Posted by Eduard Schmiege, January 24, 2011 1:57 PM
Dear Mr. Brancaccio,

Thank you for your concise report on Friday, 1/21. I would like to comment on your key reasons.

1. I'd rather say "Products are well-suited for export" (vs. "made for export"); well-engineered (and well designed and eye-pleasing) goods happen to sell well, at home and abroad. "For export," I believe describes the phenomenon to narrow.

2. The prevalence of small to mid-sized manufacturers. I would like to add that German small and mid-size companies are established in a wide spectrum of domains; medical, chemical, pharma, engineering, technology, automotive, construction, you name it; the good ones are successful at home and abroad. It appears that U.S. small and mid-sized US manufacturers are not much present internationally.
Related: it appears that the US trade representations abroad have not been actively supporting "enough" or dont conceive this task as their role. They seem to lack staff, funds, marketing enthusiasm and effort. Offices often are small; comparing with German, Austrian (where I am from originally) representations in the US, American representations abroad are not much engaged in presentations, PR and sales jobs. Large companies can do this on own, small and medium sized-ones need to congregate their efforts under the umbrella of the US trade offices abroad. I believe this is not happening enough. A reason why German small and mid-sized companies are on occasions present on the world market, whereas U.S. companies of this size are rather not.

3. Labor and management cooperating. US class-less society may be true when it comes to nobility, yet needs improvement, I feel, in everyday and corporate life. The separation management vs. not-management with all its facetted is yesteryear. Success of a society in the future will be determined by the ability to spread wealth rather than to take money and run. In Germany, Central and Northern Europe, in this regard there exists consensus among the population at large.

4. Frugal Germans? I am not so sure. Due to historic and geographic circumstances, Americans live on more square feet, need cars to go from A to B from age 16; garages are full of tools and men's toys, homes are full of stereo equipment and computer games; private spending has been in high esteem, public spending is a bad word. The Germans spend money, too, if only for other things, I say this without value judgment. The fact that the young man of the family you visited near the Chiemsee played the piano well means that he had a piano teacher for a few years at cost of many thousand Euro. The typical German worker has 5+ weeks vacation plus 12 holidays, twice as much as in the US. Because of the luxury of free time, the Germans are "world champion" in traveling; they spend four times the amount US citizens spend on international travel, and they spend more on wellness in general including wellness vacations. Family reunions are not the five-day highlight of the summer, but done on a long weekend (the distances are shorter over there which helps) and they are not their main vacation. Germans spend more per person for shoes, clothes, hair dresser, for dinner at restaurants, for wine and beer (yet this may not be so good); though they only may have one car which often is parked on the street because they live in a condo. Gasoline is twice the money its here, so the German one-car family spends the same amount on gas as the US two car family if car and driven distance were the same; but their distances driven are shorter and cars still more economical so yes, they spend less on gas.
The money goes partly to oil companies and more than here to the public hand who uses the funds to provide infrastructure, so families only need one car; etc. The roads and streets are usually in better shape in Germany, too. Electricity, gas, water are comparable in price. Example electricity, it can be a hand-slapping experience leaving the light on in a room on the way out, there is no habit of illuminate tress from underneath in middle class neighborhoods and high-rises are not illuminated inside during the wee hours. May be their janitors clean in the dark; is this the reason whey they earn more over there? However the city streets are much better lit at night, though this is necessary as people walk more. May be this helps with lower crime rates (and lower prison expense).

May I add to the above four reasons:

5. GERMAN PUBLIC EXPENSES FOR EDUCATION AND OTHER ITEMS ARE MUCH LOWER THAN IN THE US, YET PRODUCING SIMILAR OR SUPERIOR RESULTS
K 1-12, TRADE EDUCAITON, UNIVERSITIES
ALSO WATER BOARDS, PRISONS ETC

