Fareed Zakaria published an op-ed in the Washington Post on Thanksgiving (literally and figuratively). In it, he stated that we (Americans) should not be “enamored of Germany” for maintaining its industrial base through economic reforms. Since, after all, we are in the “post-industrial, information economy”.
So, let’s consider these statements. First of all, if Germany can maintain its position as a manufacturing base for products that can’t be made with cheap (i.e. Chinese, Vietnamese, and other soon-to-be developed countries) labor, then this IS something to emulate. Because their unemployment- and our potential unemployment- rates are gravely affected by a lack of available manufacturing jobs.
There have been many laments voiced by cities/counties that thought they were getting great deals from Apple, Equinix, CoreSite. Until they realized that those “big box” locations they were promoting and enticing would have few, if any, employees. And, it’s an increased employee base that is exactly what America needs to get out and stay out of the Great Recession.
On top of this, it is unclear if we really are out of the Industrial Revolution. As I’ve reported previously, Dr. Neil Spence believes (as do many others) that we are in the third century of the Industrial Revolution, one that Germany has certainly mastered. We need to find those manufacturing niches that afford us the ability to claim the prize for globalization and trade. Biotech, pharmaceuticals, instrumentation are all places that we need to maintain our primacy. (Automobiles may even be due for a comeback!)
Yet, as Zakaria stated, there are silver linings in our Great Recession cloud. Larry Summers (former Treasury Secretary, National Economic Council Director, Harvard professor) compared the US to Japan; our housing values have tanked (value dropped by 15 to 35%), while those in Japan have precipitated by 85%. Their stock market dropped three times as much as ours, and their GDP has been halved (versus a 6% drop here). Furthermore, everyone knows that our bonds are still selling out, but Germany’s have been left wanting.
We need to change our politicians. They need to stop saying, “No new taxes”, without explaining that means the services we expect will cease. Our business behemoths need to change their compensation systems that afford CEO’s of firms not making money increases in salary. They need to stop compensating executives at rates of 25 to 250 times those of their average employees (not the lowest paid- the average compensation rate for the firm). And, if they are making money, these executives can be fairly compensated- but, if profits went up 10%, why does executive compensation go up by 100%?