Commentary: Should the US be like France & Germany?

[davidlane]

Originally Posted by 377Z

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?

It's "D" sized. I drove one at the auto show and really liked it. Especially the brash in your face styling. If I were going to buy a car this size it would probably be the one I'd buy. Even though the Coupe is larger than what I want to drive it would be worth it. I have very little hope it will be produced. The CTS is one of the best things GM has done. Unfortunately you have to build more than one or two standouts, and do it consistently, to be successful.

[CorsaTurboC]

Not an apples to apples (or GM/Ford/Chrysler VS French and German car) comparison.
French cars? Not here! Still driving that Renault Duaphene (sp)? Airbus aircraft? You bet! Smelly cheese? Wine???
How many German cars? Maybe... Can this be narrowed to just cars?
My point is that this has VERY LITTLE to do with US exported cars!

[63GrandSport001]

Originally Posted by davidlane

...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

Here is the thing, Germany's unemployment has gone up like everyone elses but this isn't the only aspect of protecting workers. When an American workers is out of a job they may not qualify for unemployment, and if they do its a fraction of what they made at a job. People are less likely to get another job doing the exact same thing making the exact same amount in this economy. Our unemployment benefits also run out in about 6 months, so if you come from a job where you make $6,000 a month and have a house note and a family and a car note or two then you can't settle for a job at McDonalds or you will end up loosing your house (which has been happening in great numbers).

In Germany and France if you loose your house you get a much bigger portion of your income in unemployment benefits which last much longer.

Ok say when you lost your job you also lost your benefits and your wife has cancer, now not only are you going to loose your home but your going to file chapter 11 as you were barely hanging on before. In Germany where they have healthcare this also isn't a issue, so while their unemployment is 8.6% (no shocker there) its not as big of a problem for them as it is for us. 8.6% unemployment rates means millions of American families are going to suffer and loose their homes which in Germany the same figure won't have the same impact.

[fan]

This is only half-bad.

Germany build BMWs and exports them.
Apple "designed in California" their iPods, make them in Asia and "export" them in US.

[ksr]

Originally Posted by 377Z

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?

I'd say the Mercedes C-Class.

[ksr]

Originally Posted by 63GrandSport001

In Germany and France if you loose your house you get a much bigger portion of your income in unemployment benefits which last much longer.

Ok say when you lost your job you also lost your benefits and your wife has cancer, now not only are you going to loose your home but your going to file chapter 11 as you were barely hanging on before. In Germany where they have healthcare this also isn't a issue, so while their unemployment is 8.6% (no shocker there) its not as big of a problem for them as it is for us. 8.6% unemployment rates means millions of American families are going to suffer and loose their homes which in Germany the same figure won't have the same impact.

In the long run, is this is a good thing? Those are hugely expensive programs. As the birthrates decline in Europe, they've become very dependent on immigration to fill their jobs and pay their taxes to support their massive welfare states.

I guess it depends on the type of society that you want to live in.

Somplace where you largely make your own way in life.

Or a cradle-to-grave nanny state where more is provided for you, but much more is taken from you as well.

Maybe it's not so different. In the US, we may pay for more services ourselves. In Europe, they pay as well, but it's taken from people's paychecks up front.

I'd rather have the freedom to choose.

[MonaroSS]

I have added the following to the OpEd for those who wanted a better idea of who imported and exported what to whom and by how much....

When you look at China/US figures it not as bad as many assume. China imports nearly 80% as much as they export, it's just the US only gets 7.3% of those imports to China while taking 19.1% of their exports. The Chinese take 14% of their imports from Japan but don't really like the Japanese. The US needs to more aggressively take some of that business away from Japan going into China.


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)

[Exploder]

Well, one thing I'll say for sure is that Detroit's export numbers are hideously low, as if they've never even heard of the concept, while virtually all other car companies in the world do just that successfully.

