The Great Recession rolls on, but it’s not too early to single out the major powers that have come through the wreckage in the best shape. They are the ones the other major nations implore for help — to bail out weaker economies, to diminish their dominance of the world’s production and start consuming more themselves. There are just two such nations: China and Germany.
…Most Americans, I suspect, believe we’re losing manufacturing because we can’t compete against cheap Chinese labor. But Germany has remained a manufacturing giant notwithstanding the rise of East Asia, making high-end products with a workforce that is more unionized and better paid than ours. German exports came to $1.1 trillion in 2009 — roughly $125 billion more than we exported, though there are just 82 million Germans to our 310 million Americans. Germany’s yearly trade balance went from a deficit of $6 billion in 1998 to a surplus of $267 billion in 2008 — the same year the United States ran a trade deficit of $569 billion. Over those same 10 years, Germany’s annual growth rate per capita exceeded ours.
…So even as Germany and China have been busily building, and selling us, high-speed trains, photovoltaic cells and lithium-ion batteries, we’ve spent the past decade, at the direction of our CEOs and bankers, shuttering 50,000 factories and springing credit-default swaps on an unsuspecting world. That’s not to say our CEOs and bankers are conscious agents of foreign powers. But given what they’ve done to America, they might as well have been.
A lot of the manufacturing equipment we’ve seen used for production is made in Germany which makes sense if they’re both rapidly growing at the moment. “Cheap labor” doesn’t seem to be what is making manufacturing a challenge in the USA, it’s also supply chain and the culture we celebrate (non-manufacturing / engineering / science careers). All you 6th graders’ now will need to solve this in a decade or so, no pressure.
Andy Grove (Intel) is talking a bit about all of this as well…