The US Compared To Germany

David Leonhardt has an interesting column comparing the performance of the US and German economies.

Germany has been a frequent cudgel in recent fights over the American economy. When Germany has grown faster than the United States, stimulus skeptics like to point across the Atlantic Ocean and say that austerity works. When it has grown more slowly, people who think the American stimulus made a big difference — including me — return the favor.

But the full story is more interesting than any caricature. In the last decade, Germany has succeeded in some important ways that the United States has not. The lessons aren’t simply liberal or conservative. They are both.

And yet another lesson is that statistics must be viewed with caution.  For example:

The results are intriguing. After performing worse than the American economy for years, the German economy has grown faster since the middle of last decade. (It did better than our economy before the crisis and has endured the crisis about equally.) Just as important, most Germans have fared much better than most Americans, because the bounty of their growth has not been concentrated among a small slice of the affluent.

Inflation-adjusted average hourly pay has risen almost 30 percent since 1985 in Germany, the kind of gains American workers have not enjoyed since the ’50s and ’60s. In this country, hourly pay has risen a scant 6 percent since 1985.

Interesting, but!  Mr. Leonhardt is kind enough to link to the relevant graph at his blog.  A quick glance indicates that 1985 is an odd starting point: the US was just a few years from the stock market crash and the S&L debacle, while Germany was about to reunify.

My eyeballometric estimate is that if he had chosen 1996 as the starting point (fifteen years ago, so we get a bit of the Clinton boom but also the Bush Dark Ages), he would have determined that US average hourly pay had risen by 10% (from an indexed level of 95 to 105), while it had risen by only 7% in Germany (122 to 130 on his index).  Put another way, most of the German wage surge was from 1985 to 1995, so any lessons about income inequality ought to be drawn from that period.

I should note that I have no idea whether these indices reflect take home pay or total compenation, including health care.  And Mr. Leonhardt's entire discussion of immigration policy in the two countries is this:

I’m not saying that the United States should want to become Germany. Americans remain considerably richer. We have the innovative companies — Wal-Mart, Google, Apple, Facebook, Twitter — that make other countries swoon. We remain the world’s immigration Mecca.

Economists have estimated that if the US was a bit less of a Mecca, especially for unskilled workers, then hourly earnings would be higher.  Even Paul Krugman has stared at that implication of the liberal embrace of open borders for the poor.

Comments

[narciso]

Unrelated, but not really:

http://www.bloomberg.com/news/2011-06-06/what-paul-krugman-misses-about-1937-redux-echoes.html

[BR]

What Clinton boom? He was riding on the success of Reagan and Bush I. A state is like a large ship, takes a while to turn. Dems falsely claim their Republican predecessors' wins for their own, mess things up, and then incoming Republicans are blamed for their messes. Obama's mess is going to take a lot of cleanup.

[jimmyk]

In Narciso's link, Shlaes is right, but she glosses over the big difference between raising taxes and cutting spending. To Keynesians they are much the same, but in the real world, raising taxes has incentive effects, and also signals higher future spending (in other words, it makes temporary spending increases permanent).

[Steve C.]

Incomplete analysis.
Left out:
Impact of reunification
Housing is a small part of the German economy
Unions actually sit on corporate boards (fox meet hen house)
High value added taxes do not apply to exports
The German banks are a ticking time bomb (see Greece, Ireland, Spain and Portugal bad loans) and will make our banking crisis look like a hiccup!

[imaginer]

Imagine our economy if Germany paid for our national security!

[DebinNC]

This blogger in Germany says most houses and apartments there don't have kitchens. Sounds preposterous, but, if true, I imagine Germans spend much more to feed themselves than we do.

[Melinda Romanoff]

DebinNC-

Usually they don't, most are of the knock down type and go with you on your move.

[DebinNC]

So they have kitchens, but the units aren't built-in. Well, that makes sense. Thanks, mel.

[windansea]

This blogger in Germany says most houses and apartments there don't have kitchens. Sounds preposterous, but, if true, I imagine Germans spend much more to feed themselves than we do.

in my visits there with several german families, they had real kitchens, they eat HUGE breakfasts (whole table covered with all kinds of food, not just typical breakfast items) and they make some of the best cakes and desserts in the world

[Abadman]

A lot do not have closets either. I think it has something to do with how the German's tax houses

[daddy]

Speaking of comparing German's and Americans:

Piers Morgan Asks Ann Coulter if Tea Party is Modern Version of Hitler's Followers

According to the story she stuck it down his throat.

And of course Adolf Hitler has now weighed in on WeinerGate.

[Sara (Pal2Pal)]

Did she mean they don't have a kitchen or that they are sold with kitchens? I watch "Househunter's International" and they often show apts where the previous owners have taken the kitchen with them. Seems weird to us, but apparently you can buy full kitchens in these European countries to install and then easily uninstall to take. I've seen it in France, Italy, Germany and a few others.

I always think it strange, for instance, that in a country such as France, famous for its fine cooking, they have kitchens the size of a breadbox. Small appliances such as stove and tiny undercounter refrigs, barely any counter space, and sometimes only open shelves for storage. And they all seem to put their laundry combo washer/dryer in the kitchen, something I think I would hate.

