Commentary: Should the US be like France & Germany?

[MonaroSS]

Should the US be like France & Germany?

OpEd by MonaroSS
15 May 2009

Most Americans if asked that question, "Should the US be like France & Germany" would have a knee jerk reaction of something like "hell no". But some interesting numbers came to light when I did a bit of research for one of the threads about GM importing cars from China.

We all know that the idea of exporting jobs to China is a hot button topic and many threads here at GMI have spent countless hours debating how hard it is to compete with lower Chinese wages. And this is seemingly especially true for the auto industry and has been brought up many times concerning UAW wages and benefits and also came up during the Presidential Election regarding healthcare policy and whether American industry is further burdened when other countries are not.

So I looked up the CIA World Fact Book online and got the figures. Following is what I found and what can be deduced from them:

Highest Dollar Value Exporting Countries
Rank; Country; Exports US$; Date

1 Germany; $1,530 Billion; 2008
2 China (PRC); $1,465 Billion; 2008
3 United States; $1,377 Billion; 2008
4 Japan; $776 Billion; 2008
5 France; $761 Billion; 2008

Germany, China and the US are the top three, so clearly America still exports a lot of it's worker's product. But that is only half the story because it gets really interesting when we look at the per worker ratios.

As to which countries are taking the most work from exports per head of population, below are the populations and below that is the $ value of goods sold adjusted to 300 million people (if each country was the same size as the US population).

Population Size

China 1,338,156,900
United States 306,420,000
Japan 127,630,000
Germany 82,062,200
France 65,073,482

Therefore dollars of Exports per 300 million people

Germany $5,597 Billion
France $3,512 Billion
Japan $1,833 Billion
United States $1,377 Billion
China $328 Billion

The above indicates the ratio of dollars earned per person from exports in each country, which means the dollars earned per person from jobs taken from workers in other countries.

Clearly Germany and France are leagues ahead of the next two being Japan and the US, followed way behind by China. So if you are worried which worker in what other country is more likely to be doing work you could be then don't buy German (machinery, vehicles, chemicals, metals and manufactures, foodstuffs, textiles ) or French (machinery and transportation equipment, aircraft, plastics, chemicals, pharmaceutical products, iron and steel, beverages).

Most importantly, given the huge leadership of Germany in earning export dollars, the US should forget about trying to emulate China by lowering middle class wages but instead emulate whatever Germany and France are doing right as they make money AND pay high wages.

The US imports $2,190 Billion and exports only $1,377 Billion, that's the problem. Either cut imports OR improve your individual worker export levels to just that of France and the US would be exporting $3,512 Billion and have a balance of trade in the US's favour of $1,322 Billion extra cash to spend. If you could match Germany the US would have $3,402 Billion cash left over to bank each year.

So how does the US become as good at exporting as France and Germany? You could start with free healthcare to cut manufacturing costs and free higher education to massively push up the level of qualifications and living standards of US workers....

The simple fact is that GM could be making high quality BMW level cars profitably right in Detroit if they used American made robots and automated lines run not by UAW labourers but by educated American engineers and technicians. And other engineers and technicians would be making money designing and producing those robots and machines made with American machine tools made by American engineers and technicians in high tech American foundries and so on and so forth...

So here is the burning question:

Is it time for American manufacturing to move into the 21st century and not just relocate to southern states where it's cheaper and easier to still live in the 20th century?



LINK TO CIA WORLD FACT BOOK

---------------------------------------------

Additional information from the CIA World Fact Book


Germany

Exports: $1.53 trillion f.o.b. (2008 est.)
Exports - commodities: machinery, vehicles, chemicals, metals and manufactures, foodstuffs, textiles
Exports - partners: France 9.7%, US 7.5%, UK 7.3%, Italy 6.7%, Netherlands 6.4%, Austria 5.4%, Belgium 5.3%, Spain 5% (2007)
Imports: $1.202 trillion f.o.b. (2008 est.)
Imports - commodities: machinery, vehicles, chemicals, foodstuffs, textiles, metals
Imports - partners: Netherlands 12%, France 8.6%, Belgium 7.8%, China 6.2%, Italy 5.8%, UK 5.6%, US 4.5%, Austria 4.4% (2007)


