re: Germany lending money to Greece-- censored facts below...

"Lose your dreams and you will lose your mind." -- Mick Jagger/Rolling Stones ("Ruby Tuesday")

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Hi all...

For weeks now we've been reading in the neoliberal New York Times and Poughkeepsie Journal about how those lazy, greedy Greeks are finally getting their comeuppance (according to pundits all over)...

[more fuel for right-wing's fire to further decimate public spending at local state, national levels, natch... ignoring common-sense revenue alternatives, massive coalition @ http://www.ABetterChoiceforNY.org ;
reason to unite to fight right, work harder than ever this weekend to GOTV for school budgets!...CISPE:
http://www.facebook.com/pages/Community-in-Support-of-Public-Education-CISPE/110343808996171?ref=ts&v=wall (you must live under rock to not notice steady media drumbeat for cuts, cuts, cuts, cuts... but did FDR get us out of Depression with massive budget cuts, layoffs, union-busting?...ignored, sadly]

Here's something tho (surprise) the Times, Journal, and practically everyone has ignored re: Greece...

Namely this-- the kind of country that's come out first and foremost to bail out Greece-- Germany...(!)...

[e.g., see: http://blogs.reuters.com/felix-salmon/2010/02/09/when-germany-bails-out-greece/ ;
http://www.telegraph.co.uk/finance/comment/ambroseevans_pritchard/7199625/Germany-backs-Greek-bail-out-as-EU-creates-economic-government.html ]

Germany-- with full pensions, health care, child care, university education, and good wages for all...
[while here in U.S. GOP, many Dems, media all convince us this is an impossible dream we can't have]

Germany-- with literally half its corporations' boards of directors elected by workers-- codetermination...

Germany-- with an economy that's been booming for many years now-- based on the strength of a deep middle class able to actually purchase goods and services to keep the economy turning around...

Germany-- with BMW, Daimler, Siemens, Bertelsmann, and many other large corporations, sm. biz too...

More reason to come out to our book discussion group of Steven Hill's Europe's Promise tomorrow!...

[we'll be meeting at 10:30 am at Palace Diner at 194 Washington St. in Poughkeepsie; come if u can]

See http://www.EuropesPromise.org ; my post on this-- http://www.DutchessDemocracy.blogspot.com ...

[Steven Hill is Director of the Political Reform Program at the New America Foundation, and will soon be our guest again on our Fri. 5-6 pm show on WVKR 91.3 FM; just firming up which Fri. in June for this]

Recall Feb. Amy Goodman interview w/Hill http://www.democracynow.org/2010/2/12/europes_promise .

...and if you haven't read these to recent ones from Hill re: Greece/Europe/U.S., they are must-reads(!):

"Europe's Answer To Wall Street" [The Nation Apr. 21st] [also see http://www.NewAmerica.net ]
http://www.newamerica.net/publications/articles/2010/europes_answer_to_wall_street_30951

"Greek Crisis Leads to Positive Steps" [today's San Francisco Chronicle]
http://newamerica.net/publications/articles/2010/greek_crisis_leads_to_positive_steps_31739

[also see Paul Krugman's column in today's Times: "We're Not Greece":
http://www.nytimes.com/2010/05/14/opinion/14krugman.html ]

These three are from Steven Hill's new http://www.EuropesPromise.org book; will be discussing these:

[reality check: Obama not even close to socialism-- while responsible capitalism working in Germany; we have to wait 'til 2525 for common sense policies doing great in Europe to happen here?...hope not!]

Fact: "In terms of taxes, it turns out Europeans don't pay any more than most Americans if we factor in the entire tax burden of federal, state, local, real estate, and social security taxes, as well as the out-of-pocket fees, deductibles, premiums, and tuition that Americans pay in addition to their taxes in order to receive the same level of workfare supports that Europeans have."
[see http://www.EuropesPromise.org ]

Fact: "Many of the things Europeans receive for their taxes-- health care, a university education, a decent retirement, child care, and parental leave, for example-- are hardly discretionary; they are necessary to enjoy a basic level of security and comfort. But Americans have to pay extra for those services and benefits. In short, when you sum up the total balance sheet you discover that many Americans pay out just as much as Europeans, but we receive a lot less for our money."
[see http://www.EuropesPromise.org ]

Fact: "Europe has the largest economy in the world-- almost a third of the world's economy. In fact, it's almost as large as the United States and China's economy combined. Europe has more Fortune 500 companies (179) than China (less than 39) and the United States (140) combined. It has more small businesses, that produce two-thirds of the jobs, compared to in the United States where small business produces about only half the jobs. However you want to measure it, the European economy is robust, and it's vibrant."
[see: http://www.democracynow.org/2010/2/12/europes_promise ]

[what's the alternative to educating ourselves/others on this?...even darker times, folks-- pass this on!]

