Anyway, the absolute key issue seems to be energy costs. If they hadn't skyrocketed, this wouldn't be happening.
You'd think that quoting facts would strengthen ones argument, all these tiny and sometimes very specific facts with no context had the opposite effect.
You get that only when you look at a bunch of "unrelated", "small" facts. If there are a lot of facts pointing in one direction, maybe there is something to it.
The other point is: That was not cheery picking. There are no other facts that would point in the opposite direction… More or less everything in Germany is in decline. That's just true. Source: I'm living here since about 40 years.
Though the article interpreted something quite wrong in the very beginning: The decline started quite exactly around 20 years ago. It was caused by the move to ultra-capitalism (the mentioned big social reforms 20 years ago), which made Germany a low wage country, which made the people poor and started an exodus of the well educated parts of society. The reforms made some of the numbers capitalists are interested in look good for some time, but at the expense of maximally "squeezing out" society. Now this short sighted tactic backfires.
By now almost 1/6 of the people here are poor (and 1/4 is at risk of becoming poor):
https://www.malteser.de/armut-in-deutschland.html
Almost nobody can afford children. ("Bio-Germans" are foreseeable dying out therefore, and it doesn't look like this is avoidable any more when you try to play the numbers game. The article showed the relevant statistic. At least we get some migrants; with children. But the "Bio-Germans" hate migrants. Also this may pay off not before one generation; we need to educate the children; but the education system is broken…)
Actually it's getting hard to even afford a living place. Liberal housing markets made space in areas of high population density so expensive "normal" people can't afford it any more. At the same time building new housing is too expensive and nobody invest in that. Which made companies in the building business die out, and even if the state would massively invest in housing right now we don't have the capacity to build that stuff. And even if we would have the firms, they would not find employees…
https://www.mieterbund.de/fileadmin/public/Studien/Studie_-_...
(Fun fact: AFAIK if Germany would build enough housing it would completely miss it's green goals, as building housing creates a lot of CO₂.)
The complete dependence on the car industry becomes a real problem at the same time. It's not only the big car manufacturers. But the largest part of "the Mittelstand" are external suppliers for the car industry… Should this implode (and it looks like that, as China is flooding the car markets, that's a fact) this will have catastrophic results for Germany. We simply don't have anything besides the car stuff. All we've got is already gone. And what's left is leaving because of he astronomical energy prices.
Big players are moving elsewhere, the smaller ones just die. Result: More people becoming poor, which just accelerates the downward spiral.
In regard to modern tech, like IT, Germany is a developing country. We're completely depended on the US and Asia in this area! People are making jokes about "Russian computers"[1] but the sad truth is we couldn't even build such a thing on our own.
In the last decades the education became completely messed up also. They tried to make everybody go to university; which destroyed the previously high class educational system. By now even the firms offering apprenticeship in handicraft trades complain that you can't find people skilled for that as the people coming from school can't properly read, write, or do basic calculus. (Source: I've talked to people offering apprenticeships, not only once, and I've had some contact to the youth.)
At the same time politics try to just close their eyes to most problems: If you listen to the local propaganda "everything is good" or, currently, "It's Putin's fault!". (That's not completely true, of course, there is some critical thinking even in mainstream here and there, but they hide it usually under a really large pile of straight propaganda; and it became quite seldom. This wasn't always like that. Even the state media was much more critical 20 years ago. By now it's obviously just coordinated propaganda. We actually pay over 10 billion Euro for our state propaganda…)
The article was actually refreshing unpolitical. You usually don't see such "pure" recitation of facts in the local (and especially state) media. (I was waiting the whole time while reading when we "get to the meat" and I get informed what we should buy to safe our souls, or who to blame for all the problems, but to my surprise this part never surfaced. The article looked almost like proper journalism from decades ago).
Just naming those facts is actually considered "right wing activism" here in Germany. You will get canceled quite instantly for saying the things the article said if you state such stuff for example as comment in some of the mainstream media outlets. Yes, they cancel for reciting facts. Especially if the recited facts have potential to "irritate people", and you present some proper numbers to make your point.
(Disclaimer: I'm not supporting any political party any more. I was once "leaning to the left". But the lefties are by now the same scammers as every other political movement. All these people in politics just care about redirecting state money into their own pockets. No difference the "color" or "side" of the political movement. Kleptocracy in it's final stage. Peak capitalism. This won't end good… And if there wouldn't be the language barrier I would actually start to consider to move to China. It's getting noticeably worse here and while looking at the current state of affairs it foreseeably won't get better during my lifetime anymore.)
[1] https://www.heise.de/news/MIG-Akinak-Russlands-selbstentworf... (See also the comments!)
