As a half English, half German who's had a fair bit of professional contact with the US, I'd argue the main difference between the US and Germany is short term vs. long term thinking
The US is brilliant at the short term, as characterized by it's sales culture; the mentality of sell first, build second is extremely effective in allowing some forms of innovation, capturing market share fast and eliminating certain forms of waste. This of course was traditionally offset by attracting talent worldwide, such as academics and engineers, to immigrate to the US
By contrast Germans are famous for their engineering. It's much more a build first, sell second approach that's characterized by long term thinking and planning. Socially that's also reflected education where everyone has a chance, irrespective of your parents income - having a well educated populace is a huge asset and that's seen as a long term investment.
All that said, Germany's economy may be less wonderful than it seems. While the US seems to solve any economic issues by "printing money", Germany props themselves up with exports - that a country of just 80 million people is the world's 3rd largest exporter ( http://en.wikipedia.org/wiki/List_of_countries_by_exports ) is kinda... strange and makes we wonder if something doesn't quite add up?
Having worked for a couple of years in Germany, one thing that struck me is taxes came to almost 50% of my salary. Another impression was my generation in Germany - currently in their 30's - wasn't very motivated toward their own careers. That might not entirely be a bad thing - less of a rat race - but it comes across as a generation that doesn't really know what it's purpose is.
So I have a kind of gut feeling that the German focus on exports is done at the cost of "self neglect".
Taxes in the US aren't as low as some are inclined to believe (or as high as others--).
As a programmer renting in NYC with a big salary and no investment income, Federal, State, and NYC taxes come to about 44%-46% of my income -- maybe 42%-44% since I tend to get a refund. Once you add in health care costs (both employee and employer contributions), it's probably pretty darn close to 50%.
Individual tax rates can vary considerably, but overall taxation is only about 2/3 as high in the US as in Germany, counting all taxes and sources. Germany's tax revenue is about 41% of the country's GDP, while all levels of U.S. government have tax revenue adding to only 27%: http://en.wikipedia.org/wiki/List_of_countries_by_tax_revenu... (on Wikipedia but just reproducing a Heritage Foundation data set).
My own tax rates when I lived in the U.S. were hilariously low, but then I didn't make a lot of money either, and lived in Texas for part of the time. A household making even $200k pays only 24% in federal taxes if filing singly, or 19% if filing jointly, and that's assuming they take nothing but the standard deduction and none of it is capital gains, so it's quite possible for that to be even lower.
I do agree it's important to compare like-to-like. For example, my Danish taxes now are still higher than my US taxes would be for the same income, but not as much higher once you take into account that in the US I'd have to buy health insurance separately.
I've always argued this about NYC compared to the EU. Taxes hit you hard living. But as many people would guess, NYC is filled with bankers with deep pockets and thus the means to skirt around the tax rate.
That's correct - should have been clearer - was keeping it short. By "taxes" I mean all compulsory payments I was required to make, including health, unemployment etc.
Germany's lower school system of deciding at age 10 whether you go to a school (Gymnasium) that allows you go to college later or not is definitely a big issue.
But when I went to college in Germany 10 years ago in my hometown, the cost was minimal (< 300 Euros per semester including unlimited public transport). Also there are regulated student loans (Bafoeg) that less affluent students can take advantage of.
The point is that if you come from a low income background, there is a very good chance you will never make it to university, because you will probably never quite make it to gymnasium (or through it) to begin with.
The fact is that the school is divided very early in way where you are going to college and others where you'll just learn a more simple job (mechanics, cook...). So at a young age, teachers decide where you are going to go. Studies show that this is very dependant on the social class of your parents. Teacher almost never send a surgeon's son to a no-college school. So social mobility is prevented that way, instead of letting the children decide when they are around 18 and more aware of their own capacities and wishes. Having your life determined at 10 is quite harsh.
Then, there is the fact that school is over at around 2PM, letting the afternoon to either slack off or learn piano and classical dance, and do homework. That works only well for families which are well educated, poor and immigrant families don't really know what to begin with.
It highly depends in which state (Bundesland) you live. The most states have don't have those fees anymore, only 3 of 16 states have them as far as I know. The height of those fees is about 500 € per half-year.
Independent to those fees (which are called Studiengebühr) there are other fees which have to be paid in all universities: It is called "Semesterbeitrag" and is about 150 € per half-year (average guessed on my experience ;-) ). It is used to pay public-transport and such stuff.