[Sara (Pal2Pal)]

should read = "sold WITHOUT kitchens"

[daddy]

Without Kitchens?

So you're saying that if I relocated to Cologne I'd have to have every meal in the neighborhood Biergarten or the Brauhaus?

Pack 'er up Momma. We're moving to Deutschland!

Auf wiedersehen:)

[Sara (Pal2Pal)]

Daddy: Yes, I've seen brand new construction where the house is beautiful and when you get to the kitchen area, nada. Piping and wiring are there, but nothing else. They usually quote from 10-20,000 Euros extra to purchase the kitchen install.

[Clarice]

The Hill:
Exxon Mobil said Wednesday it has discovered an estimated 700 million barrels of oil equivalent at a deepwater well off the Louisiana coast, a major find that a top House Republican argued should push the administration to speed up offshore permitting. "This is one of the largest discoveries in the Gulf of Mexico in the last decade,” Exxon Mobil Exploration Company President Steve Greenlee said in a statement. Exxon Mobil made the discovery after the Interior Department’s Bureau of Ocean Energy Management, Regulation and Enforcement (BOEMRE) approved an application in March allowing the company to resume exploratory drilling. Drilling at...

[cathyf]

daddy, I followed all of the links to all of the pictures of places you went through on your dog walk. I can't believe that either you or your womenfolk would dream of leaving!

[Melinda Romanoff]

cathyf-

Watering the feet of your children in fertile soil involves chance. My parents did it, as did their parents, when the chance arose, one by travel, the other by ROTC. Other elders were American Expeditionary, but that's another tale.

[Captain Hate]

Speaking of comparing German's and Americans:

4th quarter scoring through 4 games: Dirk 44, LeBron 9.

[Rick Ballard]

"Exxon Mobil made the discovery after the Interior Department’s Bureau of Ocean Energy Management, Regulation and Enforcement (BOEMRE) approved an application in March allowing the company to resume exploratory drilling."

Hardly. XOM made the first strike in this field in 2009 , hit very good pay in 2010 and this well confirms the extent of the play within the XOM lease blocks. Chevron resumed drilling in the Keathly Canyon as well. They're going to 29,000 feet - I believe that's subsalt territory and an entirely different stratum than the XOM well. Chevron poked its first hole in that on in 2008.

[Melinda Romanoff]

Rick-

Food for thought.

Not that I've seen this before, or anything...

[daddy]

Thanks cathyf,

Almost everyday when I'm home and decently rested I go off on walks of similar beauty with the dogs. You really can't go to an ugly place in the state.

Today the pups and I did Kincaid, a beautiful big forested Coastal Park near the airport. We did it as a sort of easy relaxing walk compared to yesterday, and the ground was soft grass and dirt and easy on their footpads. Here's a couple quick shots to give you an idea:

Pic 1.

2. From the Bluff on the Parks coastline

3. various shots

4. Little Campbell Lake in the Park

But the funny thing is that every time I come home after a long overseas trip and am struck again at the beauty of the place and can't stop exclaiming such, Momma and the girls all laugh at me and tell me to shut up already, and that I wouldn't be saying how beautiful it is if I didn't have the luxury of leaving so often. Its a big family joke now.

[Agent J. (formally known as "J"..]

daddy I so envy anyone that is in Alaska..In 1956 I was on Okinawa in the Air Force, the Rapcon at Kadena. Was shipping back state side and I wanted to go to Alaska. Could not do that then, was considered overseas to overseas..Tried many times and many different ways while in the FAA..never made it until 1989, two week work assignment..ended up working and staying for 23 days..from July 21 until can not remember when I came home..
Only my banker knows how much fun I had.Until you do Alaska in the summertime, you never know that you can do so much on so little sleep.. Still hope to get back..Your pictures look like the ones I have enlarged and hanging in my bed room..

[daddy]

Agent J,

Glad you finally made it here----and at the proper time of year!

I've got my brother and his wife and kids coming up from NC for the first time in July, so I've got the bikes all tuned up, and have been testing out different hikes (easy, medium, difficult) that I can take them on depending on who's tagging along and what their physical condition is. It's been great fun. Tomorrow we'll probably do the Turnagain Arm Trail which starts just 5 minutes down the road from our house. This is it. The signs say it goes 109 miles down to Seward, but I've only down different chunks of it for the 30 miles down towards Portage. I suspect the view of the highway down below heading towards Girdwood along the Turnagain Arm is familiar to you. Pup's love it too.

[sbw]

Mel, as with any automated system, circuit breakers are in order. Daleks can return.

[Agent J. (formally known as "J"..]

daddy, thanks for the view, I clicked the picture, as a friend of mine says "my eyes are sweating"..

[cathyf]

Before we visited Alaska my brother found some quote to the effect that you should only visit Alaska as an old man, because once you have been there it will ruin you for everywhere else for the rest of your life.

[Agent J. (formally known as "J"..]

cathyf--I have heard that, also; You can never leave Alaska..

[lonetown]

Its not Germany but in 2001, wages for engineers in Holland were 60% of their US counterparts. That is in salary, Holland has more vacation.