Joel
444-0599/876-2488
joeltyner@earthlink.net

p.s. Contrast Germany with unemployed Americans out of work for 99 weeks-- cut off from benefits entirely:
http://money.cnn.com/2010/04/23/news/economy/extending_unemployment_benefits/ ;
http://www.huffingtonpost.com/2010/04/30/tier-5-congress-sends-mix_n_557508.html ;
http://wcbstv.com/topstories/unemployment.insurance.benefits.2.1603354.html ; (Doreentig@aol.com); Town of Poughkeepsie's intrepid Doreen Tignanelli is just as frustrated with Dems in Congress as GOP; call 'em at (800) 828-0498 for 'em to get off dime on this; send letter to all 25 of us in our County Legislature on this at countylegislators@co.dutchess.ny.us for my colleagues to sign letter on this asap!

p.p.s. Big single-payer conf. in Albany tomorrow-- http://singlepayernewyork.org/pdf/capAgenda.pdf ...

[...Obama's position for single-payer back in 2003 was abandoned; we don't even have public option; fact is Obama was for single-payer: http://www.pnhp.org/news/2008/june/barack_obama_on_sing.php ; again-- contrast health care reform deal (capitulation) that was passed with successful Ger. economy...]

From http://www.pnhp.org/news/2010/may/after-the-reform-aiming-high-for-health-justice ...

["After the Reform: Aiming Higher for Health Justice" by Margaret Flowers]

So what are the White House and Congress really saying when they claim that we must retain a private insurance model? That they are unwilling to take on these powerful industries, and so we, the people, must be willing to compromise and work within their framework. Mohandas Gandhi said:

All compromise is based on give and take, but there can be no give and take on fundamentals. Any compromise on mere fundamentals is a surrender. For it is all give and no take.

When it comes to health reform, compromise on the fundamentals is unacceptable because the human costs are continued preventable deaths, continued suffering as patients fight for needed care, and continued bankruptcy from medical debt as families struggle to pay for deductibles and uncovered services. In a study published in Health Affairs in January 2008 that looked at the top nineteen industrialized nations, the United States ranked the worst-we have the highest number of preventable deaths (101,000 each year) because we lack a health system. All of the other industrialized nations have health systems based on the principles of health care as a human right: universality, equity, and accountability.

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From http://www.newamerica.net/publications/articles/2010/europes_answer_to_wall_street_30951 ...

Europe's Answer to Wall Street
* By Steven Hill,
* New America Foundation
* April 21, 2010 | The Nation

A year and a half after an economic earthquake shook the world, the so-called experts are still trying to figure out what happened and how to move forward. In the shadows of that confusion, new economic models are beginning to find traction. Alternatives to Wall Street capitalism, the epicenter of the temblor, are suddenly getting a new hearing in the United States, whether it's Paul Volcker calling for reinstatement of Glass-Steagall regulation of the banking sector, the United Steelworkers announcing an alliance with the Mondragon cooperatives in Spain to develop manufacturing cooperatives in the United States, or Cleveland-based efforts to establish worker-owned co-ops in distressed communities [see Alperovitz, Howard and Williamson, "The Cleveland Model," March 1].

But the brightest spots in the postcollapse landscape are in Europe, which long ago advanced a degree of economic democracy that has proved its mettle in this crisis and therefore deserves closer inspection. If Americans want to learn about cooperatives, Europe is a great place to start. They produce an estimated 12 percent of the GDP of the European Union and involve, directly or indirectly, at least 60 percent of the population. Besides the Mondragon co-ops in Spain, in which 256 companies employ 100,000 people in industry, retail, finance and education, there's also Coop Italia, which operates the largest supermarket chain in Italy, employing 56,000 with more than 6 million members; housing co-ops like Poland's TUW; and the Co-operative Group in Britain, which is the world's largest consumer-owned business, with 4.5 million members.

However, most cooperatives are generally small-scale and thus unlikely anytime soon to replace the most important economic institution in modern mass economies, which is the corporation. The corporation, even with all its considerable warts, is the greatest wealth generator that humans have ever created, but its success raises the questions: Who gets to control that wealth? Whose pockets should the wealth flow into?

To answer those questions, Europe, led by Germany, has evolved over several decades one of its greatest contributions to the global economy. Practices unfamiliar to Americans, such as co-determination, supervisory boards and works councils, have been crucial in helping to harness capitalism's tremendous wealth-creating capacity so that its prosperity is broadly shared.

