Economists have caught a case of Germanophilia.
Ever since Europe's industrial juggernaut grew at a nine percent pace earlier this year -- the best in two decades -- Americans have looked across the ocean with envy. As we cut costs, outsource jobs, drown at double-digit unemployment and run up huge trade deficits, Germany seems to be doing the opposite: reaping the benefits of cheaper labor, keeping German workers in German jobs, and running surreal trade surplus numbers (surreal, considering the health of the rest of Europe).
What's your secret, Berlin? That's the question I posed to Dr. Tim H. Stuchtey, director of the Business & Economics Program at American Institute For Contemporary German Studies (his answers here). And that's the question Bloomberg BusinessWeek asked in a good cover story.
There's no good place to begin a story about what makes a country special, but there's a decent plan to begin the story about what makes Germany successful, today. Let's go back to 2003, when Chancellor Gerhard Schroder, a Social Democrat, stiff-armed his party and proposed to downsize Germany's social system in a program called "Agenda 2010." The plan included big tax cuts, reduced pensions, and more cost-sharing in health care. For workers, the plan was more innovative. Unemployment benefits got the axe, but training programs were set up to ease workers into new industries when old ones died. Promises for higher wages gave way to promises for lower wages with greater job security.