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German Prosperity

September 1990

[This note was in response to a colleagueís question about German prosperity.]

Your question about German productivity is one that I havenít been able to explain, and Iíve thought about it a lot. Thereís a standing MITRE joke about no BFS people being around Friday afternoons. However, they do have a computer badge entry system that keeps track of how many hours theyíre within BFS facilities, so if they goof off much that way they must cover it in the manual accounting for places not covered by the computer. One creative way, for those who have an excuse, like the manager of the project Iím on, is to go to the BFS school in Langen in the morning – the electronic system doesnít extend there – and go home from there. And if youíre going someplace using an Autobahn on Friday, youíd better get an early start, because theyíre already jammed by 3!

I must admit that the workers one sees on the streets and in the parks – there are a lot more of them than we have, paid for by the high taxes – usually seem to be working. And the shopworkers are usually helpful and friendly. But: Japanese-like in intensity? No way.

Most things here are expensive; Germany is basically a "fair trade" country; they tell you itís because the quality is much better. In some cases, itís true; however, even then you donít always need gold-plating but you donít have a choice. In many cases, however, the items are of the same quality weíre used to – Iíve had enough things break that shouldnít have to have lost that illusion. Sometimes the stores will replace them, sometimes, just like in the U.S. theyíll say itís because they were misused. You also donít have as much choice in an item – itís particularly noticeable with items that I know we have in the U.S., although perhaps imported from someplace else, that are just not available here. Chauvinism? Trade barriers? I donít know. If itís the latter, the planned 1992 Common Market changes should make a difference.

Certainly, high prices mean those in production and sales should do well, but not everybody buying is also employed in those areas. And high taxes paying for many public projects help create more jobs, but that money has to come from somewhere, too. Of course, Frankfurt is a big banking center, but that doesnít cover the whole country, and German conservatism and secrecy has hurt their stock market here in competition with those in other countries.

A big part of their exports are high-tech, high-cost items, so that also helps. (Iíd never considered a BMW before, but a consultant who was leaving when I got here had an í83 to sell for $5,0001, and since it is a hot-rod, sort of in the Mustang mold2, I bought it. It has an instrument panel on the overhead panel that reminds me of a 747 – the first time I drove it on a trip, a light came on. It signified the oil was low. Soon after, another came on – it was for low windshield washer solution! Which reminds me – when you do turn on the washer, it also sprays the headlights, which have their own set of wipers! Itís a fairly light car with a 6-cylinder engine, and Iíve cruised comfortably for hours on the Autobahns at 100 mph.)

Of course, their prosperity is normally compared to that of the U.S. If we hadnít first tried to have both guns and butter during Vietnam, legitimizing deficit spending until the point where 25% of our budget is for interest payments, the comparison today might not be so bad. I also had thought that the difference in our military budgets might be a factor, but as a percentage of budgetary income, Germanyís isnít much different from ours.

Actually, I started this note the day I got yours – a month and a half ago! – but got distracted with trips to Sweden, Hamburg, Langen – even some vacation time to Paris. A week or so later, the Time magazine issue featuring German reunification arrived and I looked to see how they explained the prosperity. They didnít know either – they reported all the wealth and leisure, waved their arms and hypothesized that Germans are good at leveraging their labor! I think that also included the "guest workers," mainly Turks who have been imported to do the menial jobs that Germans donít want, but that still doesnít explain where the money comes from to pay high salaries to the citizens!

It also may be that all the money itís going to take to rebuild East Germany to the point where the East Germans can be employed in a competitive economy will stunt continued German prosperity for quite a while. [Yes, I really wrote this at the time.] At least we have a pretty good idea of why the Japanese are rich!

Maybe someday Iíll figure out the situation here, but so far itís a mystery!

[1The longer story: If I had a little more confidence in how the financial situation eventually would work out there, I might have gotten a more expensive vehicle, or at least one with AC. However, the usual prospect of negotiating with car dealers with the added disadvantage of not yet knowing much of the language was daunting. On the other hand, the 323i was a relatively easy choice; a long-time consultant was leaving and needed to sell and would even take a check from our US bank.

My only concern was the 135K mileage. That wouldn't have bothered me on the typical American high-torque, low-rpm V8 I was familiar with, but I wasn't sure how much different it was on a relatively smaller, higher-revving engine. Finally, I had her get a compression test, which looked OK, and I bought it. By circumstance that turned out to be a very profitable decision. Except for an early battery problem, it was trouble-free and I basically only changed the oil.

I paid $5,000 for it and when I needed to sell two years later (July '91) a lot of things had happened in the meantime. After the wall came down (October '89, only a few months after we arrived), a pent-up demand for used cars was released and the "Blue Book" values went way up. However, about the time we were returning, the American military also was leaving and suddenly there was a glut of cars on the market. I tried to sell it: in the newspapers, on bulletin boards, with a sign when it was parked.

The only guy who came to look at it disconnected a vacuum line then tried to convince me the suddenly rough running was a defect! He didn't speak any English – or at least claimed not to – however, although my automotive German wasn't good enough to properly rebut him, he knew that I knew better, and he was only looking for a really good deal.

I finally had to deal with a sleazy car dealer and got about $4,500 for it. The sleaze emerged when he wouldn't complete the deal until the Friday before the weekend we were leaving -- he needed to completely inspect it first, he said. That was the day of the going-away luncheon for a colleague and us, and I ended up being late for it.

Fortunately, the Blue Book value hadn't yet reflected the drop, and MITRE paid me the difference between what I got and the retail value of about $6,000! Not bad to be paid $1,000 for driving a car for two years!]

[2 I had owned a '71 Mustang Mach I with a 351 cubic inch V-8 engine for fifteen years before we left for Germany. Not long before the Frankfurt opportunity became available, I had begun its restoration, spending over $3,000 on body work. I had anticipated that a good paint job would cost another $2,000, and an engine and transmission rebuild another $3,000. I tried to sell it, but couldn't even get back what I had paid for the body work.

Fortunately our friend Ruth had an unused parking space in the basement of her condo that was too tight for her vintage Cadillac and she rented it to me while I was gone. (She used an outdoor parking space.) I got a $299 Maaco paint job, MITRE paid the rent in lieu of shipping a car overseas, and a friend occasionally drove it and got it inspected when necessary.

I never did finish the restoration process on my return, although I eventually sold it in 1998 to a real aficionado – he already had restored seven Mustangs, but mine was his first Mach I!]

© Copyright 2000 Jack Ludwick - All Rights Reserved

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