Co-determination has several features, one of which allows workers to elect representatives to corporate boards of directors known as supervisory boards. Supervisory boards then oversee company managers, who handle day-to-day operations. In Germany, the world's second-largest exporter and fourth-largest national economy, fully half of the boards of directors of the largest corporations--Siemens, BMW, Daimler, Deutsche Telekom and others--are elected by workers. In Sweden, one-third of a company's directors are worker-elected. To understand the significance of this, imagine if Wal-Mart were legally required to allow its workers to elect a third to half of its board, who would then oversee the CEO. Imagine how much that would change Wal-Mart's behavior toward its workers and supply chain. It's hard for Americans even to conceive of such a notion; indeed, when I ask Americans at my lectures how many of them have heard of worker-elected supervisory boards, usually no hands go up. Yet most European nations employ some version of this as a regular feature of their economy.

The impact has been impressive. Klas Levinson, a researcher for the former National Institute for Working Life in Sweden, is one of the world's experts on co-determination. I met with Levinson at the institute's Stockholm headquarters, a sleek glass structure with the air of a university campus. "Co-determination is Europe's little secret advantage," he told me. "The idea that elected worker directors should sit side by side as equal decision-makers with stockholder representatives, supervising management, is a little-known yet unprecedented extension of democratic principle into the corporate sphere."

Levinson's research shows that employee representation on corporate supervisory boards, contrary to fears that it would cause tension or render decision-making too cumbersome, has actually fostered cooperation between management and workers. This, in turn, has benefited the businesses as well as the workers. Workers have input, even into important decisions, so companies are less plagued by labor strife and internal schisms. And workers are well compensated, with high salaries and the most generous social support systems in the world.

One of Levinson's studies of Swedish businesses found that two-thirds of executives viewed co-determination as "very" or "rather" positive, because it contributed to a positive climate, made board decisions "deeply rooted among the employees" and facilitated implementation of "tough decisions." Eight of ten chairmen were satisfied with the arrangement and felt it was not important to reduce worker representation. An EU directive establishing a continentwide framework for board-level employee representation went into effect in October 2004, firmly rooting supervisory boards in Europe's economic culture.

The other pillar of co-determination is known as works councils, which are just what the name implies--elected councils at businesses, through which employees gain significant input into working conditions. Works councils, which are separate from labor unions but often populated by trade unionists, have real clout. They enjoy veto power over certain management decisions pertaining to treatment of employees, such as redeployment and dismissal. They also have "co-decision rights" to meet with management to discuss the firm's finances, work and holiday schedules, work organization and other procedures. In addition, they benefit from "consultation rights" in planning the introduction of new technologies and in mergers and layoffs, as well as in obtaining information useful in contract negotiations, such as profit and wage data. In some nations, including Germany, Sweden and France, works councils have acquired even more rights and greater influence.

In France the food manufacturer Danone agreed with its works councils to specific rules on job cuts, including consideration of union proposals to avoid layoffs and worker transfers. The Polish union Solidarity has said that the inclusion of Central and Eastern European worker representatives in works councils is "the most effective and sometimes nearly the only way" for them to obtain information on multinational companies' operations. German law stipulates that factorywide workers' assemblies must be held at least four times a year, at which a management representative must report on the plant and the business. The head of the works council also reports, and workers use these assemblies to promote their views and, if necessary, criticize company decisions in front of management.

In 1994 the EU issued a pioneering directive on works councils, stipulating that every multinational with at least 1,000 workers, and at least 150 workers in two or more EU nations, must negotiate agreements with works councils. Other nations have supplemented that directive by requiring councils in every workplace. Studies by Princeton's Jonas Pontusson and others have concluded that works councils contribute to efficiency by improving communication, which in turn improves the quality of decisions and legitimizes decisions in the eyes of workers. The studies also found that works councils are associated with lower absenteeism, more worker training, better handling of grievances and smoother implementation of health and safety standards. It turns out that when workers are given a degree of consultation, it makes them more satisfied and more productive.

In Germany works councils and supervisory boards can take substantial credit for the fact that, while the US unemployment rate has more than doubled during this economic crisis, Germany's has barely increased. That's because Chancellor Angela Merkel was heavily influenced by works councils and labor unions, and by the culture of consultation in general, to adopt a policy called Kurzarbeit, or "short-time work," in which, instead of laying off millions, employees agreed to spread the pain by working shorter weeks. Most of the lost wages have been made up from a special fund squirreled away during more prosperous times. As a result, more Germans have money in their pockets, and communities and households haven't been decimated by layoffs like they have been in the United States. (Despite the advantages, when Larry Summers, one of Barack Obama's closest economic advisers, was asked why the president didn't pursue short-time work to stem the economic bleeding, he dismissed the idea, saying the White House wanted to create new jobs, not preserve old ones.)

