Germany as a good example for the USA

I grew up with a stereotype of the Germans as prisoners of hierarchy, bureaucracy and rules, who would never be a match for us democratic, freedom-loving practical Americans.

But if that ever was true, our two countries have since traded places.

Were-You-Born-on-the-Wrong-Continent1Thomas Geoghegan, a Chicago labor lawyer whose writings I admire, wrote a book in 2010 entitled WERE YOU BORN ON THE WRONG CONTINENT? How the European Model Can Help You Get a Life about how Germany is an economic role model for the United States.

He still says so in his newest book, ONLY ONE THING CAN SAVE US: Why America Needs a New Kind of Labor Movement.

In Germany, Geoghegan wrote, the laws, strong labor unions, worker representatives in management make it difficult to fire anybody.  So layoffs are a last resort, not a first resort.

German management is forced to concentrate on figuring out how to get the most out of the work force, not on making workers powerless and replaceable.   The result is that German corporations invest in lifelong learning for their workers, on the justified assumption that they’re going to remain with the same employer and become permanent assets to the firm.

We think of our job training as something for “slow learners,” i.e., basic literacy skills, a kind of glorified high school.

In Germany, they think of it as “part of the innovation system,” i.e., a kind of continuing education or even college in the work place.

only_one_thing_can_save_us_finalThat’s the strangest part, the hardest for us to grasp.  “In the U.S.,” [Geoghegan’s friend, labor economist Gerhard] Bosch said, “the innovation only comes from the top.  In Germany, the idea is that innovation comes up from the bottom.”  [snip]

Often now a company like Siemens will let its employees leave to go back to school, or even college, and then bring them back.  These companies know that innovation doesn’t come from newly hired college grads.  And when they commit to those workers, the workers commit to them in return.

In the United States, it’s practically the opposite.  At many companies, we’re still wondering whether to do Basic Job Training, because we want to be able to fire people at any time, and in Germany they’re at Job Training 2.0 because they’ve made these long-range commitments.  [snip]

If workers can’t easily be fired, then there is more reason to invest in them over time.  They are going to hang around, after all.  And the more the investment, the higher the skill level; and the higher the skill level, the more responsibility they should have.  That increased responsibility makes them even harder to replace.

And that in turn not only leads to innovation from below, such as we don’t have over here, but makes it more plausible that they should have positions of responsibility on works councils and even on corporate boards.

The result is a high-wage, high-value-added manufacturing economy and a large trade surplus.  It does work.  The new high-tech hearing aids I bought a couple of weeks ago were made in Germany.  And my guess is that they were made by exactly the kinds of workers that Geoghegan describes.

German employers don’t necessarily do this out of the goodness of their hearts.  Georghegan wrote that they are constrained by strong labor unions, laws that give workers’ representation on the board of big corporations and, not one, but four pro-labor parties, the Social Democrats, the Christian Democrats, the Greens and the LINKS parties.

He hopes that international companies such as Volkswagen and BMW, under the influence of works councils and worker representatives on their boards of directors, will roll out their management philosophy in the USA.

I would like to think so, too.  But, as Geoghegan noted in his new book, Volkswagen management has not been able to implement its philosophy at its new plants in Tennessee.  And even though the company has a global works council with representatives from India, Mexico and Argentina, it may well be that there are Volkswagen managers who are just as happy do without worker representation.

In Germany itself, worker representation is being rolled back.  The Christian Democrats and maybe the others don’t seem to be as pro-labor at Geoghegan thinks they are.  German workers have not fallen back as much as American workers because they began at a higher point and declined at a slower rate, but for now

Unfortunately Germany is becoming more like the USA rather than the other way around.   Which is not to say the trend can’t be reversed.   The German experience is a proof of concept, whatever the Germans do or don’t do in the future.

We used to have the idea of labor-management cooperation in the USA.  It went away when management decided that it did not need labor’s cooperation.  Power is limited by checks and balances, not benevolence.

LINKS

The one thing that can save America by Thomas Geoghegan for Salon (book excerpt)

What Would Keynes Do? by Thomas Geoghegan for The Nation (book excerpt)

The Big Fix by Thomas Geoghegan for The Nation

Ten Things Dems Could Do to Win by Thomas Geoghegan for The Nation

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German industrial relations: Labour’s lost love in The Economist.

Americanized Labor Policy Is Spreading in Europe by Eduardo Porter for the New York Times.

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Bringing Labor Back by Chris Miasano for Jacobin.

Let Old Labor Die by Jeremy Gantz for In These Times.

Why Workers Won’t Unite by Kim Phillips-Fein for The Atlantic.

A Shaky Solidarity by Michael Kazin for Bookforum.

A More Perfect Union? by Thomas A. Kochan for Stanford Social Innovation Review.

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Note: I made some minor editing changes for the sake of clarity after making this post.

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