“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 … The typical German company has a long-term relationship with a single bank … likely with one of Germany’s 431 savings banks, each of them a local institution with a municipally appointed board, that shun capital markets and invest their depositors’ savings in upgrading local enterprises.”
Germany is NOT a low-wage country. But they weathered the recession. They value manufacturing and have national policies to bolster their manufacturers.
Another key point to take with you is this:
Germany and China don’t have a lot in common. Germany has a mature economy and is a stultifyingly stable democracy. China has a rising economy and remains disturbingly authoritarian. What sets them apart from the world’s other major powers, purely and simply, is manufacturing. Their predominantly industrial economies meet their own needs and those of other nations, and have made them flourish while others flounder.
This used to be true of United States, too. In 1960, manufacturing accounted for a quarter of our gross domestic product and employed 26 percent of the labor force. Today, manufacturing has shriveled to 11 percent of GDP and employs a kindred percentage of the workforce.
I think the quick point is made. But there are many other great points in Meyerson’s piece — please read it.