Co-determination has proved crucial to Europe's economic success and its broadly distributed wealth. "The practical effect of co-determination," says Levinson, "is that corporate managers and executives must confer extensively with employees and unions about a range of issues, even about the future direction of the company." Co-determination reflects European "social capitalism," with its communitarian values, long-term strategic vision and emphasis on manufacturing, much the way huge executive bonuses, quarterly earnings and a bloated financial sector reflect America's Wall Street capitalism. Social capitalism has both produced and benefited from the culture of consultation, which has also contributed to the creation of cooperatives and resulted in a vibrant small-business sector that produces two-thirds of European jobs, compared with only half of US jobs.

Interestingly, the conquering US powers in World War II can take some credit for co-determination. After the war a group of prominent German economists, led by future chancellor Ludwig Erhard, Walter Eucken and others, proposed what they called the "social market economy" in the belief that the market should serve broader social goals. And it was conservative Christian Democrats, not the leftish Social Democrats, who introduced this idea. The Allied powers encouraged this line of thinking, since it decentralized economic power, shifting it away from the German industrialists who had supported the Nazi war effort. In effect, US planners "punished" postwar Germany with economic democracy as a way of handicapping concentrated wealth and power, helping to birth the most democratic corporate governance structure the world had ever seen.

In the decades after Germany's launch of social capitalism, co-determination spread throughout Europe; it has been adopted in most of the new EU member states from Central and Eastern Europe. Sixty years after its genesis, co-determination is a core element of the European economy, and it distinguishes Europe's social capitalism from America's Wall Street capitalism.

Critics allege that co-determination hurts competitiveness, but the success of the European economy and of its many global businesses belies this criticism. Contrary to the US media stereotype that "old man" Europe is chronically plagued by a weak, sclerotic economy, Europe has the largest economy in the world, producing nearly a third of the world's GDP. Indeed, its economy is almost as large as those of the United States and China combined. Europe has more Fortune 500 companies than the United States and China together, and Europe had a higher per capita growth rate from 1998 to 2008 than the United States. Long denigrated by US pundits as the land of high unemployment, the EU currently even has a slightly lower unemployment rate than the United States. Indeed, the World Economic Forum in 2008-09 ranked Denmark, Sweden, Finland, Germany and the Netherlands--all of which employ some degree of co-determination--among the top ten most competitive economies in the world. They are also ranked at or near the top of most lists for quality of life, healthcare and social benefits. That's not a coincidence, since co-determination allows for both economic vibrancy and more egalitarian social policy. And while the United States also ranks high in competitiveness, it is near the bottom among most-developed countries in healthcare, social benefits and quality of life.

Sweden, Germany and other European countries are proof that you can have it all--but only if you have the right institutions to facilitate both a powerful economic engine and the supportive institutions and benefits to harness that engine and keep employees and families healthy and productive. These distinctly European advances may be the most important innovations in the world economy since the invention of the modern corporation, since they encourage free enterprise combined with economic democracy and worker consultation that does not unduly burden entrepreneurship and commerce. The advances allow businesses to be both competitive and socially responsible.

In effect, Europe has reinvented the corporation. Yet the latest critiques of capitalism by leading authors like Naomi Klein, Noam Chomsky and the producers of the popular film The Corporation tend to view all corporations and all capitalisms as the same. American progressives, while searching for effective responses to globalization, appear to be mostly unaware of these intriguing European inventions. Movements to revoke the charters of offensive corporations, while having gut-level appeal, have failed to recognize that European corporations are fundamentally different animals from their "disaster capitalism" US counterparts. When I asked a leading globalization critic from the Economic Policy Institute his opinion of co-determination and works councils, he replied dismissively, "Bah, those just lead to company unions," a demonstrably false claim.

Of course, the American right rejects co-determination as socialism incarnate, ignoring its potential to renew capitalism and support real family values. While the United States does not have a strong history of economic democracy, we do have a recurring pattern of responding to economic crisis by extending stakeholder rights as well as New Deal-type supports. This has resulted in employee stock-option plans, a small but vigorous co-op movement and stakeholder laws passed by an unusual labor-business coalition in Pennsylvania as a shield against corporate raiders, and other reforms. The Steelworkers alliance with the Mondragon cooperatives is another encouraging sign. These are some of the American threads of consultation and economic democracy that can be used to fashion a progressive response to the stunning failure of Wall Street capitalism. There is nothing magical or culturally determined about Europe's use of co-determination. All it takes to start the ball rolling here is a legislator, a governor or a president willing to introduce such a law. What would be the argument against it--that the CEOs who nearly destroyed the American economy and then came back for a government bailout know best? That's a debate any progressive leader should relish.

