What is Germany doing right that we're not? And why?

[Yipper]

Murph7355 said:

Yipper said:

... mean 60-80% of the UK is little richer than Greece or Spain.

I never really understand that sort of stato...

Measured in GDP per head PPP (the best benchmark of a country's wealth):

Spain = $34,000
Liverpool = $29,000
Greece = $27,000
Wales = $26,000
Essex = $25,000
Glasgow = $25,000
Cornwall = $20,000

[Digga]

Yipper said:

Murph7355 said:

Yipper said:

... mean 60-80% of the UK is little richer than Greece or Spain.

I never really understand that sort of stato...

Measured in GDP per head PPP (the best benchmark of a country's wealth):

Spain = $34,000
Liverpool = $29,000
Greece = $27,000
Wales = $26,000
Essex = $25,000
Glasgow = $25,000
Cornwall = $20,000

Hang on. Spain only got to that figure through excessive spending and government debt and it is not at $34,000 now:

[Murph7355]

Yipper said:

Measured in GDP per head PPP (the best benchmark of a country's wealth):

Spain = $34,000
Liverpool = $29,000
Greece = $27,000
Wales = $26,000
Essex = $25,000
Glasgow = $25,000
Cornwall = $20,000

Aside from Digga's comment. "Spain" also includes Barcelona and Madrid which will disproportionately up the ante on that metric (incidentally, I disagree about GDP per head PPP being the "best" metric to note a country's wealth. It's one of many and is more an indicator of "productivity". Which is not the same as pure "wealth").

So you're not comparing apples with apples.

Of course different regions/cities in the country have differing values on a number of metrics. Show me a country of any size that does not. But comparing a more granular stat like that with a broader one from another country is a nonsense for anything other than political posturing.

For example (courtesy of Google/Wiki):

Mecklenburg-Vorpommern = $26,379
Saxony-Anhalt = $26,685
Thuringia = $27,682 (updated)
Brandenburg = $27,818
Saxony = $29,165
Schleswig-Holstein = $31,641

So about a third of German states are worse than Spain and a sixth worse than Greece...

All former East German towns are under Spain's marker I believe. And even Berlin isn't that healthy depending on where you look.

So what IS Germany doing right if some significant areas are "more poor than Spain" despite them being able to make hay with a currency at Spain and Greece's expense (notionally - I accept those countries have many other issues!)

Edited by Murph7355 on Friday 24th February 10:54

[Pesty]

jjlynn27 said:

loafer123 said:

jjlynn27 said:

Pesty said:

Not paying their fare share to NATO helps

LOL. You are actually serious?

To be fair, they do spend a low proportion of their GDP on defence, and rely upon others based in their country to bolster their defence.

You are, of course, right. They spent 1.22% of GDP on defence. In return, they've balanced their books.
So, as per thread title, they are doing it right. They seem to be spending money on what matters to their citizens. They should up their spending to 2% by 2024. No obligation to do it before then.

So we went straight from "lol are you actually serious" to well yes actually not spending money on NATO and spending it elsewhere helps you are of course right.

Mockery to total agreement in the very next post. Well done.

[danllama]

Pesty said:

jjlynn27 said:

loafer123 said:

jjlynn27 said:

Pesty said:

Not paying their fare share to NATO helps

LOL. You are actually serious?

To be fair, they do spend a low proportion of their GDP on defence, and rely upon others based in their country to bolster their defence.

You are, of course, right. They spent 1.22% of GDP on defence. In return, they've balanced their books.
So, as per thread title, they are doing it right. They seem to be spending money on what matters to their citizens. They should up their spending to 2% by 2024. No obligation to do it before then.

So we went straight from "lol are you actually serious" to well yes actually not spending money on NATO and spending it elsewhere helps you are of course right.

Mockery to total agreement in the very next post. Well done.

Well played.

[jjlynn27]

Pesty said:

jjlynn27 said:

loafer123 said:

jjlynn27 said:

Pesty said:

Not paying their fare share to NATO helps

LOL. You are actually serious?

To be fair, they do spend a low proportion of their GDP on defence, and rely upon others based in their country to bolster their defence.

You are, of course, right. They spent 1.22% of GDP on defence. In return, they've balanced their books.
So, as per thread title, they are doing it right. They seem to be spending money on what matters to their citizens. They should up their spending to 2% by 2024. No obligation to do it before then.

