Who Knew? Countries that Make Stuff Are Better Off than Countries that Play the Market

German flag

German flagThose Germans. First they win the World Cup, and now they’re ranked #1 in trade. Germany has a trade surplus of $257 billion (a sign of a truly robust economy.) In contrast, the US is DEAD LAST on the list of 193 countries in the CIA World Factbook, with a trade deficit of $361 billion.

Who knew that a highly unionized country with a solid manufacturing base, a strong middle class, and a woman head of state could do so well? Aren’t we constantly being told that our overpaid, privileged union workers must accept pay and benefit cuts in order to compete with other countries for world markets? Obviously, what the corporate people and their Republican minions in the Congress have been telling us is hogwash.

In a syndicated editorial published in today’s Arizona Daily Star, Harold Meyerson of The American Prospect, compares the policies and financial health of countries in the top and bottom tiers. Meyerson writes

The composition of the top and bottom 20 nations on the list provides an even more illuminating picture. Three kinds of nations dominate the top 20: oil exporters (Saudi Arabia ranks third), East Asian manufacturers-for-export (China ranks second) and Northern European industrial and social democracies (not just Germany but also Denmark, Sweden, the Netherlands and Norway — the last, swimming in North Sea oil, an energy exporter as well).

The most striking aspect of the bottom 20, by contrast, is the prevalence of English-speaking nations. Not only does the United States finish 193rd, but Britain comes in at 192, Canada at 189, Australia at 186 and New Zealand at 173.

Does using English condemn a nation to producing less at home and buying more abroad? Probably not — especially since Britain and the United States once boasted huge export surpluses. But something has driven a wedge between the Anglo and the Saxon economies — and that something is the divergent evolutions of their respective forms of capitalism.

According to Meyerson, compared to Northern European countries, the Anglophone economies have less regulation and diminished workers’ rights, and their economies have become dominated by finance. As finance has risen in prominence, manufacturing has become less important in countries like the US and Great Britain. There also has been a shift toward “shareholder capitalism,” where  “corporations’ sole mission is to reward their shareholders.” Boosting profits for shareholders has resulted in short-changing other activities that businesses used to do like training, research and development, long-term product development, and actually making stuff. (Who knew that you could make money by making stuff and selling it to someone else– rather that just making bets on the stock market?)

But by so elevating shareholders (and themselves) over their workers and their country, the CEOs of these finance-driven companies drive down living standards and erode the United States’ economic power.

The nations of Northern Europe, by contrast, have created economies that have enhanced their power and distributed wealth more equitably. In the Nordic countries, the world’s highest levels of unionization have not led to a decline in competitiveness but rather to highly trained work forces and major trade surpluses. In Germany, corporations are required to give workers a role in key decisions, and shareholders play a minor role in businesses’ funding and calculations. In consequence, the nation’s manufacturing sector is continually upgraded and the nation’s apprenticeship programs set the standard for developing skilled workers. Median compensation in manufacturing is a third again higher than it is in the United States — yet, counter to the wage-cutting conventional wisdom in American boardrooms and economics classrooms, Germany is No. 1 in trade and the United States is No. 193.

By virtue of the economic prowess it has attained through its system of industrial democracy and diminution of finance (and by having the euro as its currency), Germany has become Europe’s dominant power.

The next time a politician tells you that we as a country can’t afford to pay workers more because it will hurt our competitiveness on the world stage, tell them about Germany.


  1. Germany’s head of state is not Angela Merkel – she’s the head of government.

    The President of Germany is Joachim Gauck – he’s head of state.

    The US combines the two in one person, but other countries don’t!

  2. I failed to point out the obvious in this story. Look at the dramatic differences in size, population, and natural resources between the US and Germany. When you take those facts into account, it makes the economic differences between the US and Germany even more glaring and reveals union-busting, corporate welfare, shareholder capitalism, and forced poverty and hunger on the populace as failed policies that have fattened the fat cats and starved workers and the economy. Austerity is a lie.

  3. But all those countries are Sooooocciaaaaliiiiiiistttttt!

    Leave Capitalism aloooooonnnnneeeee!!

    Government by the plutocrats, for the plutocrats and of the plutocrats is what we have, and their utopia is the Gilded Age, not a modern social democracy.

    We might as well go ahead and change our national motto from E Pluribus Unum to Meus Mihi, Confutuere Te

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