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Fact: "Much more than America, Europe is based on real "family values", and unlike America it is not timid or stingy about spending its wealth to support those values. Indeed, Europe spends at least 25 percent more per capita than the U.S. on workfare supports, and three times more on families, according to OECD figures."
[see http://www.EuropesPromise.org ]

Fact: "In the United States, public spending on old age care is nearly 25 percent less per capita than in Europe, but private spending on old age care is nearly three times higher per capita, because Americans mostly self-finance their own senior care."
[see http://www.EuropesPromise.org ]

Fact: "According to a Federal Reserve study, the wealthiest 10 percent of people in the United States now owns 70 percent of the wealth, and the wealthiest 1 percent owns more than the bottom 95 percent, compared with Germany, where the top 10 percent owns 44 percent of the wealth.
[see: "Richest 2% Hold Half the World's Assets" by Chris Giles (Financial Times 12/6/06):
http://www.commondreams.org/headlines06/1206-01.htm ]

Fact: "The ratio of CEO pay to average manufacturing employee pay is 475:1 in the United States, compared with 24:1 in Britain, 15:1 in France, and 13:1 in Sweden; even in nonmanufacturing sectors in the United States, the average CEO earns more in one day than the average worker earns all year."
[see http://www.EuropesPromise.org ]

Fact: "While the top income-tax rate in the United States is 35 percent, the numbers are a bit misleading. 'People coming from the U.S. to the Netherlands focus on that difference, and on that 52 percent,' said Constanze Woelfle, an American accountant based in the Netherlands whose clients are mostly American expats. 'But consider that the Dutch rate includes social security, which in the U.S. is an additional 6.2 percent. Then in the U.S. you have state and local taxes, and much higher real estate taxes. If you were to add all those up, you would get close to the 52 percent.'"
[see: "Going Dutch" by Russell Shorto (NYTimes magazine 4/29/09):
http://www.nytimes.com/2009/05/03/magazine/03european-t.html ]

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From http://newamerica.net/publications/articles/2010/greek_crisis_leads_to_positive_steps_31739 ...

Greek Crisis Leads to Positive Steps
* By Steven Hill,
* New America Foundation
* May 14, 2010 | San Francisco Chronicle
Instructively, while Greece has been going through this crisis, Greek families and workers still all have health care and access to many safety-net supports that European countries provide. But in California, which last summer had to issue IOUs to keep from defaulting, a new report found that 25 percent of the population has no health insurance.

Contrary to what the doomsayers have been saying, Greece's debt crisis may turn out to be one of the best things to happen to the European Union.

While the situation has been messy, it also has signaled a badly needed wake-up call to Europe about a flaw at the heart of its monetary union. That in turn has resulted in a move toward reforms that have the potential to lead to sensible financial regulation and transparency, as well as to strengthen Europe's union. These reforms include:
-- Financial backstop. A $1 trillion rescue package has been created that will provide the euro zone with a sort of European Monetary Fund that can tackle the default of a member state or pressure a country to cut its deficit before it gets out of hand. For the first time in its history, euro-zone members are loaning money to each other, a clear step toward a tighter union.
-- More transparency. Greece's profligacy, as well as that of other euro-zone members, was enabled by a lack of transparency that allowed Greece to submit falsified finance reports. Now, more oversight power will be given to Eurostat, the EU's statistics and data collection agency, to audit budgets of member states.
-- Financial re-regulation. Europe is cracking down on hedge funds, derivatives and credit default swaps, those toxic investment vehicles that American investor guru Warren Buffett has called "financial weapons of mass destruction." U.S. Treasury Secretary Timothy Geithner has dragged his feet on this kind of reform, but Greece's crisis has pushed the EU to its limit, and Europe won't wait any longer.

The idea of surrendering a measure of financial sovereignty would never have occurred had the Greek crisis not arisen. Indeed, the crisis seems to be spurring the European Union to fine-tune its institutions for the better.

Time will tell how it ultimately works out. But the EU often has evolved in reaction to a crisis. During each, Euroskeptics have predicted the imminent demise of the union, and each time they have been proved wrong.

It's helpful to remember that "old Europe" is quite young. The configuration of the EU -- 27 nations and 500 million people -- dates only to 2004; the euro, used by 16 nations, dates to 2002. By contrast, from the inauguration of the first American government in 1789, it took the United States about 80 years to cease being a collection of regions and to bind into a nation. And during that time, we suffered at least eight banking crises and financial panics.

Instructively, while Greece has been going through this crisis, Greek families and workers still all have health care and access to many safety-net supports that European countries provide. But in California, which last summer had to issue IOUs to keep from defaulting, a new report found that 25 percent of the population has no health insurance. Nor do Californians have access to many other safety-net features, even as unemployment is over 12 percent. Many people have been left to fend for themselves.

