Not Trumps Aggression, China’s threats or a hard Brexit threaten Germany’s economic prosperity. It is the weak investment activity, which throws back the Land of far, is Thomas Straubhaar says.
The excitement over whether and when Germany is in recession, overlaid and supplanted the dangers that prosperity far more fundamental question. Since the financial market crisis of 2008 and immediately thereafter, following the economic crash in Germany is investing too little. The equipment expenditure on domestic product (GDP), as measured by the gross in 1991 at ten percent, and in 2008 it is still around eight percent, you currently there are only between six and seven percent of GDP.
How dramatically the long-term a snail’s pace of investment activity has an impact on the future competitiveness of the German economy, on the labour productivity. The labour productivity is the mirror image of investment, because it measures the value added that is on average generated per worker or per hour of work.
And there is, of course, immediately, whether the workers dig pits with their bare hands, shovels and pimples or with excavators and heavy equipment, and that data by Hand, with calculators, simple calculators or automatically by Laser, smart Algorithms and artificial intelligence is collected and further processed.
The more computers and robots are used, the higher the labour productivity is not least because with the new machines, the technical progress input in the production procedure. The more efficient and effective is produced, the more attractive the offers, the higher the sales and the more income that can be distributed to labor and capital, people and machines are.
Creeper at work productivity
The labour productivity per hour increased in the previous economic recovery phase in the second half of the 1970s, the real (i.e. price-adjusted) per year to an average of 3.4 percent in the 1980s to 3.0 per cent in the 1990s to 2.2 percent and in the 2000s, until the beginning of 2008 to 1.4 percent. During the almost ten years of recovery from mid-2009 to mid-2018, it was only 1.1 percent.
The creeper in labour productivity as a result of the restrained investment activity and an associated slow innovation pace is out for revenge, and the economic prosperity in Germany more than all other of the question to put together – more even than Donald trump’s Aggression, China’s threats and unregulated Brexit. Because the growth of labour productivity is the basis of the increase in wages is derived.
And there is the simple rule: low level of investment today leads to tomorrow, to the low progress in labour productivity, what wages are stagnant or only slow growth – slower than in countries in which, on a broad Front, the cashless shopping without funds, the paper-free office without a Secretariat, software, robot for the collection, processing of documents for clarification of insurance cases, or artificial intelligence in medical diagnosis as well as evaluation of x-ray images of everyday Standard.
Thomas Straubhaar, Director of the world Economics Institute HWWI
For the low investment activity and the resulting weak labour productivity progress, there are a lot of causes. But one of them deserves special attention, because they will also be available with a view to future improvement is crucial.
The Hartz reforms have had side effects
The middle of the previous decade, under the then Chancellor Gerhard Schröder and his red-green government launched Agenda 2010, and after Peter Hartz labour market reforms named the “promoting and demanding” were designed to bring as many people as possible in work. Accordingly, the pressure on acquisition has been increasingly loose, to work and to accept a comparatively less well-paid Jobs. As a result, the employment in Germany increased rapidly. The unemployment rate declined from five million (beginning of 2005) steady on now 2,275 million in the summer of 2019 – a huge success.
However, the German occupation was a success, with a side-effect connected. It was based on a Wage restraint on the part of workers as a counter-power to the creation and maintenance of employment. If, however, for businesses with a workforce cheap(er), in the absence of economic incentives to invest in machinery, robots, and new digital technologies. Why the expensive(re) of machines, if labor is so cheap? Accordingly, under a modernisation thrust has remained.
You set people and not machines. So were and are in this country done still, many of the activities of the Hand and labor and not of machines and robots – what would be possible in highly developed economies, meanwhile, there is no become. Far stronger than in Germany, Software and Algorithms in the field of payroll accounting are elsewhere used, in accounting, in logistics, in Finance and insurance, and the shop cashier or diagnoses doctors superfluous.
As in the GDR?
What the GDR was typical of the war – full employment and a high level of guarantee of Employment in low productivity at work, poorer pay, and little General prosperity threatens the Federal Republic of Germany in the age of digitization and data economy, if used for too long to outdated dogmas of the industrial society is being held.
It goes in the future, first of all, to productivity, and not mass employment at any price. To get jobs, by making in many areas of cheap labour to create what robots and artificial intelligence error-free, 24/7, better and cheaper can do, is a doomed strategy.
Competitiveness and prosperity are in the long term, only with more investments (including in education and research) and to ensure, consequently, more Innovation and higher labour productivity. A total of fewer, better, more motivated, healthier, more balanced and to work far more productive than it is today, must be the goal of future labour market policy. Just so those high wages can be paid, which will enable a further increase in the standard of living for future generations.
Thomas Straubhaar, a Swiss Economist and migration researchers. He is a Professor for International economic relations at the University of Hamburg. He was from 1999 to 2014, the Director of the Hamburg world economic archive (HWWA), and the resulting emergence of the Hamburg world economy Institute (HWWI).
This comment was first published on welt.de .