[CUtiger08]

There's one big flaw that I can see in this idea/analysis: To have an accurate comparison to the US as whole... one should look at Europe/The EU as whole, which is closer to the US is size/GDP/etc than any individual European nation is.

Germany, France, the UK and Italy all trade with each other alot... just like the US states probably send most of their goods to each other rather than out of the country. In terms of GDP, France, Germany, Italy and the UK all have GDP's in the 2-4 trillion range... not that much larger than California, Texas, or New York whom all are over 1 trillion each. How much do you think Texas or California exports when both the world and the rest of the US are included?

For what it's worth, according to CIA World Factbook the EU as a whole exports around $1,952 billion from just under 500 million people compared to the US at $1,377 billion from right around 300 million people. So that's somewhere around $3904 in exports per person in the EU versus $4509 in the USA. Perhaps we shouldn't just assume the Europeans have all the answers.

As for "free" universal health care, it does not work out long term due to the demographics of a post-industrial/information age nation... namely low birth rates to the point of shrinking population, along with long life expectancy... which will eventually result in a bankrupt country. And that's not even getting into issues like taxation rates, freedom of choice, etc. At most, I would support free health care for children, and even that could be abused.

[davidlane]

Originally Posted by ksr

I'd say the Mercedes C-Class.

Not in size, only in price. Based on my limited experience with M-B the CTS will be much less of a maintenance pain in the a**, as well.

[TJ95GAGT]

Originally Posted by 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.

Why should a company be able to not claim the income earned overseas but at the same time be able to deduct expenses incurred there? One or the other I say.

US may have one of the highest corporate tax rates but check the effective tax rates actually paid, not the marginal rates.

VP Biden had an effective tax rate of around 17% on his $200+k of income while the marginal rate was 30+%. Also may want to check historical tax tables, top marginal rates are fairly lower than during the good ol' days.

[Xenon]

So if that's the case, couldn't the UAW be used as a too to promote higher education, as well as promoting higher wages and quality.

And one thing you are forgetting is that outside of China and the US, the government does do some subsidizing for healthcare. So something needs to be done about the healthcare dilemma here in the US

[MonaroSS]

Originally Posted by CUtiger08

There's one big flaw that I can see in this idea/analysis: To have an accurate comparison to the US as whole... one should look at Europe/The EU as whole, which is closer to the US is size/GDP/etc than any individual European nation is.

Germany, France, the UK and Italy all trade with each other alot... just like the US states probably send most of their goods to each other rather than out of the country. In terms of GDP, France, Germany, Italy and the UK all have GDP's in the 2-4 trillion range... not that much larger than California, Texas, or New York whom all are over 1 trillion each. How much do you think Texas or California exports when both the world and the rest of the US are included?

For what it's worth, according to CIA World Factbook the EU as a whole exports around $1,952 billion from just under 500 million people compared to the US at $1,377 billion from right around 300 million people. So that's somewhere around $3904 in exports per person in the EU versus $4509 in the USA. Perhaps we shouldn't just assume the Europeans have all the answers.

As for "free" universal health care, it does not work out long term due to the demographics of a post-industrial/information age nation... namely low birth rates to the point of shrinking population, along with long life expectancy... which will eventually result in a bankrupt country. And that's not even getting into issues like taxation rates, freedom of choice, etc. At most, I would support free health care for children, and even that could be abused.

The problem with your suggestion is that it equally applies to the US which then should include Canada and Mexico. As you can see by the figures Canada at 21.4% exports and and 15.7% imports is the 1st and 2nd biggest respective US trading partner. Mexico at 11.7% exports and 10.6% imports is the 2nd and 3rd respective US trading partner.

The reason why one should not include Canada and Mexico with the US, is that even while they all operate under a single trading pact (NAFTA), they do not share national government, education policy and funding, foreign and trade policy, labour laws, healthcare policy and funding etc. The same is true for members of the EU.