[rolls dice - dice gives a 6]
unbelievable ... not 3, not 15, but 6 - that's remarkably close to 8!
you're some smart dice, aren't you!
1. The attitude of the average German consumer
It seems to me that one of the national sports in Germany is to find cheaper deals for pretty much anything (and then brag about it). Even if it's fractions of a euro! After trimming down on everything that they could, the manufacturers and service providers had to finally reduce quality. This happened to such an extent that the famous "Made in Germany" is now meaningless, if not worse.
2. The attitude of the average German manager
"I am your boss, you are the employee, now shut up and do as I say" attitude does not work well in knowledge-based industries like Software. And I believe this is one of the reasons why Germany is behind in digitalization, let alone in digital innovation.
2. Why software Made in Germany doesn't work well has a number of reasons but I'd say that it is primarily because it is much harder to raise capital for things that only might work 1 out of 50 times. People who start businesses are much more risk-averse and most try to be profitable or self-financed from year 1. This makes them uncompetitive in innovative sectors.
2. France has a similarly ossified financial culture, but has a much more robust tech industry compared to Germany (eg. Ubisoft, Datadog, Capgemeni, Dassault Systemes, Dataiku, Alcatel-Lucent, Thales, Orange, etc)
Germany has a strong base, but some reform is absolutely needed to upskill their economy.
This would also not work in engineering and never did. In fact, it's likely one of reasons why german engineering was so good: because people would (and still do) tell their boss bluntly what is wrong.
Mind, this is my poor man’s sociologist analysis, but it seems that they rely heavily on foreigners, which are very hard to attract because of the language and bureaucratic barrier. From what I see, even companies that pay good salaries (say ~100K total compensation for a senior) mainly employ foreigners.
And people from the UK say the opposite, that engineers are not respected and paid in the UK the way they are in Germany. I think the low/high PoV of your salary depends in which bubble you hang around. Every market is flooded with low pay offers, but yes, I feel like in Germany, unless you work for big-tech, SW engineering is pay way less compared to other positions, in contrast to the US where tech wages rule over the rest.
>only recently, after Covid, they skyrocketed
I don't think you're correct, maybe that was true at the height of the market a year or so before, but recently after the tech market fell and layoffs happened, I see most companies rarely hire and when they do they exclusively want skilled seniors for mid-level pay. I don't see those skyrocket salaries anymore after the market collapsed.
Same info I got when I talk to people who recruit/hire: a year or so ago they were struggling to hire and had to increase pay or hire juniors and train them, but now they get a tone of experienced applicants for every opening that they can dictate pay.
I don’t mean to be disrespectful in any way, but (there’s always a but after that opening) if that’s you’re experience working in Germany, I’m afraid you’re either ignorant of culture in other countries, or not working in a job with a lot of impact, or responsibility. The German work culture is distinctly the opposite, namely people being blunt in what they say and brutally honest with their superiors.
This was originally an anglo pejorative meant to denigrate the quality of German goods. Mild irony.
>2. The attitude of the average German manager
>"I am your boss, you are the employee, now shut up and do as I say" attitude does not work well in knowledge-based industries like Software. And I believe this is one of the reasons why Germany is behind in digitalization, let alone in digital innovation.
My experience has been the complete opposite.
Want to sell something? Company registration takes months, just getting a business tax ID was 6 weeks for me. To sell electronics, register with Stiftung EAR, then find an intermediary to get you a WEEE-Nummer and report monthly (!) sales figures of all your device types. Just that registration costs 1k and 8 weeks. And don't forget your battery and packaging license!
By comparison, similar WEEE fees in UK are 30 pounds and in Estonia are 12 euros, no wait.
But the real fun starts if you hire someone :) The paperwork there is a magnitude more.
I don't think we're doomed though. The schools are packed with kids, education is free and good, health services are not a concern (looking at you, US), society is healthy. I think we'll manage :) Hopefully no more self-inflicted energy crises in the works.
> society is healthy
no pain, no gain :)
there's probably a terry prachett quote attributing bureaucracy to the stability of a large-scale civilization
I've been very happy with Sage, an online SaaS to manage employees and their payments, taxes, and related paperwork.
https://www.bloomberg.com/news/articles/1995-08-06/germany-w...
I have the typical American of German descent hate for Germany because they threw my family away but now are open for everyone else to come live there (making it a huge 'fuck you and your family specifically love Germany'), but also how truly horrible they behave when it comes to business.
I've never seen this sentiment expressed before (but I'm neither of German descent nor US American). Care to expand further ?