One thing is clear: The EU member states have swum too far across the stream to turn back. It's possible that one day we will look back at this time and realize it was a seminal moment in the further formation of the European Union.

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Recall these two pertinent gems from Yes magazine back last December as well:

"Why Is Costa Rica Smiling?" by Lisa Gale Garrigues
http://www.yesmagazine.org/issues/climate-action/why-is-costa-rica-smiling

"Putting the Science of Happiness Into Practice" by John de Graaf
http://www.yesmagazine.org/yes/happiness/putting-the-science-of-happiness-into-practice

[why are we here in U.S. so low on http://www.HappyPlanetIndex.org , folks?]

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These three are from Amy Goodman's Feb. 12th interview with Steven Hill on Democracy Now:

Fact: "Childcare for two children in the United States is about $12,000 per year for a family in the United States. In Europe, you're paying a thousand to maybe $2,000 per year for that same childcare."
[see: http://www.democracynow.org/2010/2/12/europes_promise ]

Fact: "Europeans have lowered their ecological footprint to half that of the United States, even though they have the same standard of living. The average American uses twice as much carbon, twice as much electricity as your average European, and over four times as much carbon as someone from China or India. Europe is really leading the way is on its use of environmental technologies, green technologies, green design, conservation technologies and renewable technologies, that are being implemented in a much more widespread fashion in Europe."
[see: http://www.democracynow.org/2010/2/12/europes_promise ]

Fact: "Germany was the first to develop a practice known as co-determination to put some regulations around corporate power, where the- you know, every corporation has a board of directors, but in Germany 50 percent of those board members are elected by the workers. In Sweden a third of the board members are elected by the workers. It would be as if Wal-Mart were required by law to allow its workers to elect 50 percent of its board of directors. It's almost unimaginable from the American point of view. And yet, here you have major economies in Europe that actually do this on a fairly regular basis, and yet most Americans have never even heard about this."
[see: http://www.democracynow.org/2010/2/12/europes_promise ]

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These five are from Thomas Geoghegan's March 2010 "Consider the Germans" piece for Harper's:

Fact: "Even as we in the United States fall more deeply into the clutches of our foreign creditors, Germany has somehow managed to create a high-wage, unionized economy without shipping all its jobs abroad or creating a massive trade deficit, or any trade deficit at all. the dollar is dropping, and we still can't compete with Germany. Even as the Germans outsell the United States, they manage to take six weeks of vacation every year. They're beating us with one hand tied behind their back."
[see: http://www.newheadnews.com/harpersGeoghegan/index.html ]

Fact: "The big three building blocks of German social democracy are the works council, the co-determined board, and Germany's regional wage-setting institutions. There are thousands of clerks and engineers in Germany who now are (or a few years ago were) elected officials, with real power over other people. They are responsible for other people. They are responsible for running the firm. They make up a powerful leadership class that represents the kind of people- low-income, low-education-who don't have much of a voice in the affairs of other industrialized countries."
[see: http://www.newheadnews.com/harpersGeoghegan/index.html ]

Fact: "Co-determined boards apply mostly to the largest companies, those with more than 2,000 employees. the clerks get to elect half the board: not a fifth, not a third, but half-the same number of voting directors that the hedge funds get to elect."
[see: http://www.newheadnews.com/harpersGeoghegan/index.html ]

Fact: "In a German firm, the workers are Cato-like guardians, able to look at all of the financial records and planning documents as if they owned the place. If a company wants to start a plant abroad, the workers can pressure the board to plow some money back into a German plant or provide a ten-year employment guarantee. Or they can fight to get a better owner. It's not just the arguing: it's the fact that they can be in the boardroom watching, or in the back room rifling through the files."
[see: http://www.newheadnews.com/harpersGeoghegan/index.html ]

Fact: "Workers in Germany can't stop outsourcing-- but they can cut deals. In the United States, people don't even know the plant is closing until management calls a meeting and ushers everyone out under armed guard. With works councils and co-determination, everything in the firm gets discussed, rather than the CEO going to the mountaintop without ever seeing a worker and deciding to pull the plug."
[see: http://www.newheadnews.com/harpersGeoghegan/index.html ]

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From http://www.newheadnews.com/harpersGeoghegan/index.html ...

