What the U.S. Can Learn From Germany's Impressive Economic Rebound
But as U.S. voters and policymakers head toward this fall's midterm congressional elections, it could be highly instructive to examine the prominent features of European economic juggernauts like Germany that have nearly recouped all the jobs they lost during the downturn.
During the credit-fueled boom just a few years ago, American private-equity firms backed by easy money seemed unstoppable, and commentators predicted that future for the German model of provisioning generous rights for workers was limited.
Of course, the credit bubble fueling much of that private-equity bravado came to a disastrous end. And the remarkable competitiveness of German titans like Volkswagen (VLKAY), Daimler (DDAIF), BMW (BAMXY) and Siemans AG (SI) on the world stage means that the tables might now be turning.
Egalitarian German Model Beats U.S. on Jobs, Exports
The German model has long been hailed as more egalitarian than its American counterpart. At large German companies, for example, half of a supervisory board -- which plays a key role in determining the company's strategy and direction -- is elected by employees. That stands in stark contrast to the dog-eat-dog world of American capitalism, where companies are run only to maximize profits for shareholders.
But along with more egalitarian, it may be more effective as well in relation to some big goals the U.S. is striving top achieve. President Obama is pushing to double U.S. exports over the next five years in attempt to tap into fast-growing emerging markets. Germany, though, is already a bigger exporter than the U.S. despite having an overall GDP that is much smaller: about $3.7 trillion, to America's nearly $15 trillion.
Despite having mounds of cash on hand from cutting costs during the downturn, American companies have yet to start hiring in a meaningful way to bring down unemployment. But Germany has posted 13 consecutive months of job growth.
The German rebound comes at a time when the standoff in the U.S. between business, labor and government is growing increasingly tense. Finger-pointing has been rising as the jobless rate continues to hover above 9% and talk of painful deflationary conditions picks up.
Discussions about how a stakeholder model might work in the U.S., meanwhile, were on the rise following the financial crisis and during the government's widely criticized dealings with Chrysler's creditors. But those discussions seem to have taken a backseat to schemes like more stimulus spending to prop up the American system in the short run as weak job growth continues to frustrate policymakers and Main Street alike.
Germany's robust and broadly shared rebound, though, suggests that its model may hold many insights for those seeking to creating sustainable growth in the U.S.