So we went straight from "lol are you actually serious" to well yes actually not spending money on NATO and spending it elsewhere helps you are of course right.

Mockery to total agreement in the very next post. Well done.

'Fare' share is not the same as a low proportion. Not even close. They are obliged to spend 2% from 2024, not before, which makes your assessment that they are not paying 'fare' share rather ridiculous.

[Tango13]

paul789 said:

By any objective measure, they have done everything better than us. However, having lived there for years and having made a lot of friends there, I had to move back.

There is something irresistible about the chaos here. Something about the soft power we have here. There was something empty about life in Germany. Maybe it was just my peculiar take on things.

Or did they make you leave because you wouldn't grow a mullet and wear leather trousers?

[stuckmojo]

Murph7355 said:

Aside from Digga's comment. "Spain" also includes Barcelona and Madrid which will disproportionately up the ante on that metric (incidentally, I disagree about GDP per head PPP being the "best" metric to note a country's wealth. It's one of many and is more an indicator of "productivity". Which is not the same as pure "wealth").

So you're not comparing apples with apples.

Of course different regions/cities in the country have differing values on a number of metrics. Show me a country of any size that does not. But comparing a more granular stat like that with a broader one from another country is a nonsense for anything other than political posturing.

For example (courtesy of Google/Wiki):

Mecklenburg-Vorpommern = $26,379
Saxony-Anhalt = $26,685
Thuringia = $27,682 (updated)
Brandenburg = $27,818
Saxony = $29,165
Schleswig-Holstein = $31,641

So about a third of German states are worse than Spain and a sixth worse than Greece...

All former East German towns are under Spain's marker I believe. And even Berlin isn't that healthy depending on where you look.

So what IS Germany doing right if some significant areas are "more poor than Spain" despite them being able to make hay with a currency at Spain and Greece's expense (notionally - I accept those countries have many other issues!)

Edited by Murph7355 on Friday 24th February 10:54

they keep local living costs low, don't live beyond their means and don't have a completely irrationally government sponsored housing bubble to stifle all the wealth creation and quality of life.

[Murph7355]

stuckmojo said:

they keep local living costs low, don't live beyond their means and don't have a completely irrationally government sponsored housing bubble to stifle all the wealth creation and quality of life.

You started off OK...

The main point I was addressing in that post was the relative wealth of regions versus countries tries btw.

[AlexC1981]

There is little difference between GB and Germany in my experience. Not sure what all the fuss is about.

[pim]

There is little difference between France UK and Germany.

Pockets of wealth and poverty what I have seen.

Scandinavian Countries including the Netherlands above them regarding overall wealth.Driving through Belgian with the poor road systems to Holland you can see the difference.Houses are cheaper to buy in Belgian.In London beggars in one street.Porches parked in the next.>;)The world is a strange place.

[egomeister]

From my observations, a lot of the things Germany do well have been covered in replies above.

The key one I've seen is the management attitude in business. There is much better long term strategy and investment than I've experienced in the UK - the German approach seems to be one of slowly building something whereas here there is a focus on this years bottom line and forget the future. On the whole German management seems to recognise that it is there to plan long term, and facilitate work short term. An example of this would be a colleague who requested a certain tool (relatively cheap) that would make his life easier. In Germany the management took the request, saw it was reasonable and he had the tool in days. In the UK, similar requests are met with "it's not in this years budget..." - the tool is never bought and efficiencies never realised.

Another interesting difference was in education. A colleague who had studied in both countries said the style of teaching was very different. In Germany he found there was much more emphasis on acquiring knowledge but in the UK it was more cramming for an exam. He said it wasn't uncommon for students to go back retake modules at a later date if they felt they could then get a better result, not just if they failed.

The points made earlier about NATO spend are very valid - I'm in agreement with Trump that NATO countries need to pull their weight. If you join a club where the agreement is a 2% GDP spend then that's what you should do. The cumulative benefit to Germany of underspending is huge, and facilitates their spend in other areas. Similarly the underpriced Euro has been a great benefit for German industry. Both of these have helped them greatly in the good time, but leave the country rather exposed if things turn...

[paul789]

Tango13 said:

paul789 said:

By any objective measure, they have done everything better than us. However, having lived there for years and having made a lot of friends there, I had to move back.

There is something irresistible about the chaos here. Something about the soft power we have here. There was something empty about life in Germany. Maybe it was just my peculiar take on things.