Harper's Magazine
March 2010 p. 7-9
NOTEBOOK
Consider the Germans
By Thomas Geoghegan

Come on: is the West really in such decline? Yes, we can sit here on our island continent and gloom about the rise of China, as our elite now like to do. Or we can go out into the world and start competing like the Europeans. For here's a strange fact: since 2003, it's not China but Germany, that colossus of European socialism, that has either led the world in export sales or at least been tied for first. Even as we in the United States fall more deeply into the clutches of our foreign creditors-China foremost among them-Germany has somehow managed to create a high-wage, unionized economy without shipping all its jobs abroad or creating a massive trade deficit, or any trade deficit at all. Sure, China just pulled slightly ahead of Germany, but that's mostly because the euro has soared, making German goods even more expensive, and world trade has slumped. Meanwhile, the dollar is dropping, and we still can't compete with either nation. And even as the Germans outsell the United States, they manage to take six weeks of vacation every year. They're beating us with one hand tied behind their back.

Why is Germany beating us? It's tempting to say it's because we beat them. After all, we helped put a major component of the German model in place, which is the role that German workers have in running their firms. After World War II, we had a problem: Who would keep watch over all the German businessmen who had supported Hitler? We couldn't put them all in jail. Back in that New Deal era, we and our allies were quite willing to put workers on the boards to keep an eye on businessmen. Still, the idea of works councils was not invented by Americans. In fact, it had its origins in Weimar Germany. And now Germany is the country, out of all countries, including Communist China, in which workers have the greatest amount of control over (dare I say it) the means of production.

Okay, it's not that much control. But it's enough to make the German system a rival form of capitalism. And because German workers are at the table when the big decisions are made, and elect people who still watch and sometimes check the businessmen, they have been able to hang on to their manufacturing sector. They have kept a tool-making, engineering culture, which our own entrepreneurs, dreamily buried in their Ayn Rand novels, have gutted. And now, thanks in large part to these smart structural decisions, Germany is not only competitive, it's rich. Although it's unlikely that even the most liberal of American politicians would ever use a phrase like "worker control"-much less describe people who work as "workers"-it might still be worth at least considering what would be involved in emulating the German model.
Let me here cart out the big three building blocks of German social democracy: the works council, the co-determined board, and Germany's regional wage-setting institutions. If I were teaching a class, I'd put these up on the blackboard and talk about them at the beginning of every class. "What do I mean by the German model? I'd like to see hands." No one knows. So I give the answer: "It's the works council, the co-determined board, and the wagesetting institutions."

Everyone in class groans. Whatever does that mean?

Well, the works council is simple in theory, though hard for an American to take in. Let's say you work at the Barnes & Noble at the corner of Clybourn and Webster avenues in Chicago. You may be just a clerk, no degree. (In Germany, you'd have a certificate in bookstore clerking, but in the United States there's no need.) Still, you could be elected to a works council at this store. That means you help manage the place. You help decide when to open and close the store. You help decide who gets what shift. On layoffs and other issues, the employer must reach an agreement with the works council. So you may ultimately decide whether Ms. X is to be laid off or fired. How did you get into this kind of "management"? Barnes & Noble had no say in it. You were elected by your fellow workers. You went out and campaigned: "Elect me."

The result is that there are thousands of clerks and engineers in Germany who now are (or a few years ago were) elected officials, with real power over other people. They are responsible for other people. They are responsible for running the firm. They make up a powerful leadership class that represents the kind of people-low-income, low-education-who don't have much of a voice in the affairs of other industrialized countries.

If that's a works council, what's a co-determined board? These apply mostly to the largest companies, those with more than 2,000 employees. We now leave behind the bookstore at Clybourn and Webster and try to imagine all of Barnes & Noble, the whole company. Way at the top, in the boardroom, where you expect to bump into Robert Rubin, the clerks get to elect half the board: not a fifth, not a third, but half-the same number of voting directors that the hedge funds get to elect.

Of course there's a catch! Under German law, if the directors elected by the clerks and the directors elected by the shareholders are deadlocked, then the chairman can break the tie. And who picks the chairman? Ultimately, just the shareholders. So capitalism wins by one vote, provided the stockholders, the bankers, and the kids from Goldman Sachs all vote in a single bloc. But the clerks still have a lot of clout. If the shareholders are divided on whether "A" or "B" should be the next CEO, the clerks get to pick the king. "A" is CEO but he owes his job to the clerks. By the way, the clerks have all this power without owning any shares! In this stakeholder model, they need only act on their interests as "the workers."

With works councils and co-determination, everything in the firm gets discussed, rather than the CEO going to the mountaintop without ever seeing a worker and deciding to pull the plug. "Wait," people say to me. "You mean co-determination keeps jobs from going abroad?" No, they can't stop a sale.

They can't stop outsourcing. But they can cut deals. "Conditions-that is my motto," is how one worker-director put it in an issue of my favorite German magazine, Mitbestimmung. In the United States, people don't even know the plant is closing until management calls a meeting and ushers everyone out under armed guard. But in a German firm, the workers are Cato-like guardians, able to look at all of the financial records and planning documents as if they owned the place. If a company wants to start a plant abroad, the workers can pressure the board to plow some money back into a German plant or provide a ten-year employment guarantee. Or they can fight to get a better owner. It's not just the arguing: it's the fact that they can be in the boardroom watching, or in the back room rifling through the files. Doesn't your own behavior change when you think Cato is watching you? Well, it's true for managers too. That's why there is still a manufacturing sector in Germany.

