Germany’s creeping satisfactionism
by Tom Sullivan
Germans are much happier with their lot than Americans, writes Harold Meyerson. Satisfaction tracks more closely with a country’s economy than its style of government, according to a recent Pew survey of the world’s economies. Nine out of ten people in countries with “advanced” economies were dissatisfied with theirs, and eight felt their economies were “bad.” Except Germany.
A strong, manufacturing-driven export economy (with the Euro a factor) and a weaker financial sector sets Germany apart from the United States. Whereas 58 percent in the U.S. feel the economy is bad, 85 percent of Germans felt things in Germany were going well. Why?
Many of Germany’s most successful companies are privately owned and not subject to investor pressure to reward large shareholders through practices prevalent in the United States, such as slashing wages, cutting back on worker training and research and development and buying back stock. Publicly traded German companies still retain their earnings to invest in expansions, a practice that was the U.S. norm until the doctrine of rewarding shareholders with nearly all of a company’s profits took hold during the past quarter-century.
In the United States, major shareholders and the top executives whose pay increasingly is linked to stock price control the corporate boards that approve these kinds of distributions of their companies’ earnings. In Germany, however, the profits that companies rack up are shared more broadly because shareholders don’t dominate corporate boards. By law, any sizable German company must divide the seats on its board equally between management- and worker-selected representatives. Any company with more than 50 employees must have managers meet regularly with workers’ councils to discuss and negotiate issues of working conditions (but not pay). These arrangements have largely ensured that the funding is there for the world’s best worker-training programs and that the most highly skilled and compensated jobs of such globalized German firms as Daimler and Siemens remain in Germany. They have ensured that prosperity is widely shared in Germany — not concentrated at the top, as it is in the United States.
Damned socialists. No … wait.
Some friends observed that tax and economic policy changes in this country over the last thirty years have shifted the business model from one that encouraged, long, slow growth sustained by good schools, sound infrastructure, and reinvestment — more like the German model — to one that encourages financialization and get-rich-quick schemes. Make your money fast and cash out. If that’s not your business model, said one from experience, American venture capitalists are uninterested in your better mousetrap.
Says Meyerson, since the 1980s U.S. business and government leaned on Germany “to get with the Wall Street program.” The Germans declined. Their economy did not. Overall, Germans seem rather satisfied with the results.