(1928) How Germany became Europe’s richest country!? | SECRETS REVEALED... 😮

Introduction

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Economic Context

• The U.S. is experiencing economic sclerosis, showing inefficiency in institutions.

• Comparison with successful economies like Japan and Germany.

Germany's Economic History

• The term "eurosclerosis" was coined by a German economist, referring to slow growth from the 1980s to 1990s.

• Germany faced high unemployment rates over 10% even during U.S. economic booms.

• Post-global financial crisis, Germany's unemployment decreased, labor participation improved, and wages increased.

Current Challenges in Germany

• Low fertility rate (1.38 children per woman), resulting in a shrinking workforce supporting retirees.

• Facing the global productivity slowdown similar to other developed countries.

• Challenges with automation, with less industrial robots than Japan.

Wage Growth vs. Automation

• Despite threats to jobs from robots, German wages have consistently risen alongside employment.

Factors Contributing to Germany’s Success

• Large state sector and generous welfare spending.

• Higher unionization rates compared to the U.S.

• Limited deregulation, with no major shifts post-2008 financial crisis.

The Role of Exports

• Significant increase in exports, constituting about 50% of Germany’s GDP despite a small share of global output.

• Germany's trade surplus is notable; it exports more than imports.

• Weak Euro due to Eurozone economic slumps enhances export competitiveness.

Collective Bargaining System

• Wages in Germany are set at the industry and regional level via collective bargaining.

• Unions' decision to restrain wages leads to lower production costs, boosting exports.

• Future wage expectations influence companies’ decisions on investments.

Possible Concerns

• Germany's competitiveness may come at the expense of slower-growing Eurozone countries.

• Potential issues with sustainability of trade surplus in the long run.

Conclusion

• Germany’s approach may offer valuable lessons for countries with trade deficits like the U.S.

• Encouraged reflection on collective bargaining advantages.

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