Given the influence of the works council and a co-determined board, what remains for Germany's many powerful unions? They do the bargaining over wages and pensions but at a macro level, with a federation of all the big bookstores, not just Barnes & Noble but Borders as well. This is the German model of regional or multi-employer bargaining. We negotiated wages this way in the United States in the 1940s and 1950s, but no more. I doubt many Americans under forty even know what I mean by regional wage-setting institutions, and yet they are probably the single most important way in which Germany is "socialist."

This system is much in decline even in Germany, but it still has a huge egalitarian effect. The goal, never quite reached, is that every Barnes & Noble, every Borders, everywhere in the covered area, pays the same wage for the same type of work. Wages are not set person by person or shop by shop.

They're the same, everywhere, as much as possible. The result, from an American perspective, is a shocking transparency: in Germany the ideal is that everyone knows what everyone else is making. By contrast, who knows what Barnes & Noble pays in Chicago, or Borders in Joliet? In the German system, people can find out what other people are getting, and their unions in turn can demand the same.

The private export sector is the most unionized part of the German economy (even more than the public sector). And it is understood to be the vanguard, the industry on the front lines of the global economy. So if the engineers at ThyssenKrupp get a 3 percent raise, then certainly the clerks should get a 3 percent raise. Soon everyone in Germany is getting 3 percent! In a complicated and limited way, the whole country can have a voice, if not a vote, in what takehome pay they receive. Unification with low-wage East Germany has made this leveling tougher, but people in Germany can still actually talk about "wage policy" and "wage objectives." There's a national conversation, unknown here, as to how much everybody should get.

All my life as a labor lawyer I have read the same thing in The Economist, about the United States and its wonderful labor-market flexibility. What they mean is: Unlike the Germans, U.S. working people are completely powerless. But it's precisely because of our labor-market flexibility that we can't compete. Our workers have been flexed right out of their high-wage, high-skill jobs and into low-wage, low-skill jobs. That's bad for the workers, of course, and it's also bad for the economy. The German model-with worker control built into the very structure of the firm-keeps bosses and workers in groups, rubbing elbows with each other, and sometimes just elbowing. It creates a group interaction that over time builds and protects what economists like to call human capital, especially in engineering and quality control. It's precisely this kind of valuable capital that our atomizing "flexible" labor markets are so good at breaking up and dispersing.

Yes, there's much to like about the U.S. model. In global competition, the United States has almost every comparative advantage over Germany. We spend vastly more on basic research than the Germans do. We have much more land, more labor, more capital, much higher levels of formal education. But with our flexible labor markets we cannot develop human capital or knowledge to wean ourselves away from turning out crap and leaving the high-skill manufacturing to the Europeans. The one great comparative advantage of Germany is that it is a social democracy. Germany has its problems, and I take them seriously. But I'm also sure that German companies will lead the next industrial revolution, the "green" one, while we in the United States will merely watch.
If you ask most Democrats and their think-tank minions how to help our powerless middle class, they have no answer except to send even more of them to college, where with luck they get out being only $50,000 or so in debt. As for the high school graduates who make up the base of the party, we effectively tell them: You're finished. There's no role for high school graduates in our version of the global economy. In Germany, these same high school graduates could be sitting on a corporate board. Skeptical readers will say: Oh, but that's Europe, it's socialism, something like that is not possible here. I think it's quite possible.

I now have stopped underlining and re-reading Wolfgang Streeck's great 1996 essay, "German Capitalism: Does It Exist? Can It Survive?" Still, I recall his central, disheartening point that the German model, with its works councils and the rest, was simply too hard to replicate in other countries. In the end, global capitalism would force Germany itself into our simpler, top-down Anglo-American model.

But it turns out, at least in the European Union, that other countries are now keen on experimenting with co-determination and works councils.

"Co-determination is our biggest export," a former official in the German government told me. As it spreads through Europe, we may come to understand the German model as not just a rival but a better form of capitalism. It only takes a change in law. Maybe we'll decide one day, simply out of patriotism, that we have no other choice.

Is it likely? No. Is it possible? Yes. At any rate, it's just nonsense that "Europe's way" and "our way" can never be the same. We may have messed up our part in globalization, but we still have time to fix things. It may be even easier in this wired world to exercise our greatest privilege as Americans-to astonish ourselves by being American and making a European idea of democracy our own.