No, maybe not in Fußball this summer (although they came damn close), but when it comes to being an export nation, it looks as if Germany is about to defend its world champion title once again – for the fifth year running! That’s right, Germany exports more than the USA, China, Japan or France. And everybody else for that matter, of course.

These are not services which are being exported, the US still leads here (so there!), but the amount paid for the countless commodities made in Germany and sold elsewhere this year has already been calculated at being roughly a quarter higher than it was the previous year and may even, for the first time, reach the billion dollar mark.

How do the Germans do this, you ask? The Made in Germany label still means something, that’s why. Quality and reliability still has its price. But can that be the only reason? No, say the French. Germany’s biggest trading partner has been growing impatient with its next door neighbor in recent years when it comes to this issue. It appears that from the French point of view, Germany has become somewhat of a Billig-Lohn-Land (cheap labor country). Huh? Germany? Are we talking about the same country?

That’s right, about ten percent of everything Germany exports goes to France, and the demand is increasing. But the French (and other European neighbors out there, too) are attributing part of this demand to the cheaper cost of German products due to the stable wage policy that has reigned in Germany for many a year now. Because productivity continues to increase, but wages haven’t “kept up” with this productivity, the prices for these products become cheaper, relatively speaking.

The average hourly wage cost in Germany has only increased about two percent since 1995, whereas in France, for instance, this increase has been ten percent. This difference has given German products a competitive edge = they are cheaper than they used to be. Both countries share a common currency, of course, so where currency exchange rates used to be a big part of the pricing calculation between two countries like this, now it’s the wage cost.

So is all this aggressive talk about aggressive German wage increases for the coming season a good thing? That’s impossible to say. I’m sure that generous increases in wages can only help in the short term, provided people finally start spending their money here. But nobody ever knows about the long term effects until the long term effects finally get here.

And the real question is this: How many times was Michael Schumacher formula one world champion? I can’t count that high, I guess. Let’s just say that it was a whole bunch of times, a lot of them consecutively, too. But even he had to hang up his helmet eventually, know what I’m sayin’? And he wasn’t even interested in a wage increase.

It’s good to be the king.

Come visit me at Observing Hermann…

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