I don't understand what you mean. Why is this different from saying "the shop owner props herself up by selling to other people in town?", only at an international level?
Because it seems unsustainable. Sooner or later international trade has to reach an equilibrium where everyone exports as much as they import (just as everyone in town must ultimately sell the same amount of value as they buy). Obviously someone who's buying more than they're selling has a problem, since sooner or later they'll run out. But someone who's selling more than they're buying should not expect this to go on forever either, and if their internal economy depends on a constant influx of money from outside then there will be trouble when it stops. To stretch the analogy to its limits, a shopkeeper who's got in the habit of having the extra money on hand from being able to sell more than they buy in the market is living dangerously.
(More specifically for Germany I'd say there's a risk of a deflationary spiral - if exports fall then companies will reduce domestic prices and take losses (leading to reduced pay in real terms). Consumers see that prices and salaries are falling, so they hold onto their money and spend less, which only makes it worse).
But you're right in that it's not so much having high exports that's a problem, as the risk of seeing a sudden drop in your exports.
>> international trade has to reach an equilibrium where everyone exports as much as they import (just as everyone in town must ultimately sell the same amount of value as they buy)
I'm not sure that must or will happen. Maybe the US will decline as a German customer, but India will step up, for example. Germany might be able to go on relying on exports for ever.
And a wise shopkeeper brings in more than they earn for decades, saving up for when their is no income (hard times or retirement).
Dependance on exports makes Germany vulnerable to worldwide financial changes, but dependance on domestic sales makes them vulnerable to domestic crises, like a falling birth rate. Pick your poison. I'm not sure the choice is very clear. Although maybe the answer is "spread your risks by having a balance," which I suppose was your original point.
>I'm not sure that must or will happen. Maybe the US will decline as a German customer, but India will step up, for example. Germany might be able to go on relying on exports for ever.
The thing is, money can't really be created or destroyed, because it's just a marker for wealth. If country X is paying Germany money for its exports, that money is "really" a promise of future goods/labour from country X or someone they trade with; it only really works if it's "redeemed" from the same country in the end. If the trades were denominated in some scarce resource like gold, sooner or later all the gold would end up in Germany; likewise trading in euros within the eurozone.
(Obviously with fiat money if country X is paying in their own currency (let's say shillings) then they can continue to print more, but that devalues everyone's shillings (including the ones that have now made their way into German pension funds), German companies start charging more and more for their exports so the shilling inflates faster and faster and it all ends very badly for country X.)
((In reality, of course, neither of these extreme scenarios usually comes to pass. What would tend to happen is that as more of the international money supply is concentrated in Germany, other countries can't afford to pay as much for German exports, while Germany has more money available to spend on imports, and the market adjusts so imports and exports balance out))
>And a wise shopkeeper brings in more than they earn for decades, saving up for when their is no income (hard times or retirement).
True, but I think the analogy breaks down here. Thought if Germany were to "go into retirement" as a country the effects on the global financial system would be... interesting to say the least.
The US is brilliant at the short term, as characterized by it's sales culture; the mentality of sell first, build second is extremely effective in allowing some forms of innovation, capturing market share fast and eliminating certain forms of waste. This of course was traditionally offset by attracting talent worldwide, such as academics and engineers, to immigrate to the US
By contrast Germans are famous for their engineering. It's much more a build first, sell second approach that's characterized by long term thinking and planning. Socially that's also reflected education where everyone has a chance, irrespective of your parents income - having a well educated populace is a huge asset and that's seen as a long term investment.
All that said, Germany's economy may be less wonderful than it seems. While the US seems to solve any economic issues by "printing money", Germany props themselves up with exports - that a country of just 80 million people is the world's 3rd largest exporter ( http://en.wikipedia.org/wiki/List_of_countries_by_exports ) is kinda... strange and makes we wonder if something doesn't quite add up?
Having worked for a couple of years in Germany, one thing that struck me is taxes came to almost 50% of my salary. Another impression was my generation in Germany - currently in their 30's - wasn't very motivated toward their own careers. That might not entirely be a bad thing - less of a rat race - but it comes across as a generation that doesn't really know what it's purpose is.
So I have a kind of gut feeling that the German focus on exports is done at the cost of "self neglect".