Facts about the German economy
by Stephan-Goetz Richter
Did you know...
... that Germany has the world's third largest economy?
Yet only 30 of its companies make Business Week's list of the 1000 largest global corporations. One reason is the nation's focus on small and medium sized firms. Another is that it's darn difficult to get a company listed on the stock exchange. There have been only 210 new listings on the Frankfurt Exchange in the past 15 years or so.
... that moving the government from Bonn to Berlin will cost tens of billions of Deutschmarks?
A hefty part of that is a compensation package for civil servants. It's earmarked more than $600-million to help them get over the trauma. Older bureaucrats can avoid the moving vans altogether: Anyone over 50 can apply for early retirement.
... that Otto von Bismarck created the German pension system about one-hundred years ago?
It was the first state-organized one in the world. Retirement was set at 65 years of age. But, life expectancy was only 45 years back then. Today, most Germans take early retirement, and most live to be 75 years old.
... that Americans work, on the average, 7 more weeks a year than Germans do?
The Institute for the German Economy estimates that the country's GDP would increase by 100-billion dollars if they reduced their vacation time to the U.S. level. That means Germans would get only 23 vacation days a year.
... that the Germans interest in owning stock is incredibly low?
Well over 40 percent of Americans are involved in the market, but only 5 percent of Germans are. No wonder, then, that the average German family spends more money buying bananas each year than buying stocks.... that in the past 7 years since Germany was reunited, the government has pumped over 100 billion dollars annually into the former East German states?
That's more each year than the total cost of the Marshall Plan, which helped resurrect much of Europe after World War II, calculated in today's dollars. And yet, the East German economy has recovered to only 75 percent of its pre-unification level. Not really impressive. Compare that to neighboring Poland which, without the benefit of German-made mass subsidies, has already managed to exceed the pre-reform GDP level.... that the world's biggest chemical company is Frankfurt-based Hoechst?
It made 31-billion dollars last year. That's more business than America's Dow Chemical and Union Carbide did together. On the other hand, high labor costs in Germany along with restructuring measures mean that Hoechst now has more employees in North America than it does at home.... that on April 6, 1997, the German government announced that unemployment was at the highest level ever for that month of the year since the end of World War II?
Curiously enough, that same day, the German stock market index also reached a new record high.And - do you remember the Bundesbank and its stellar reputation around the globe as a fierce inflation fighter?
Well, think again. Germany, it turns out, has a long history of missing the stability criteria for European monetary union. Since 1960, it has missed the Maastricht criteria two-thirds of the time. Even more surprising, in most of those years, Germany failed to qualify because inflation was too high. The last time that Germany fulfilled all the criteria was almost 10 years ago, back in 1988.
Stephan-Goetz Richter is a journalist and president of the Washington, DC company Transatlantic Futures, Inc. Information regarding their newsletter and services is available at (202) 898-4760.
