Wednesday, December 01, 2010

Book Review -- Were You Born on the Wrong Continent?: How the European Model Can Help You Get A Life

This chatty and engaging book by Thomas Geoghegan explores the little-known world of the present-day German industrial economy -- a form of quasi-socialism which involves large measures of worker control, through unions, "works councils", and other mechanisms. Contrary to what you would expect if you read only the financial press, this model appears to work quite well -- Germany is the world's biggest exporter (outdoing China), and they've managed to retain and make use of a skilled manufacturing workforce. According to Geoghegan, the lifestyle of a typical middle-class German is vastly better that that of a similar USian, at least along some obvious dimensions (vacation time, guaranteed health care, job security and hence no need to work like a dog to keep your job) and some non-obvious ones (a strong feeling of social solidarity, the way job stability helps to build a high-value workforce).

This is a book of personal impressions rather than something systematically researched and thought out. Geoghegan wanders in and out of the country in a daze, not quite believing this can work. Most of the people he talks to in Germany believe their system is doomed and the Anglo-American model of capitalism will triumph there as it has everywhere, and the German workers will join the race to the bottom along with the rest of the world. Yet even the center-right parties (the Christian Democrats) have robust support for the existing system.

There is some wistful but unconvincing speculation about how the US could somehow someday adopt a model like this. I'm dubious. The social and economic fabric of the US has frayed so far that it is hard to imagine it coming together again to make a society like that of Germany, where people feel responsibility for each other and enact that responsibility through social institutions with enough actual power to restrain economic rapaciousness. OTOH, think about the hellish world that present-day Germany grew out of. So dramatic changes for the good can happen. I hope it doesn't require passing through utter catastrophe.

Geoghegan's earlier book, Which Side Are You On: Trying to be for Labor When It's Flat on Its Back is also very good.

Speaking of solidarity, another interesting-looking book on my queue is Yellow Blue Tibia, a novel in which Stalin after the end of WWII enlists a troop of Soviet science fiction writers to create a a new threat to bind the country together -- sort of Watchmen meets Gary Shteyngart. Uniting-against-a-fake-common-enemy is a hoary idea, but presumably the setting puts a new spin on it.


TGGP said...

I've been discussing the weirdness of German firms with a sociologist at my blog.

Anonymous said...

The requirements of "works councils," labor representation on corporate boards, etc., applies only to publicly traded companies, i.e., those which carry the suffix "AG" (for Aktiengesellschaft). There are relatively few such publicly traded companies in Germany, considering the size of its economy.

The predominant form of German business organization is the Gesellchaft mit beschränktiger Haftung (GmbH) which means "company with limited liability.' These are most often privately held (they may have as few as two partners) and are not subject to many of the regulations which tend to discourage the formation of public companies in Germany. There is a large "Mittelstand" of smaller privately held companies, which face the difficulties raising capital that are typical of such businesses.

The general climate of business regulation and taxation in Germany, as also the case in France, has led to a relatively high structural rate of unemployment. From the 1990s boom through the financial collapse of 2008, Germany's unemployment rate was several percentage points higher than that in the U.S. Its supposed advantage of "job security" must be balanced against the difficulty of getting a job to begin with, even in good times.

TGGP said...

The paucity of American-style corporations in Germany is one of the things we're discussing at my link.