France

Exports: $761 billion f.o.b. (2008 est.)
Exports - commodities: machinery and transportation equipment, aircraft, plastics, chemicals, pharmaceutical products, iron and steel, beverages
Exports - partners: Germany 14.9%, Spain 9.3%, Italy 8.9%, UK 8.1%, Belgium 7.3%, US 6.1%, Netherlands 4.1% (2007)
Imports: $833 billion f.o.b. (2008 est.)
Imports - commodities: machinery and equipment, vehicles, crude oil, aircraft, plastics, chemicals
Imports - partners: Germany 18.9%, Belgium 11.4%, Italy 8.4%, Spain 7.1%, Netherlands 7%, UK 5.6%, US 4.4%, China 4% (2007)


US

Exports: $1.377 trillion f.o.b. (2008 est.)
Exports - commodities: agricultural products (soybeans, fruit, corn) 9.2%, industrial supplies (organic chemicals) 26.8%, capital goods (transistors, aircraft, motor vehicle parts, computers, telecommunications equipment) 49.0%, consumer goods (automobiles, medicines) 15.0% (2003)
Exports - partners: Canada 21.4%, Mexico 11.7%, China 5.6%, Japan 5.4%, UK 4.3%, Germany 4.3% (2007)
Imports: $2.19 trillion f.o.b. (2008 est.)
Imports - commodities: agricultural products 4.9%, industrial supplies 32.9% (crude oil 8.2%), capital goods 30.4% (computers, telecommunications equipment, motor vehicle parts, office machines, electric power machinery), consumer goods 31.8% (automobiles, clothing, medicines, furniture, toys) (2003)
Imports - partners: China 16.9%, Canada 15.7%, Mexico 10.6%, Japan 7.4%, Germany 4.8% (2007)


China

Exports: $1.465 trillion f.o.b. (2008 est.)
Exports - commodities: electrical and other machinery, including data processing equipment, apparel, textiles, iron and steel, optical and medical equipment
Exports - partners: US 19.1%, Hong Kong 15.1%, Japan 8.4%, South Korea 4.6%, Germany 4% (2007)
Imports: $1.156 trillion f.o.b. (2008 est.)
Imports - commodities: electrical and other machinery, oil and mineral fuels, optical and medical equipment, metal ores, plastics, organic chemicals
Imports - partners: Japan 14%, South Korea 10.9%, Taiwan 10.5%, US 7.3%, Germany 4.7% (2007)

[eurohazard]

^ Nice! What are the trends like in the past decade or so?......using the same formula.

[Stéphane Dumas]

there one thing from France I won't bring here, strikes mainly like the ones at the SNCF (French counterpart of Amtrack) and at some universities.

[johnstarnes]

Thanks much for that clear-headed and informative overview.

[davidlane]

In lieu of cooking the numbers to support your conclusion why didn't you list the Gross Domestic Product of the three countries:

United States $14.33 Trillion
Japan $4.844 Trillion
China $4.222 Trillion
Germany $3.818 Trillion
France $2.978 Trillion

Per capita GDP
United States $47,000
Germany $34,800
Japan $34,200
France $32,700
China $6,000

All the number are current and from your source and published in, the CIA Fact Book.

[PhishPhood]

Originally Posted by MonaroSS

Should the US be like France & Germany?

OpEd by MonaroSS
15 May 2009

(Note to Mods: You can put this in GMI Commentaries if you feel it of interest)

Most Americans if asked that question, "Should the US be like France & Germany" would have a knee jerk reaction of something like "hell no". But some interesting numbers came to light when I did a bit of research for one of the threads about GM importing cars from China.

We all know that the idea of exporting jobs to China is a hot button topic and many threads here at GMI have spent countless hours debating how hard it is to compete with lower Chinese wages. And this is seemingly especially true for the auto industry and has been brought up many times concerning UAW ages and benefits and also came up during the Presidential Election regarding healthcare policy and whether American industry is further burdened when other countries are not.

So I looked up the CIA World Fact Book online and got the figures. Following is what I found and what can be deduced from them:

Highest Dollar Value Exporting Countries
Rank; Country; Exports US$; Date

1 Germany; $1,530 Billion; 2008
2 China (PRC); $1,465 Billion; 2008
3 United States; $1,377 Billion; 2008
4 Japan; $776 Billion; 2008
5 France; $761 Billion; 2008

Germany, China and the US are the top three, so clearly America still exports a lot of it's worker's product. But that is only half the story because it gets really interesting when we look at the per worker ratios.