Or did they make you leave because you wouldn't grow a mullet and wear leather trousers?

They did mention that I was insufficiently tiefergelegt, Kollege

[Carl_Manchester]

Well, here is what I think.

Break down:

Germany: 69% Services 25% manufacturing, 4.5% Construction, <2% everything else.

U.K: 78.4% Services, 14.5% Manufacturing, 6.4% Construction, <1% Everything else.

Lets not forget, manufacturing is a high-volume, low-margin activity, the ultimate goal should always be to have as near to 100% services with high output per person, on the basis that upper levels of services industries generally are higher profit, lower polluting and less prone to automation and so you can afford to reduce taxes.

The more successful the economy, the lower the taxes will then become and ultimately, it becomes a self sustaining near utopia.

What is also key is the environment which allows a services based economy to thrive and what favours manufacturing.

The conditions required for a boom in the German economy are a single zero tariff market for goods, low interest rates (for capital intensive activities and also for things such as car loans to end consumers), cheap supply of labour (no restrictions) to work in factories and very low inflation/property prices to house and feed the labour and critically, a cheap currency. These factors are all interlinked, it is hard to keep them all in alignment.

i.e. If you import 2 million people, you would assume that whilst GDP increases, inflation increases non?

The conditions required for a boom in the U.K economy are a single zero tariff market for services, liberal regulation, moderate interest rates, moderate currency value, a selective immigration policy which allows for large numbers of high output individuals into the country to work in the services industry, low inflation and property prices which allow consumers to spend a higher proportion of their income on goods and services via retail.

Germany has created a near perfect environment to grow itself at the cost of the remainder of the E.U member states and the people who already lived in Germany. The single market, zero tariff approach for goods and not for services, whilst strangling London with increased regulation is a master stroke. Whatever you may think about their immigration policy, it feeds their industrial machine with whats required to keep it growing. What is also key is that if Germany was not part of the Euro, their goods would be at least 20% more expensive than they are now.

The U.K had a near perfect environment to grow itself until 2004 and then threw it into the bin by growing the economy by simply importing large amounts of low-skilled labour and pretending to be Germany. It was never going to work.

That said, some moderate de-regulation of London by detaching it from the E.U, house building, strangling the immigration numbers and a slow increase of interest rates should be enough to start tipping the hand back in the U.K's favour.

All the talk of manufacturing increase is a nonsense, if anything, its the Germans that are more finely balanced as their environment for growth requires many more factors than the U.K does.

[Otispunkmeyer]

Carl_Manchester said:

Well, here is what I think.

Break down:

Germany: 69% Services 25% manufacturing, 4.5% Construction, <2% everything else.

U.K: 78.4% Services, 14.5% Manufacturing, 6.4% Construction, <1% Everything else.

Lets not forget, manufacturing is a high-volume, low-margin activity, the ultimate goal should always be to have as near to 100% services with high output per person, on the basis that upper levels of services industries generally are higher profit, lower polluting and less prone to automation and so you can afford to reduce taxes.

The more successful the economy, the lower the taxes will then become and ultimately, it becomes a self sustaining near utopia.

What is also key is the environment which allows a services based economy to thrive and what favours manufacturing.

The conditions required for a boom in the German economy are a single zero tariff market for goods, low interest rates (for capital intensive activities and also for things such as car loans to end consumers), cheap supply of labour (no restrictions) to work in factories and very low inflation/property prices to house and feed the labour and critically, a cheap currency. These factors are all interlinked, it is hard to keep them all in alignment.

i.e. If you import 2 million people, you would assume that whilst GDP increases, inflation increases non?

The conditions required for a boom in the U.K economy are a single zero tariff market for services, liberal regulation, moderate interest rates, moderate currency value, a selective immigration policy which allows for large numbers of high output individuals into the country to work in the services industry, low inflation and property prices which allow consumers to spend a higher proportion of their income on goods and services via retail.

Germany has created a near perfect environment to grow itself at the cost of the remainder of the E.U member states and the people who already lived in Germany. The single market, zero tariff approach for goods and not for services, whilst strangling London with increased regulation is a master stroke. Whatever you may think about their immigration policy, it feeds their industrial machine with whats required to keep it growing. What is also key is that if Germany was not part of the Euro, their goods would be at least 20% more expensive than they are now.

