Germany’s economy has been heavily dependent on specific sectors, particularly the automotive and machinery industries. These sectors are so vital that any decline in their performance could have significant ripple effects across the economy. However, the global market is increasingly shifting towards electric vehicles (EVs) with advanced software interfaces. Companies like Tesla and Chinese manufacturers have taken the lead in this space, while German carmakers have struggled to adapt to the EV and software revolution.
Germany also has been facing two big challenges that have seen limited action: rising energy costs and slowing exports to China, both of which have started around 2020. The decision to rely heavily on Russian energy to sustain its industrial economy has proven to be a bad idea. The influx of low- or unskilled labor into a social welfare system, coupled with the challenges of cultural integration (German culture isn't the sexiest of things), has also turned out to be a bad idea.
Bonus issue: Germany’s taxes are high, particularly for individuals and workers. Some of the highest in the world. This gives consumers less $ to consume with.
>The decision to rely heavily on Russian energy to sustain its industrial economy has proven to be a bad idea.
The decision to rely heavily on American military hegemony has proven to be a far worse idea than piping gas from Russia. Without military sovereignty, they don't get to choose their economic partners. Without the ability to choose their economic partners, they have to accept dictates about their economic relationships. Because of that they have to suffer.
The same thing happened with Huawei - America decided that Europe needed to decouple from them so decouple they did.
As for the moral argument - what Russia is doing in Ukraine is awful, but what Israel is doing in Gaza (with Germany's blessing) is SO much worse. Germany follows America's dictates on both, so their economic relationship to the genociders is still maintained even though it has very little impact on the health of the Germany economy.
Now Trump is in charge, Europe is being told that it still has to fall in line, but it needs to jack up its own military spending as well - America has shifted focus East and isn't all that interested in defending Europe any more (if it ever was).
Are you suggesting that Germany is not "free" to choose to have economic relationships with e.g. Russia because of United States military reasons? Do you think the US military is the primary reason Germany (the people, the government) is reluctant to trade with Russia?
Germans can only blame themselves for kicking the can down the road for 13 years. They were naive with Russia for energy, they were naive with the U.S. for security, and they were naive with China for its economic growth.
They're politically captured and lacking sovereignty more than they are naive. It's awkward and nobody wants to admit it but fundamentally they have a relationship with the US that is similar to the one Belarus has with Russia.
That's why when the pipeline was blown up and they became dependent instead on more expensive American LNG they accepted their fate with a minimum of protest. It's why they've not demonstrated much interest in finding the culprit, despite the incredible economic damage it incurred.
If they were a puppet of the U.S. like you say, they wouldn't have been investing in and dependent on Russia in the first place. When Trump was President the first time and he chided them on their dependence on Russia and asked them to build a floating LNG terminal, they laughed.
The Germans are in the situation they're in because they did not take U.S. advice on the entirely predictable Russian bad behavior.
just look back 15 years, for all those emerging sectors that were/are hot during the period, how many new EU companies managed to rise? a few drug makers for sure, but everything else is just dead despite the fact that they have a huge economy and a relatively unified market with hundreds of million people.
EU is dying a slow economic death, the US must be very happy for that.
Unlike the U.S., Germany has no natural resources. U.S. LNG dependency means that it has another master. Except that the previous one never dictated anything to Germany, just like Saudi Arabia never dictates anything.
They are not naive with security. Either they fully defend themselves and get nuclear weapons or they keep the status quo. Buying useless F35 (possibly with a kill switch) from the U.S. just enriches the MIC.
Germany should have build up a "high tech" Internet industry so it could control which parts of the narrative get flagged and which ones stay up.
Oh, they were dictated to. It was simply implied. "Let us repress our people and reclaim our neighbors, and the pipes will stay open."
Russia used that NG to bully and dictate to it's neighbors like Poland, Hungary, Romania, and others. Germany learned to keep it's mouth shut. Divide and conquer.
It's very likely that arrangement would have still been in place had Russia's "special military operation" succeeded. Kyiv would have fallen in days, and by the time Germany and the others felt any sense of unease, it would have all been fait accompli. "Oh well, wasn't us, that's a Ukrainian matter." and life would have gone on for Germany industry.
Only that's not what happened, and Germany and the others were forced to take a good long look at things and the ugliness behind it. Poland had been ringing the alarm bell for years, and they were right.
Other notes:
- There's a lot wrong with how the German economy doesn't reward risk, and that stifles their innovation. Economics Explained on YouTube has done a few videos on this, and it's more than just Germany. I think there's ways to German prosperity that doesn't require just another Google however, just as the U.S. economy isn't solely dependent on it's tech giants for it's GDP gains.
- The "useless F35" argument is a tired and uninformed one which fails to understand much about how these platforms are developed and why they're developed in the first place. I'll direct you to a link here, which, while hardly academic, is spot on with it's examples and references. https://www.youtube.com/watch?v=xxVsS9ZNUOU
(TL;DW: Every plane goes through this stuff. No, drones won't replace everything; that ignores the role of the strike aircraft. And if the F35 is so bloody useless, why is China pursuing so many versions of their own? Because regardless of what the internet peanut gallery thinks, warfighters around the world know exactly what they need.)
I would like to learn more about the situation of the German economy.
Is there any industry in Germany that will grow in the coming decade?
Has anything important been developed in Germany in the last decade?
Have there been any big IPOs in Germany in the last decade?
Germany's companies seem to have very low p/e ratios. This means the market expects them to tank. Are there companies in Germany with a high p/e ratio, say over 100? Off the top of my head, I can only think of SAP. A company that I find hard to reason about.