The issue lies in the fact that the EU is comprised of numerous countries within a single market. When one nation begins to subsidize a company or an entire sector, the other nations are left powerless, merely watching their own companies struggle to compete against those bolstered by government subsidies. It becomes a game of pouring government money down the drain and destroying any semblance of free market mechanisms.
> BASF opened a plant near Dresden that makes cathode materials for electric-car batteries just two weeks ago and has pledged to keep investing in its home market. To secure such commitments, however, local and federal governments have been forced to offer generous incentives. BASF will receive €175 million in government support for its new battery operation, for example.
> Similarly, in June, the U.S. chipmaker Intel secured an eye-watering €10 billion subsidy for a massive new factory in the eastern city of Magdeburg. That translates into €3.3 million for each of the 3,000 jobs the company has pledged to create.
Reading between the lines, the proposed solution seems something like lower corporate taxes (currently making decamping to Dublin more attractive) and lower energy prices.
The risk brought up is that if things continue it will likely lead to increasing blaming of immigrants and a rise in the far-right AfD party, which has already started.
- Germany is heavily reliant on industry (like Autos)
- Cheap energy has ended due to war in Ukraine
- The available replacements are going to be even more expensive (and they are still closing more nuclear plants)
- The production costs will increase reducing their competitiveness even further
- The competitives was bad even before this (VW vs Tesla anyone?)
- Once the huge layoffs and closures will begin, the entire economy will enter recession.
Industry-focuses businesses are now low-margin and high-competition (competition mostly coming from Asia). The same is happening here what happened during the shift of Agriculture economy into Industrial economy.
And the shift to services (tech/software specifically) was pretty much non-existent. Also, it's unlikely to become any better due to alienation of investors (who wants to invest in a country where everybody is taxed and red-taped into oblivion?).
So... who nows. Germany is probably going to pull a "Greece" on us :).
While there is some truth to that, energy prices are lower than at the start of the war.
> - The available replacements are going to be even more expensive (and they are still closing more nuclear plants)
There are no nuclear plants left. And Germany just got 12.6 billion from auctioning of building rights for 4 new wind parks (with capped price limits of 6.3ct/kW/h.
> - The competitives was bad even before this (VW vs Tesla anyone?)
How is that? VW has a quite broad electric car range by now. Tesla is hip (which VW also tries to be) but that's about it
> - Once the huge layoffs and closures will begin, the entire economy will enter recession
The german labour market is quite strong (except maybe construction, but there's not many germans working there anyways). Problem is rather that too many people are retiring (and that the average age is so high)
> So... who nows. Germany is probably going to pull a "Greece" on us :).
The budget of the german state is almost balanced. How does it look in the US?
I learned about this today from Eclipse Foundation executive director Mike Milinkovich's excellent video/tutorial/warning on the subject: https://www.youtube.com/watch?v=AmsM5_5QO5A
And of course the AI act, which might make it possible for the publishers of open models to be sued if a third party misuses it: https://techcrunch.com/2022/09/06/the-eus-ai-act-could-have-...
https://www.berliner-zeitung.de/wirtschaft-verantwortung/dei...
The linked article is mentioning additional factors:
- tax incentives and favorable legislation offered in the US and China.
- drawn out planning and approval procedures in Germany
- no more cheap natural gas from Russia (i guess that was a big hit for the chemical industry)
- cheaper energy (also cheaper green energy) in the US and China.
... and Intel is building one big fab in Magdeburg - that one is costing 17 billion euro: https://www.intel.com/content/www/us/en/corporate-responsibi...
So maybe not all of industry is leaving.
God only knows what he thinks his corporate profits "should be", but I'd bet it's a lot higher that you or I would guess.
The only real problem right now is efficiency of spending. Nearly all public sectors (defense, housing, transportation, education, healthcare) bemoan significant lack of financing and workers. Yet, Germany spends enormous amounts of money and employs record levels of workers there. It's like all the money and workers just vanish. This leads to the situation that it's currently difficult to hire in Germany.
This process leads to the attraction of skilled workers especially from eastern Europe. I don't know where this ends, but I doubt the spending and employment will get significantly more efficient. Instead, Germany might very well attract additional millions of well-educated Poles, Ukrainians, Romanians, etc.
I wouldn't be surprised if by 2030 we see a Germany with a population of 90M people absolutely dominating the European market.
I've been here long enough to apply for citizenship, but Berlin has a backlog of 26,000 applications and literally refuses new ones until they centralise the processing. The new central office is expected to handle 20,000 applications per year.
This is the city where you need an in-person appointment weeks in the future to register your address, a key process that many other things depend on.
All of this can only be done in German, of course.