While it is certainly OK to make comparisons with individual states in the US, especially the larger ones such as California, the nations of Europe are not monolithic and are legally separate Sovereign states. The only real similarity with the US is that the US states share a single currency and so do the European nations, but the US has a single foreign and trade policy, Europe has dozens. US companies and trade unions can operate across the nation, in Europe they have to incorporate under each national law separately.

In the US federal corporate income and capital gains taxes apply across the nation whereas the EU countries determine their own. That is why a place like Ireland can have a corporate tax rate of 12.5%. Nevada can't just decide corporations will only be taxed at 12.5%. They can fiddle around the edges with their own state taxes, but not the core tax system.

So what Germany does can be looked at as uniquely German and not European, same with France etc, as they are far more autonomous than US states in these core economic matters.

As to free or subsidized education. The US federal government subsidises farmers to grow more crops, why not subsidize students to grow more engineers and technicians? And education will not bankrupt a changing demographic as if less children are born then more can be spent on them, besides, every dollar spent on education recoups more than a dollar in return. I think it's threefold. The single universal identifier that correlates with wealth is education. The higher educated the citizens of a country are the wealthier that country is. That is a long term trend with no sign of change yet.

Also, education does not have to be owned by the young. As populations age and demographics shift, older people can be educated into higher paid jobs too, and so the national education level can be raised that way.....

[ksr]

Originally Posted by TJ95GAGT

Why should a company be able to not claim the income earned overseas but at the same time be able to deduct expenses incurred there? One or the other I say.

US may have one of the highest corporate tax rates but check the effective tax rates actually paid, not the marginal rates.

VP Biden had an effective tax rate of around 17% on his $200+k of income while the marginal rate was 30+%. Also may want to check historical tax tables, top marginal rates are fairly lower than during the good ol' days.

There are abusive off-shore tax shelters, but sometimes what Obama wants to consider "income" isn't really income, but a change in the value of what is essentially an investment from which no cash or profits have been brought to the US.

Say that an American company has a foreign subsidiary. It earns a pre-tax profit of $50 million. After paying federal corporate and local taxes on that money in for example, Germany, there is $35 million remaining as profit. That company pays no dividends to the American parent and basically the subsidiary just reinvests that $35 million into itself, maybe growing the business.

Right now, the American company doesn't owe US tax on the $35 million. No cash or dividends were brought to the US. They would only owe US taxes should profits be brought from the subsidiary to the US.

Obama wants to change this to collect taxes on that $35 million in offshore profit that currently is not income coming to the US. How is that fair? The money has already been taxed. The American parent firm is not bringing the profits to the US.

This "loophole" is perfectly legal and understandable. It's not a loophole at all, more like common sense. Foreign countries doing business in the US enjoy the same "loophole," so by eliminating it, you're putting American business at a disadvantage.


The corporate tax rate should be lowered, but your other point is well taken. Lower the rates, but enforce them. I'd prefer a flat tax for individuals too.

[CUtiger08]

I was comparing the EU and USA more as demographic entities (number of people and net GDP/trade) than political. Obviously the EU is a less federally controlled group than the US states... though how federally controlled our states should be has long been a matter of debate (and at least one outright war) and my ideal setup would have more in common with the EU than the current USA. That being said, including Canada and Mexico in with the US probably would be a better comparison even on purely demographic terms, as well as making a more direct political comparison.

My bigger point is that there are alot more people to trade with the US than in any European nation, and that if our inter-state trade was combined with each state's indivdual international trade, several states would likely have similar numbers, especially per person, as Germany or France without requiring universal health care or any other economic "reforms". If this is true, then the claim that the whole nation needs to change its policies to match these nations is not valid.


As for taxes: I think simpler is better. Instead of having a dozen tax classes with thousands of deductions... have a simple tax code that anyone can understand, and one that applies to everyone. I really think a sales tax would be best, as it taxes consumption instead of income, and is far more progressive if done right. And I would much rather have my tax dollars used for education than just about any other domestic use, including health care, industry subsidies, or company bailouts/loans.