US from DE is actual trade between arms of the same company so in reality a lot of it is our own goods.

I also believe that Germany is not in a good position economically and is not practicing economic measures I would wish for the US to emulate...especially in regards to future innovation.



Yet you won’t acknowledge that a lack of IP protection effects US merchandise trade..why not? I have given examples. 97% of medicines sold in China are counterfeits. You have any idea how much the US is investing in the pharm ind currently?

Also my argument is not based on what I feel..I have offered a argument based on a lot more than just feelings.


How melodramatic. No I obviously don’t think that as I have cited the importance of FDI investments , R&D spending, high tech innovations, immigration policies for high qualified entrants, entrepreneurship etc. I don’t think in any of my postings on this debate topic I have once devalued the importance and need for innovation.



How so? You still have not really explained this. The money still comes back to the mothership. So that money in return can still be spent on R&D or capital spending etc. How is it not able to benefit Ford in America or Americans? In fact I looked Ford up she is ranked high amongst US car makers in R&D and capital investments...see for yourself..
Leaders By Sector

I am sure money gets spent in Wales or any other European region Ford is successful in too..who cares? I don’t I am happy for it. You misconstrue my debate about one of nationalism when it is one of globalism. And it is not something I feel we need or should desire to combat.



You have proof for this theory?



Germany has a lot of problems as in plural not singular. I don’t deny there are all sorts of multi -nationals..German, British, French etc. That is my point national breakdowns of trade to show how well or not well one nation produces goods or as you put ...”make goods that appeal to consumers outside their domestic market” is irrelevant and shows a distorted image. I have said several times that I feel indicators such as FDI investments, R&D, entrepreneurship, tech advancements, highly trained workforce etc. is more important to me then trade breakdown by nations.

I never questioned Germany’s trade or her success...show me where I have. I questioned her economic health and her lack of R&D spending. I never said they cheated or haven’t won..you just wildly invented those comments yourself and slapped quotation marks around them to try and make them appear authentic. Your argument here is bogus. And it was you who claimed America has failed..with no evidence of any sort to back it up.




Oh I dunno healthy employment might be one important factor, overall economic growth is another goody, healthy FDI helps, an incredibly dynamic and reactionary structure, high tech advancements, self-sufficiency...need me to go on?

Also this productivity growth in the US and the very absence of it in many EU nations is not some minor point either. It is without question one of the most prevalent differences between our economies. Productivity is important...so important that the lack of it in the EU has even the ECB complaining about it. And it is not because of longer working hours..it is because of capital investment, and R&D, mainly in the IT depts.
Well I looked at a few..some specific to particular industries and I was shocked that the discrepancies were as great as they were. I saw one example in the Pharm ind. Where the US (and the UK) more than doubled R&D spending and in DE they cut it back.

In the United States, investment in knowledge – the sum of investment in R&D, software and higher education – amounted to almost 7% of GDP in 2000, well above the share for the European Union or Japan. The OECD average was about 4.8% of GDP, of which almost half for R&D.

In 2001, OECD countries allocated about USD 645 billion (current purchasing power parity) to R&D. The United States accounted for approximately 44% of the OECD total, the European Union for 28% and Japan for 17%. R&D expenditure in the OECD area rose annually by 4.7% over 1995-2001. R&D expenditure has risen faster in the United States (5.4% a year) than in the European Union (3.7%) and Japan (2.8%).


In 2000, services accounted for about 23% of total business sector R&D in the OECD area, an increase of 8 percentage points from 1991. More than 30% of all R&D is carried out in the services sector in Norway, Denmark, Australia, Spain and the United States but less than 10% in Germany and Japan.

Direct government support for health R&D accounts for over 0.2% of GDP in the United States, substantially above the levels for the European Union and Japan.

n the OECD area, a quarter of the population aged 25-64 has completed tertiary-level education. The share is much higher in the United States (37%) and Japan (34%) than in the European Union (21%).

R&D expenditure in China grew rapidly over the past decade and in 2001 reached almost USD 60 billion. This is behind the United States (USD 282 billion) and Japan (USD 104 billion), but ahead of Germany (USD 54 billion).
source
That last one is disturbing..even China is ahead of Germany.




I would love to hear your argument on how higher R&D spending, capital investment, greater productivity levels, higher educated population, entrepreneurship is in the wrong direction for a nation.

Does this not apply for all nations?


I also wish to point out that all figures shown (sources) is in USD (American Dollar). Which brings a loss in calculation for the other nations (as they use other currenies).




Source for that?

Why is a developed country like Germany able to compete and create the largest exporting country in the world while maintaining the high wages that are supposed to be the reason we are exporting jobs?

Long term mentality, and consumers not willing to settle for anything but the best. Which drives their corporations to do so.

How does the US combat this on a large scale?

Tough question. It is not possible to change the behavior of the buyers to put pressure on the manufacturers quickly. I believe part of the equation has to do with US perceived business philosophy of you are not a success unless you make big money so the goal is not to provide a great product but a high rate of return.



In review of the other posts here are my comments:
I have to agree with Moif on everything he said and add a bit. Being an Engineer and involved in new technology products and an inventor for 20 years I think there are some fundamental problems in the USA that we just do not pay attention to.

I would agree with Yogurts statement of “Possibly by graduating engineers and training craftsmen instead of spewing out lawyers and "liberal" arts majors?”

From buckets source,

education tech… but study in different disciplines in different regions.




I do not know but how much do German CEOs make vs. USA ones.

Remember Germans have a 35 hour work week and on average the Worker with several years under their belt has a 6-8 week vacation per year. This is not the exception but the norm. so again supporting CR point he is making how do they do it and we can not.

Remember to add to Germany success in these numbers they do not have virtually any natural resources like the US to manufacture. And yet they are successful. Also they just absorbed an entire population equal to what they had and are doing spectacular from my perspective in such a short time. Imagine the USA doubling in size in a week with a third world poverty rate nation.

Thanks EricStanze for the per capita point of view….ie normalizing data. some people live in a glass house and can not see. Living on the largest per capita credit card is just plain stupid and to infer it is not a major issues is just blinder mentality. I do not understand how people can not understand that when in a global system those who are not living on a credit card are far better off.

In Julians patent proportion senerio post 23 I have a question, are those just US patents?. So their proportion of 3.84 in the USA is remarkable. Here is the data I dug up from buckets source, If you do a per capita the Japanese are kicking our rear ends and the Germans are also kicking our butts per capita.

world data

patent stats
1990 1999 2000
Germany 4112 5867 5777
Japan 9929 11726 11757
US 11165 15079 14985

Now from an engineers perspective that ships products all over the world here is my two cents. A fundamental difference I see in the attitude of the Germans, for that matter Japanese and much of Europe is they take a long term attitude in everything they do. I think bucket briefly started on this point. We in the US do not do this, a example I cite all the time is our houses, we build wood stick houses that with a lot of maintenance (many hours of our time) that last 100 years and they are slums. Germans build brick and concrete homes that last 3000 years without significant maintenance. This is a philosophy that caries through to their cars watches and so on. So is paying 50%(number to exaggerate point) more for a home that lasts 3000 years a better investment in the long run than having to condemn and tear down rebuild houses every 100 years?

You have to be kidding, right? Why in the world would someone pay significantly more for something that's going to last 3000 years rather than 100 years? What in the hell do I care if my house needs to be re-built a hundred years from now? And, at that point do I really need to know what time it is?