While Britons and Americans are gloomy about deficits and possible recession, for Germans it is as if 2008 never happened.
Germany has just reported the highest export figures since records began. While there are worries about the euro, this is only because other eurozone members are so weak. Germans predict a “golden decade” ahead for their own country.
That may be hyperbole, but there is no denying that Germany is now in a relatively strong position. There is no mystery to that success. Successful nations, businesses, and entrepreneurs all follow a very simple formula: provide others with the goods and services they want, but keep a firm grip on the finances.
The firm grip on the finances has been the Merkel government’s great contribution. Even left-leaning German ministers were scornful of the British – and, by implication, American – government attempts to borrow their way out of the 2008 crisis. The results of the differing approaches are plain to see: Germany came out of the crisis quicker and stronger.
As for providing the goods and services people want, the German way has always been to compete on the basis of quality rather than price. If you want something done cheaply, go to China; if you want it done to perfection, go to Germany.
This gives the lie to the accusation that business favours globalisation because it relies on “cheap labour”. German labour costs are high, but the business community – unlike its critics – has always understood that quality has a price, and has never objected to paying that price so long as it gets value for money. It objects to high labour costs only when there are no viable products or services in return for its investment.
Germany’s high labour costs are – usually – justified by the high quality of both the labour and its end product. This quality in turn owes much to the superiority of the German secondary, tertiary, and technical education systems. When American and British entrepreneurs are asked why they no longer locate their factories in their home countries, they usually cite the high labour costs – but they are just as likely to mention how the state schools there are not providing them with workers fit for employment. Indeed, many of them would rather employ a German who has been taught excellent English than a native English-speaker. Germany has itself become a successful brand name again.