The U.K had a near perfect environment to grow itself until 2004 and then threw it into the bin by growing the economy by simply importing large amounts of low-skilled labour and pretending to be Germany. It was never going to work.

That said, some moderate de-regulation of London by detaching it from the E.U, house building, strangling the immigration numbers and a slow increase of interest rates should be enough to start tipping the hand back in the U.K's favour.

All the talk of manufacturing increase is a nonsense, if anything, its the Germans that are more finely balanced as their environment for growth requires many more factors than the U.K does.

High volume, low margin?

Not in Germany. A lot of their stuff is high margin...Volume or not. Or at least the stuff I was involved with was. It's German engineering they said. Worth the premium. Supposedly.

Edited by Otispunkmeyer on Sunday 26th February 14:34

[Carl_Manchester]

Otispunkmeyer said:

High volume, low margin?

Not in Germany. A lot of their stuff is high margin...Volume or not. Or at least the stuff I was involved with was.

Sorry Otispunkmeyer, this is simply not true in the developed western world and here is why.

The main problem with the German manufacturing industry (and by association the U.K) is that to extract a good per unit gross profit, the amount of money required to build, run and maintain facilities that can produce such products is, in the main, eats so much of your per unit gross that you end up with a low net.

And this is why Services will almost always trump making things in our economies, net margin for services can hit almost 20%, with manufacturing you are doing really well if you can hit 5% and this is not including the other aspects such as the pollution, natural resources requirements and the energy intensive nature of German industry.

This is why, unless there is a trade war or an actual war, there will never be a big comeback for U.K manufacturing outside niche markets, it just does not make financial sense to do so, it is not backed up by the numbers.

[Digga]

Carl_Manchester said:

Germany has created a near perfect environment to grow itself at the cost of the remainder of the E.U member states and the people who already lived in Germany.

The excellent link posted by Fastdruid in the Euro thread is highly pertinent here: https://mishtalk.com/2017/02/24/fuse-is-lit/

[V8 Fettler]

Carl_Manchester said:

Sorry Otispunkmeyer, this is simply not true in the developed western world and here is why.

The main problem with the German manufacturing industry (and by association the U.K) is that to extract a good per unit gross profit, the amount of money required to build, run and maintain facilities that can produce such products is, in the main, eats so much of your per unit gross that you end up with a low net.

And this is why Services will almost always trump making things in our economies, net margin for services can hit almost 20%, with manufacturing you are doing really well if you can hit 5% and this is not including the other aspects such as the pollution, natural resources requirements and the energy intensive nature of German industry.

This is why, unless there is a trade war or an actual war, there will never be a big comeback for U.K manufacturing outside niche markets, it just does not make financial sense to do so, it is not backed up by the numbers.

Several ways to measure net profit. In a free market with transparent pricing and knowledgeable punters, net profit should be just enough to sustain the business.

Porsche can achieve a "profit margin" of nearly 20%, although no definition of profit margin http://www.motorauthority.com/news/1090892_porsche...

[Carl_Manchester]

Porsche does very well, their margin has been averaging around 15-16%.

This is only possible due to the assistance VW gives it via R&D, component, supply chain and capital access.

Using Porsche as an example is like using Apple, the problem is that these companies are exceptions.

Having said that, Porsche still would not register on the worlds top profit making companies, to do that it would need to hit far higher heights and there is only so much you can charge for a Macan Diesel.

In terms of U.K data, the office of national statistics runs a quarterly report here is an extract:



Source: https://www.ons.gov.uk/economy/nationalaccounts/uk...

[Otispunkmeyer]

Carl_Manchester said:

Porsche does very well, their margin has been averaging around 15-16%.

This is only possible due to the assistance VW gives it via R&D, component, supply chain and capital access.

Using Porsche as an example is like using Apple, the problem is that these companies are exceptions.

Having said that, Porsche still would not register on the worlds top profit making companies, to do that it would need to hit far higher heights and there is only so much you can charge for a Macan Diesel.

In terms of U.K data, the office of national statistics runs a quarterly report here is an extract:



Source: https://www.ons.gov.uk/economy/nationalaccounts/uk...

But not everyone is cut out to work in banking and other service type jobs, surely we need to keep some form of manufacturing. Might not be as profitable...But keeps more in employment?

I'm sure Porsche had high margins even before Be took them on. I'm sure at one point Porsche actually tried to take VW! (Although they weren't doing it with car making profits...It was their financial services funding that one!)