As to which countries are taking the most work from exports per head of population, below are the populations and below that is the $ value of goods sold adjusted to 300 million people (if each country was the same size as the US population).

Population Size

China 1,338,156,900
United States 306,420,000
Japan 127,630,000
Germany 82,062,200
France 65,073,482

Therefore dollars of Exports per 300 million people

Germany $5,597 Billion
France $3,512 Billion
Japan $1,833 Billion
United States $1,377 Billion
China $328 Billion

The above indicates the ratio of dollars earned per person from exports in each country, which means the dollars earned per person from jobs taken from workers in other countries.

Clearly Germany and France are leagues ahead of the next two being Japan and the US, followed way behind by China. So if you are worried which worker in what other country is more likely to be doing work you could be then don't buy German (machinery, vehicles, chemicals, metals and manufactures, foodstuffs, textiles ) or French (machinery and transportation equipment, aircraft, plastics, chemicals, pharmaceutical products, iron and steel, beverages).

Most importantly, given the huge leadership of Germany in earning export dollars, the US should forget about trying to emulate China by lowering middle class wages but instead emulate whatever Germany and France are doing right as they make money AND pay high wages.

The US imports $2,190 Billion and exports only $1,377 Billion, that's the problem. Either cut imports OR improve your individual worker export levels to just that of France and the US would be exporting $3,512 Billion and have a balance of trade in the US's favour of $1,322 Billion extra cash to spend. If you could match Germany the US would have $3,402 Billion cash left over to bank each year.

So how does the US become as good at exporting as France and Germany? You could start with free healthcare to cut manufacturing costs and free higher education to massively push up the level of qualifications and living standards of US workers....

The simple fact is that GM could be making high quality BMW level cars profitably right in Detroit if they used American made robots and automated lines run not by UAW labourers but by educated American engineers and technicians. And other engineers and technicians would be making money designing and producing those robots and machines made with American machine tools made by American engineers and technicians in high tech American foundries and so on and so forth...

So here is the burning question:

Is it time for American manufacturing to move into the 21st century and not just relocate to southern states where it's cheaper and easier to still live in the 20th century?

Very interesting study and analysis. Nice start to a discussion.

[vu2vu]

He was writing about balance of trade. The extra data sets in GDP are not needed to make his point.

GDP = consumption + gross investment + government spending + (exports − imports)

Originally Posted by davidlane

In lieu of cooking the numbers to support your conclusion why didn't you list the Gross Domestic Product of the three countries:

[377Z]

Originally Posted by MonaroSS

The simple fact is that GM could be making high quality BMW level cars profitably right in Detroit if they used American made robots and automated lines run not by UAW labourers but by educated American engineers and technicians. And other engineers and technicians would be making money designing and producing those robots and machines made with American machine tools made by American engineers and technicians in high tech American foundries and so on and so forth...

So here is the burning question:

Is it time for American manufacturing to move into the 21st century and not just relocate to southern states where it's cheaper and easier to still live in the 20th century?

Within the context of the auto industry, I think US manufacturers need to raise the perception of American exports first--chronicly misaligned & underfeatured products need not apply. Sorry guys, the CTS is NOT GOOD ENOUGH. Then (and only then) all the other stuff above could follow. Its frustrating because I know my countrymen are capable of competing--we do in many other industries but it seems like the folks that have the reigns to the auto industry are beyond clueless.

[davidlane]

Originally Posted by vu2vu

He was writing about balance of trade. The extra data sets in GDP are not needed to make his point.

...So how does the US become as good at exporting as France and Germany? You could start with free healthcare to cut manufacturing costs and free higher education to massively push up the level of qualifications and living standards of US workers....

He's not writing about balance of trade. He's advocating additional collectivist "governmental" policies be implemented in the US. Just in case there's any doubt I'm diametrically opposed to this. As evidenced by this stat, France's system is no better at protecting "workers."

...This brought French unemployment to more than eight percent, and European Commission experts predict the official rate will hit 9.8 percent by the end of this year and 10.6 percent in 2010

http://www.france24.com/en/20090225-...ic-high-france

The news from Germany isn't any better

Germany's unemployment rate rose to 8.6% in March as the global economic downturn continued to tighten its grip on Europe's largest economy.

http://news.bbc.co.uk/2/hi/business/7973708.stm

[vu2vu]

Whenever I see a GM car (not truck) I instinctively look for the rental fleet decal.

