> Locomotive runs out of steam
> David Gow, industrial editor
> Friday April 26, 2002, The Guardian
>
> In the five new federal states in the east, which have received the
> equivalent of 1.3 trillion marks in the past 10 years in financial
> transfers - equal to 3.5% of GDP a year - unemployment is officially
> almost 20%, productivity two-thirds of the level in the west, per
> capita GDP 60% of western output. Personal disposable income is about
> 80% of western levels.
Germany's overall performance in the 1990s was respectable, with low GDP growth balanced out by noticeable reductions in working hours (the German average workweek is around 20% lower than the comparable US level) and a marked increase in sustainability (lower energy usage, a shift to windpower, etc.). Productivity levels in the GDR were, by most accounts, anywhere from 25% to 33% of West German levels in 1990, so the productivity gains are enormous. Dresden's engineers are already producing AMD's world-beating Athlon chips. Daimler continues to produce the best cars in the world. SAP is eating Oracle's lunch. Germany continues to boast the world's second-largest machine-tools industry. Etc. etc. etc.
> Industry, big and small, is angry that the state takes 55% of GDP
> (compared with 42% in Britain). It wants the tax system simplified,
> with the top rate reduced to 35%, and the unemployed and those on
> social security benefits forced to accept lower-paid jobs or see their
> payments cut/cancelled after a strictly limited period. It wants the
> law protecting employees against dismissal changed and the power of
> unions, who have lost 4m members in 10 years, substantially reduced.
Alles Hundescheisse. The state intermediates around 50% of GDP, but that's because it manages rocksolid, secure and egalitarian health insurance, pensions, and savings schemes, whereas those lucky Americans get to experience the joys of retiring on Enron stock, dot-com-laden 401(k)s, and other lucrative schemes for enriching the few and goat-fucking the many (and don't get me started on the US health insurance system). Reducing the power of unions means slashing real wages. Funny, how the same folks who call for wage restraint want to award themselves massive stock options and bonuses for sitting in an office and re-reading Tom Peters ukases. The decline in union membership is due to the collapse of the GDR, incidentally, not an anti-union turn in German society -- the workers officially affiliated, but then the factories were closed down.
In all honesty, I've been surprised at how far and fast the EU has geared up for the 21st century, with STMicro and Nokia just busting out all over. The EU recession was even milder than the US one, the Eastern European countries were shielded nicely this time around -- EU growth rates may well hit 3.5% this year and 4% next, as the wolverine economies of Eastern Europe start their take-off.
-- Dennis