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US should take Germany as example, says Obama advisor

The Local · 13 Dec 2009, 11:34

Published: 13 Dec 2009 11:34 GMT+01:00

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Speaking in an interview with news magazine Der Spiegel, Volcker said he admired Germany's economic model, and suggested that the US should consider a shift towards exporting to help the US recover from the economic crisis.

"In some ways, I think the labour cost is higher in Germany than it is in the United States but you can somehow maintain that export edge," Volcker said, "You are dedicated to exporting, we are dedicated to financial engineering and it hasn't worked out too well."

Volcker, who is chairman of the US Economic Recovery Advisory Board, added, "I wish we had fewer financial engineers and more mechanical engineers. Tell me the secret of how the Germans keep this going."

Volcker also said that while the US was doing okay in researching and developing new technologies, it was leaving all the manufacturing to other countries, particularly Germany.

The 82-year-old is more pessimistic about the US economy than some of his colleagues, most notably Chairman of the US Federal Reserve Ben Bernanke, who recently declared the recession over.

"The recovery is quite slow and I expect it to continue to be pretty slow and restrained for a variety of reasons, and the possibility of a relapse can't be entirely discounted," said Volcker, "I'm not predicting it but I think we have to be careful." The veteran economist said it was "amazing" how quickly people are forgetting the global financial meltdown and want to return to business as usual.

Volcker said that there was a fundamentally different psychology in Germany than in the US, which allowed a lot of manufacturing be outsourced.

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"The young, ambitious Germans realize that export industry and heavy engineering is the German competitive advantage," he told the magazine, "The best Americans don't even think about that. We have the Silicon Valley and that whole kind of high tech industry is still our strength but we need something broader than that too."

The Local (news@thelocal.de)

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Your comments about this article

12:25 December 13, 2009 by Kayak
HE = Heavy Engineering

IT = Information Technology

US = The United States of America

DE = The Federal Republic of Germany

CN = The People's Republic of China

DE = HE (check!)

US = IT (check!)

CN = HE + IT (check!)

Go figure.
13:04 December 13, 2009 by Frenemy
lets clarify this a little:

DE = HE (check....not sure why tho). IT (no check, because of a societal tech-phobia/refusal to join the 21st century)

CN = HE (check...because the work force is accustomed to sub-Western living standards. IT (check!....because they stole it all)

US = IT (check?....riiiiight....maybe like 15 years ago!!), HE (no check because Americans view work-ethic like young Germans view higher-education fiscal policy)
14:49 December 13, 2009 by Celeon
Well, first of all the term "heavy industry" is a popular word.

The term became popular through Japanese and Korean companies who put it into their names . "Kawasaki Heavy Industries" for instance.

A heavy industry can mean you build things that are heavy in weight or it can mean you use heavy machinery to produce things which do not necessarily have to be heavy themselves.

Additionally most governments basically define anything that produces a lot of pollution as being heavy industry.

So the USA has of course a heavy industry like for instance steel production, chemical industry, mining, motorvehicles and aerospace. General Motors? Boeing anyone?
15:17 December 13, 2009 by Frenemy
what!?! really?! (not calling you out or anything, I just didn't know that. but weight??)

So If produce lead-cast garden gnomes, I'm in heavy industry? cool. :-)
15:49 December 13, 2009 by mixxim
Obama should have learned more from Oma.
16:10 December 13, 2009 by Celeon
@ Frenemy

If you produce them in big ass 1000 ton machines that darken the skies with smoke ...yes then you have a heavy garden gnome industry :-D
16:13 December 13, 2009 by Frenemy
sh!t....its so hard to get industrial pollution street-cred these days!!!
16:27 December 13, 2009 by twisted
Volcker has one of the best financial and economic minds around and I wish Obama would listen to him more.
19:31 December 13, 2009 by puisoh
To export, you need good products that the world wants to buy.

The US is just too arrogant, they build what they want to build (not what the world wants to buy).

Look at an average German/Japanese car vs an average American car. Look first, then compare (its performance). There is nothing to compare. They are way off.

To learn, one has to start with a humble attitude. Is America ready to admit they have something to learn, afterall they are God own's country.
21:25 December 13, 2009 by LickmyPorkChop
Mr. Volcker needs to be investigated for making comments like that. Germany's economic model should definitely NOT be seen as a role model!
00:37 December 14, 2009 by Frenemy
"The US is just too arrogant, they build what they want to build (not what the world wants to buy)."


lets be honest here, that's not the full extent of that arrogance. Its blatantly apparent in all facets of economics AND geopolitics. (and, believe me, when the piper comes a'calling....its gonna be costly!)
03:28 December 14, 2009 by Davey-jo
This is good; yes/no?.

We should all base our economies on exporting quality goods. If all economies go the same way there is nothing but war to be expected. Either we wipe out your production capacity or we destroy your market. Either way your prosperity depends on American pacification and UK cowardice. One day we'll blow you to bits; again.
03:32 December 14, 2009 by randyt
Reading the article Volcker's stress was on exporting, not so much "heavy."

He is correct. For example even when the American auto industry was not in the tank they refused to build cars for export - yes in some cases quality would have had to be improved, but American workers could do that.

I taught a GSM intro course for Ericsson years ago. I had a photo of an old style POT hanging from the dash of an old car. It was one of Ericsson's first mobile phones. I passed the photo around the class and when it came back I'd ask the students "what kind of car was that phone in?" Of course everyone tried Volvo and Saab - but no it was an old 1937-40 or so Chevy! America did at one time export a lot of products, we got lazy, CEOs got lazy making tons of money on just the American market. We have now turned into as Volcker says a nation of "financial engineering" money changers. Excuse the biblical reference but these money changers need to be chased out of the country. Maybe send them to China and pay them Chinese wages.
07:15 December 14, 2009 by Frenemy
@daveyjo: NO!! Its not f#ckin good....for ANYONE!!! when the American economy catches a cold...the world sneezes...(he happens to be right in this situation,...but just for the record, I hate Thomas Friedman).

And Daveyjo, I'll tell you something else, I think I said on some other thread something along the lines of the US cannot "go it alone". The opposite (vis-a-vis Europe) also holds true. The transatlantic relationship is both natural and VITAL. The 20th century shows that as soon as you start f#cking with that relationship (European stability and American "passivity"/satisfaction with the "current state of -geopolitical- affairs")...the world goes violently haywire...

"One day we'll blow you to bits; again."

What???? who is "we"? and when did that happen?
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