Originally Posted by 377Z

Within the context of the auto industry, I think US manufacturers need to raise the perception of American exports first--chronicly misaligned & underfeatured products need not apply. Sorry guys, the CTS is NOT GOOD ENOUGH. Then (and only then) all the other stuff above could follow. Its frustrating because I know my countrymen are capable of competing--we do in many other industries but it seems like the folks that have the reigns to the auto industry are beyond clueless.

[377Z]

Originally Posted by MonaroSS

Highest Dollar Value Exporting Countries
Rank; Country; Exports US$; Date

1 Germany; $1,530 Billion; 2008
2 China (PRC); $1,465 Billion; 2008
3 United States; $1,377 Billion; 2008
4 Japan; $776 Billion; 2008
5 France; $761 Billion; 2008

Population Size

China 1,338,156,900
United States 306,420,000
Japan 127,630,000
Germany 82,062,200
France 65,073,482

Therefore dollars of Exports per 300 million people

Germany $5,597 Billion
France $3,512 Billion
Japan $1,833 Billion
United States $1,377 Billion
China $328 Billion

It would also be nice to see where the exports are going, who is consuming what. First, I think its a safe bet that French and German exports are mostly luxury goods. Second, I'd presume much is going to the US--& thus there is a scenario where the 'export $ per worker' numbers could be equalized between the countries without increasing the absolute $ value of US exports. This would be the least difficult way to go about it--raise the perception of domestic luxury goods to US consumers, thereby supplanting foriegn sales & increasing domestic made luxury good consumption at the expense of foriegn imports. This could result in the same postive effect on US manufacturing, presuming management of domestic manufacturers has the capacity to value less tangible stuff such as the benefits of domestic production, versus simply the next quarters numbers on their spreadsheet. I personally like the idea of slashing corporate taxes to encourage domestic investment, by domestic and foriegn firms alike.

Steep uphill battle though to regain customers in a mature market.

[ksr]

The CTS isn't good enough?

If you mean that it alone, by itself, isn't enough for GM, yes. They need more CTS-like vehicles.

Taken by itself, it's more than good enough in it's class. It's a great vehicle. At some point, judgements get subjective. But you could make a pretty good argument that it's class-leading, inside and out.

[ksr]

I don't want collectivism/socialism.

I don't think people have a "right" to a higher-education. There's plenty of opportunities and abilities to earn that education. More people than ever attend college, and frankly more people attend than really should. Not everyone is cut out for college. I went to college, my parents paid for part and I took out loans that I've paid back. My nieces and nephews have all graduated from college, paid for via their parents, grants, loans, and scholarships. I don't come from a rich family by any definition, yet we've managed.

You don't have a "right" to health care. Some people take far better care of themselves than others. Why should everyone share in their expense? I'll never understand why a lot of people don't seem to think that they should have to pay for their health care. It's YOUR health.

We all pay now, either through our employers or insurance that we purchase ourselves or for Medicare/Medicaid.

There's this big myth about a lack of coverage in the US, and polls will show that a large majority of people think that the US has a big problem with health care and that most people don't have it. Yet when you make the question personal and ask someone if they're satisified with their own health care plans, about 85% of people are.

And people are not turned away in the US except for isolated incidents. When someone needs care, they get it, regardless of income.

The higher percentage a person keeps of their own paycheck, the better. Individual achievement and rugged individualism are what made the country great. We need a safety net to cover those less fortunate who can't succeed, through no fault of their own. And that net is there.

[ksr]

The US already has one of the highest corporate tax rates in the world. With the new threats to stop supposed "loopholes," taking away deductions for companies on overseas earnings, it will get worse. These loopholes are benefits that foreign-companies also have, so their competitive position will get even better.

Obama is also going to break [yet another] another pledge that he rightly bashed McCain for and will propose taxes on employer-provided health benefits.

[377Z]

Originally Posted by ksr

The CTS isn't good enough?

If you mean that it alone, by itself, isn't enough for GM, yes. They need more CTS-like vehicles.

Taken by itself, it's more than good enough in it's class. It's a great vehicle. At some point, judgements get subjective. But you could make a pretty good argument that it's class-leading, inside and out.

I really don't want to derail this thread with a debate about the inadeqacies of the CTS, but every GM vehicle could be CTS-like & they would still do poorly in terms of exports.

Out of curiosity, what class do you think the CTS fits into?