Why Germany is Successful

An interesting article from Richard Anderson at the BBC on the background to Germany’s current success. He explores a broad background of factors, and makes the point that copying one aspect (such as vocational education) without the others may not have the desired effect.

One point he does not make is that, over the last few years, German real pay has declined gradually. This has been done consensually (again because of the structure of German companies, where worker representatives sit on the board) in order to keep their products competitive.

The other issue for manufacturing is that employment in the sector (not production) is in decline pretty well everywhere. Workers become more expensive, even in very low wage economies, and are replaced by machines. Tim Worstall explains why at Forbes here. Clearly there are differences between standard and non standard items, and between large and small products (hence Honda build cars in Swindon).

Can or should Germany move to being a service economy? What happens to its competitiveness if the Euro fails? Discuss.

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