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Transcript: Thom Hartmann: With Europe near collapse, why is Germany doing just fine? 4 January '12
Here's a question for you:
Why is it that with the European Continent in recession and on the verge of catastrophic collapse - and with unemployment steadily above 8% in the United States and economic activity just creeping along - with all that going on, that GERMANY is doing just fine?
Why is that amidst a tumultuous global economy - where Greece has an unemployment rate of 18%, Spain is at 23% unemployment rate - the German economy just marked its lowest level of unemployment in two decades - 20 years?
How are they doing it?
Well, first - the German government has recession-proof programs like the “short-week” - or in German Kurzarbeit.
And the way it works is businesses are encouraged to cut back on the hours that workers work rather than laying them off during economic downturns.
The government then steps in to reimburse the lost wages of the workers who now have fewer hours - so that people will still have the money in their pockets to spend and so the economy keeps churning along despite the fact that there's a recession going on.
In 2009 - and as the Bush Great Recession took hold - the Kurzarbeit program saved a half million jobs just that year just in Germany.
And the second reason for the Germans' success is that they're doing what WE used to do...plus more.
They're protecting domestic industries and they're empowering their workers.
While Germany doesn't have substantial trade tariff programs - they do protect domestic manufacturing with their VAT tax, domestic content rules, and a variety of "around the edges" ways of helping domestic manufacturers and punishing foreign ones.
And while we subsidize transnational corporations that ship jobs overseas - Germany subsidizes domestic industries that keep jobs at home.
They also have in place high barriers to imports - so that foreign industries with cheap labor don't undercut prices in what they consider important parts of their domestic marketplace.
That's different than the United States where corporations like Wal Mart undercut everyone with their supply of cheap-foreign made goods.
Germany also employs a whole array of quotas, regulatory standards, and customs standards - all for the sole purpose of protecting German factories that employ German workers and thus stimulate the German economy.
Germany also brings democracy to the workplace.
While labor unions in the United States are increasingly an endangered species - nearly the entire German auto industry is unionized.
As a result - Germany pays their autoworkers about 67 dollars an hour - including wages and benefits.
The United States? We pay an average to our autoworker of 33 dollars an hour - also including wages and benefits - and new hires are coming into US auto companies at 14 dollars an hour.
And according to Conservatives - since we pay our workers less - we should be able to produce more cars, right? - and corporations should be more profitable.
In 2010, Germany manufactured 5.5 million cars.
The United States manufactured fewer than half that - 2.7 million cars.
On top of that, German car manufacturers were highly profitable, despite the large paychecks to their workers.
BMW, for example, earned a before-tax profit of 3.8 billion Euros, and Mercedes-Benz hauled in profits of 4.6 billion Euros.
With such a high union membership rate, autoworkers hold a lot of sway in Germany - but they hardly ever go on strike.
That's because - unlike here - there's actually collaboration and co-operation between CEOs and the workers in Germany.
Why? Because there's actually a constitutional amendment in Germany that forces corporate executives to listen to labor unions.
It's called The Works Constitution Act - and it forces every factory to set up a Works Council so they're called Works Councils - that gives representatives of the workers a seat at the table in every decision-making process at the factory.
That's democracy in the workplace, expanding the decision-making process to not just the corporate elite, but to everybody in the company, from the bottom-up.
And it's working.
As Horst Mund, the head of the International Department of the German autoworkers says:
We have strong unions, we have strong social security systems, we have high wages. So, if I believed what the neo-liberals [what are called 'conservatives' here in the US] are arguing, we would have to be bankrupt, but apparently this is not the case…the economy is working well in Germany.
It turns out that in Germany, workers know what's best for the economy, and the government knows that as well.
In the aftermath of World War 2 - as Germany was in ruins - President Harry Truman knew that Europe - and in particular a devastated Germany - needed to be rebuilt.
And working with the United States - Germany did rebuild their economy - and put into place these protections for workers that today are responsible for Germany's seemingly recession-proof economy.
Unfortunately - during that time of rebuilding in Germany - Harry Truman couldn't help workers in the United States.
He was up against a Republican-controlled Congress - the 80th Congress - that was elected in 1946.
Truman called it the "Do-Nothing Congress" - even though it did DO a lot - namely kill progress.
It sabotaged Truman's hopes for a single-payer universal health care system, for example.
And they passed Taft-Hartley - overriding Truman's veto - which created the right-to-work states where corporations could move in and do business WITHOUT unions.
I call them right-to-work...for less states.
And because of that Congress - the 80th Congress - the United States fell behind when it comes to creating an economy that benefits the 99% and not just the 1% - while Germany surged ahead.
And that's where we are today.
It took a crisis to put Germany back on track.
And at this rate - it may take a crisis to get America back on track.
That's The Big Picture.