If Germany wants to attract talent, it has to meet it in the 21st century.
Germany seems like it wants to have its cake and eat it too. It wants more migration to put downward pressure on wages and upward pressure on housing prices, but that's it, it does nothing to actually make life pleasant and attractive for the people moving there to live and work, in terms of taxes, bureaucracy and housing, so you just feel like cattle, exploited for your ability to pay taxes to the state and to pay someone else's mortgage.
Another problem is one that plagues all old world countries - societies are based around ethnicity.
These combine to mean that Germany and the EU in general are not attracting the best from abroad. The region is often the second or third choice of the educated migrant. Don’t believe me - look at the EU’s own internal migration numbers and the stats for immigrants from outside the EU. Internal EU migration is pretty low relative to countries like US (states vs countries, sure) and the immigrations from outside are largely poorly educated.
This shows in Germany’s immigration policy - they have been reducing barriers to entry for over a decade now and are yet struggling to hire foreign talent. This begs the question - why?
But beside all that, everyone with a basic education in Germany does speak good English if needed.
How many skilled Eastern Europeans have you met who still want to move to Germany? This was the dream ~10 years ago but most white collar EE engineers I know take one look at the wages and housing situation there and make a 180 back home.
Does anyone know what those were?
It’s important to note that they are overall poor reforms and should have been nullified by the German money value shifting due to the knock off effect on the saving rate. This didn’t happen because they were put in place at the same time as the Euro and the overall imbalance in the union allowed Germany to keep an undervalued currency. In effect, Germany robbed all the poorer members of the union to prop up its own economy something it has kept doing since.
Those who like to bully the poorer members of the Union on the grounds that they're being bankrolled by the the wealthier states would be wise to take note of this, and take a more intelligent and informed view of EU "subsidies". The idea that the wealthier member states are showering these countries with funds out of the disinterested goodness of their hearts is not only ignorant of how these cash flows actually work in the grander scheme of the movement of money, but also preposterously naive.
The power balance is shifting in Europe against this crypto-germanocentrism, however.
Hartz IV reforms pushed unemployed people back to work by reducing long term unemployment benefits to 400 EUR + rent. This certainly reduced purchasing power first (by reducing available money) but also quickly freed up social spending as employment rates soared.
"In 2003–05, Germany undertook extensive labor market reforms which were followed by a large and persistent decline in unemployment. Key elements of the reforms were a drastic cut in benefits for the long-term unemployed and tighter job search and acceptance obligations."
Is it so bad? For 83 millions people economy.
Time to rename the region CHAD I guess.
The political corruption and and election meddling done by Axel Springer is a known fact. [0]
Excerpt from [0] translated with DeepL:
"Our last hope is the FDP. Only if it becomes very strong - and that may be - the green-red disaster will be avoided. Can we do any more for them. The only ones who are consistently positioned against the Corona Measures madness. It's a patriotic duty."
1. In retrospect, was the German decision to eliminate nuclear power wise? Could they have squeezed another decade of power out of their existing plants, even if they didn't see that as a viable long-term energy source (having to import uranium fuel is not all that better from having to import natural gas, economically speaking)? Granted, nuclear only provides electricty, while BASF needs methane.
2. Russian gas exports to Germany have been replaced by US LNG gas exports, but the cost differential is pretty huge. Looking around, I see this site has discussed it before (Nov 2022):
https://www.politico.eu/article/cheap-us-gas-cost-fortune-eu...
That's an interesting article, pointing to tight markets being taken advantage of by European energy traders (though Exxon and Chevron shares are up 50% since the price boom, Permian Basin development, booming LNG exports, etc.). It also might explain why some European interests see a finacial benefit in prolonging the Ukraine war (i.e. keeping Russian gas sanctions in place).
3. Somewhat amusingly, if BASF moves a lot of production China, then their natural gas feedstocks will be coming from... Russia's massive Sakahalin 1 & 2 projects (built with extensive help from Exxon and Shell respectively, and ironically)?
https://www.reuters.com/business/energy/russias-sakhalin-inv...
Maybe blowing up the Nordstream pipeline wasn't such a smart move, after all.
"The country’s Green transformation, the so-called Energiewende, has only made matters worse. Just as it was losing access to Russian gas, the country switched off all nuclear power."
> Maybe blowing up the Nordstream pipeline wasn't such a smart move, after all.
Or maybe relying so much on a partner which others have warned you about was actually the not so smart move.
Do we know with any degree of certainty who was actually responsible for sabotaging the pipeline?
Ukraine is also the only country which had clear motive and no real repercussions if found out (because already at war with Russia).