Germany’s Economy Shows Government “Interference” Works

This post originally appeared at Campaign for America’s Future (CAF) at their Blog for OurFuture as part of the Making It In America project. I am a Fellow with CAF.
Can we compete with China’s wages? Does government interference and regulation hold us back? Are our unions keeping us from being competitive? Do we need to lower our standard of living in a race to the bottom? You might be surprised to learn that Germany pays higher wages, has strong unions, has much more government involvement and is doing better as a result. Conclusion: our wages, unions and government are not the problem, they are the solution.
In July I wrote about something Harold Meyerson wrote about Germany and China and manufacturing and recession.

Germany is NOT a low-wage country. But they weathered the recession. They value manufacturing and have national policies to bolster their manufacturers.

Today I want to write about something Harold Meyerson wrote about Germany and manufacturing and the recession. In Save the economy by keeping jobs at home, Meyerson writes,

Hourly manufacturing compensation (wages plus benefits) was $48 in Germany in 2008 – the most recent year surveyed by the Bureau of Labor Statistics – while it was $32 in the United States. Yet Germany is an export giant, while we are the colossus of imports.

Please go read Meyerson’s entire piece.
In Germany, workers also get six weeks vacation – by law, federally mandated, a right. They get health care, university, child care and pensions and as a result they have higher productivity. In Germany, the government requires worker representatives to hold seats on the boards of directors of companies, depending on the number of workers. Government-funded research and vocational training, and policies to retain skilled workers bring another competitive advantage. Germany values manufacturing and the government has an industrial policy. The government is currently helping promote green manufacturing, for example.
The result of all this government interference is that Germany’s export-oriented manufacturing economy recovered from the recession and is doing OK, and their workers are paid well and have great benefits.
Our government is supposed to be of, by and for the people. But today in the U.S. it is considered “socialistic” to talk about these things because it violates the dominant conservative “free market” ideology that is designed to enrich a few at the expense of the rest of us. If we try to talk about a national industrial/economic policy, it is derided with such slogans as “government interference” or “picking winners and losers.” If the discussion is allowed it very quickly will move to the dominance of fossil fuels and the other industries that are holding us back but have a lock on influence over the government. If we talk about taking the burden of health care off of the people and businesses, the giant insurance companies beat it back, calling it “socialized medicine,” to keep us from doing something about how their profits are draining the rest of the economy. And imagine the furor that would result if anyone even suggested mandating worker representatives on boards of directors so the companies take the interests of workers and communities into account!
Our adherence to conservative free-market ideology is clearly holding our country back. The ideology is designed to transfer wealth from the public to a very few, and hold the lead of the already-dominant. This is killing market innovation and it is destroying our competitiveness and standard of living. We should be looking at what works for the country instead of what keeps the few at the top at the top.
Just Who Is Interfering With Our System?
We need to develop a national economic/industrial policy to help us with our competitive position relative to the rest of the world. We need Medicare-For-All to lower the burden on our people and companies. We need to reorient our labor policies to bring better wages and benefits to our people. We need to restore a level playing field on which innovative smaller companies can complete with the giants—who are interfering with the system while complaining that the attempts by We, the People to stop them are interfering with our system.
Later we can talk about whether China’s government interferes with its businesses, and how their economic growth is doing compared to ours.
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