Yes, the German education system too has its weaknesses, however education quality for 14-18 year olds is second to none. Parallel to prep school, attended by a minority, the majority of the young people attend trade school. They learn professionally how to become a crafts person; electrician, mechanic, roofer, carpenter, sales clerk, prosthetics producer, cook, Gardner, locksmith and whatnot. There is no comparison to this kind of educational path here in the U.S.
(P.S. in CA Governor Schwarzenegger, aware of the Austrian (German) system, showed interest in introducing a like system in CA, yet could not convince legislators, lobbyists and population at large.
(a) HIGH SCHOOL. High school education lacks intensity; non academic activities from quasi professionally practiced sports to social clubs and activities considered "fun" take a big chunk of time and focus (and money from the school system). Of course there is good in those activities, too, considering the living circumstances, interests and habits of the population. Consequentially though, high school graduates when in college spend two more years for general ed courses; and they have no meaningful training in a trade profession. To be an electrician, one has to attend two years college or similar school, yet the outcome is inferior compared to the education packet available in Germany. The result, often, are crafts people not well trained to do a professional job and they are older than their peers in Germany once they can be considered solid in their discipline. This is a major reason why German manufacturing companies, especially small to mid-sized ones, so often deliver quality products.
(b) GERMAN WORKER’S QUALITY OF LIFE. The US habit of teaching general ed classes at college level for two years is a consequence of less intensive high school learning; back end this means that US students earning their bachelor degree end up with less training in their actual major than German students would; there is more to be said to this which would exceed the scope of my letter. THE QUALITY OF THE GERMAN WORKER, THEIR GOOD INCOME AND STATUS IN THE SOCIETY contributes to the country's economic success (not only currently, but since a long time).
(c) LESS BUREAUCRACY IN GERMANY’S PUBLIC SECTOR. Administrative overhead in the US education system appears to be considerable. Germans make due with a lot less administrators and bureaucracy in their education system, from K-12 to the colleges and universities. Germany's education product is at least as successful if not better than the US', all things considered. The costs in Germany are much lower for the same or superior product. It appears to me that the administrative intensity of US education takes a large piece of the pie. Humble example San Diego County, three million inhabitants, several hundred thousand pupils K-12: 44 school districts. Each of them complete with superintendent, vice-intendents, directors, controllers, developers, managers, etc., plus principles and several vice principles per school, of course. It appears that our population demands, is accustomed to and/or tolerates this complicated level of bureaucracy. The argument of each district’s board would like to bend and shape educational contents according to their priorities, does not justify, I feel, such a costly disintegration. Often injustice and inequality rule, there are “poor” and “rich” districts. Many students transfer to schools outside their “home” district if the home district is lacking, resulting in unnecessary travel cost and time, hardships of all kinds, lack of neighborhood cohesiveness and even less funds for their original districts. The percentage of immigrants in Germany has become even higher than in the U.S., though the traditional “German” population is less ethnically diversified but also less resource separated. Another example is the average university, where numbers and ratios of academic and research staff of four year institutions is similar to Germany's universities. However, numbers of non-academic staff such as directors, managers, supervisors are x-times higher at a US college than at a college in Germany. Bureaucratic excesses, per my view, also exist in numerous mainly public businesses; example, in water districts (there are several dozen districts in our county, all doing basically the same thing, their presidents and vices making 6-digit salaries).
(d)PRISONS. The astonishingly high expense for our prison system has been published. I am not an expert, but it appears to me that this represents another multi billion dollar overhead, which the Germans live without. Yes they have convicts and prisons as well, but they cost less.
We know ones gain is another ones loss; however I feel we need to evaluate the use of the valuable work force resource, shift from admin to production.

6. MONEY MAKING WITH MONEY VS. MAKING MONEY WITH PRODUCTION OF GOODS
We here in the U.S. still suffer from the financial sector’s weakness. Germany’s economy slowed down to lesser extend and did so for a shorter period. Germany’s financial sector, too, is tremendously important in- and outside the country, yet it has shown it either is not such a major part of the economy, or it has been less out of whack than ours, or both. One notion prevails: the Germans produce more “tangible stuff", more usable stuff and internationally more desired stuff. In some ways our inches, pounds and quarts dont help either, the world runs on metric system. It's us who has to adjust when we want to export.
A typical example in regards to the above opinion is the segment of construction and real estate.
Here, a realtor and the busy folks around her/him like mortgage and escrow people have an elevated status in society. The sector though produces not much besides jobs for relatively few. Of course real estate dealing has its justification for those who want to sell or buy a house. However, the casual reduction of a country’s construction and development activities down to real estate comparisons and sales numbers is one-dimensional. The equivalent sector in Germany consists of construction; large projects such as high speed train lines and their stations; inland waterways, tunnels and bridges, quality housing built for many decades (the kind that can't be nailed together within weeks), freeways (under surface as needed), metro-lines, canal system renewal, water and waste water development, environment and urban upgrades, solar energy systems; all this besides real estate related considerations.
It appears that here we focus on monthly real estate downs and ups and relate the findings to our financial well being. Over there, the construction, environment and real estate complex is seen as a continuum. The mega segment has more weight within Germany’s economy than the real estate listing derivative in ours; and - structures are produced over there, not merely traded.
Sure we need to adapt according to our US circumstances, but it appears we are lacking an entire creative dimension.

7. GERMANY'S HEALTH SYSTEM IS SUPERIOR
The health conversation here in this country is on the plate since ever I arrived which is thirty years ago. Not much happened except talk, although Americans are able and practical people. The Germans have 50% more doctors, twice as many nurses, double hospital and long term care beds; life expectancy is higher, infant mortality lower and adult medication consummation are lower. Uninsured and stigma of suffering from pre-condition (in terms of insurance coverage) are foreign to Germans. Quality of medical care is comparable to US if not better; long distances Americans in low population areas have to travel to find adequate care are a consequence of living on more square feet and acres. Annual physicals for Germans are recommended to begin at much lower age than here; theirs are routinely more comprehensive than ours and there is no out-of-pocket charge for the patient. The German system costs only about 60% of the US system. German doctors enjoy a comfortable income though not as high as US physicians. Nurses get paid about the same here or there, lower skilled workers earn more in Germany. German doctors don’t graduate with a $200 grand debt on their back; however due to a more transparent system, there are just a handful of health insurance business and rather easily understandable plans and thousands of complicated ones. Fewer people working in this segment and with those on the top making perhaps two-three hundred thousand Euros but never millions of Dollars. Bottom line is that the German way of healthcare delivery is more efficient than ours. It is a major contributor to the economic success of the country.
8. U.S. DEFENSE EXPENSES. Its defense system costs the U.S. dearly. However, the defense expense has been accepted as non negotiable item. U.S. and even more so Germany can’t live without the U.S. defense resources. May I suggest, ask the Germans for a contribution; they enjoy the benefits as much as we do!
Thank you for your excellent reports on public radio and television.

With best regards,
Edauard Schmiege
(San Diego)