Anecdote: a friend of mine, a mechanical engineer with master’s degree in automobile engineering from one of the good German Universities ended up working for the biggest German Automakers. Him being the only non German, non White person in his department, had his entire experience be “This in not <insert your country>, this is Germany. We do things a certain way.” He moved to the US after 2 years and worked for Tesla and now Rivian. Not only did he make a bunch of money, but he now gets to work on the new technology. Meanwhile the old company is trying to keep up and stay current with the times.
While it is definitely unfortunate that his origin was involved in this, this is one of two general arguments you hear in Germany and to some degree Switzerland whenever any kind of change is suggested. "We've always done it like this here!" or "We've never done it like this here!" pick one. Where "here" refers to anything from the country down to the department, depending on the topic.
It is the experience of every non-german working in Germany and especially in automotive. I'm white fwiw.
I probably lost years of my life expectancy just working there.
In fact I think the best thing that could happen for the european tech sector would be for the german automotive industry to collapse.
The German car industry is completely outdated and very, VERY conservative. This includes Bosch. I would never work there.
The VW board even fired the CEO (Herbert Diess) because he wanted to make too many changes at once. The German car industry is a hopeless case, except maybe BMW.
A high p/e just means that the markets expects the company's earnings to grow to a multiple of what they are today. That does not have to be explosive. And there is no reason some "bubble" has to burst.
The fastest growing economic sector in 2024 was "Information and Communication" with a 2.48% inflation-adjusted growth rate: https://www-genesis.destatis.de/datenbank/online/statistic/8... I think it'll likely keep growing faster than the rest of the economy for a while.
I read an interesting point recently: Austria's 100 wealthiest families have two thirds of the country's wealth, and none has earned their money from technology; they've all inherited it.
How different would the same list be for Germany? One, perhaps two families earned their fortunes from tech? Zero outside of SAP, a company founded 50 years ago?
Germany and a lot of other European countries do a lot of cool cutting edge research. Problem though is that one needs to commercialize it via products and services to reap the benefits. That happens a lot in the US/UK. See the sibling thread about covid vaccine research as an example.
However, it is safe to say that the policies surrounding this sector have failed quite spectacularly in bringing new talent to Germany in the past 10 years.
Economic immigrant in Germany here. And most of my friends are also skilled -economic- migrants (mostly doctors/engineers/scientists) as well. Maybe I can draw a picture. There are a number of reasons, but I would say the biggest one is this: while I am told things are a lot worse than it was, the situation here is still a lot better than it is in my home country. I also have no hope for my home country; while I think Germany will probably get better eventually.
Now, for the alternatives; emigrating to US is rather challenging with all the H1B shenanigans going on, while my friends who has moved to Canada all eventually came to hate their lives and moved to other places. If you don't speak the local language, there are not many jobs in a lot of the European countries. Japan is not really welcoming to immigrants, and Australia is seen as too remote. This leaves you with few choices in the first world; Britain, Netherlands, and Germany. I got the first job offer from Germany, so I am here. Quite a few of my friends were thinking along similar lines, so they are scattered across these three countries.
If bad economy leads to better social welfare programs than we need more "bad economy". It seems to be good for the people. It is strange that sometimes it is forgotten that economic growth as an indicator only makes sense if at the same time it improves life of the people. Economic growth can also be decoupled from people wellbeing, which happens easily if one doesn't fight against inequality and monopolies in capitalistic societies.
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Germany also has been facing two big challenges that have seen limited action: rising energy costs and slowing exports to China, both of which have started around 2020. The decision to rely heavily on Russian energy to sustain its industrial economy has proven to be a bad idea. The influx of low- or unskilled labor into a social welfare system, coupled with the challenges of cultural integration (German culture isn't the sexiest of things), has also turned out to be a bad idea.
Bonus issue: Germany’s taxes are high, particularly for individuals and workers. Some of the highest in the world. This gives consumers less $ to consume with.
The decision to rely heavily on American military hegemony has proven to be a far worse idea than piping gas from Russia. Without military sovereignty, they don't get to choose their economic partners. Without the ability to choose their economic partners, they have to accept dictates about their economic relationships. Because of that they have to suffer.
The same thing happened with Huawei - America decided that Europe needed to decouple from them so decouple they did.
As for the moral argument - what Russia is doing in Ukraine is awful, but what Israel is doing in Gaza (with Germany's blessing) is SO much worse. Germany follows America's dictates on both, so their economic relationship to the genociders is still maintained even though it has very little impact on the health of the Germany economy.
Now Trump is in charge, Europe is being told that it still has to fall in line, but it needs to jack up its own military spending as well - America has shifted focus East and isn't all that interested in defending Europe any more (if it ever was).
Trump might ask the EU to be the 52nd state of the US.
That's why when the pipeline was blown up and they became dependent instead on more expensive American LNG they accepted their fate with a minimum of protest. It's why they've not demonstrated much interest in finding the culprit, despite the incredible economic damage it incurred.
The Germans are in the situation they're in because they did not take U.S. advice on the entirely predictable Russian bad behavior.
just look back 15 years, for all those emerging sectors that were/are hot during the period, how many new EU companies managed to rise? a few drug makers for sure, but everything else is just dead despite the fact that they have a huge economy and a relatively unified market with hundreds of million people.
EU is dying a slow economic death, the US must be very happy for that.
They are not naive with security. Either they fully defend themselves and get nuclear weapons or they keep the status quo. Buying useless F35 (possibly with a kill switch) from the U.S. just enriches the MIC.
Germany should have build up a "high tech" Internet industry so it could control which parts of the narrative get flagged and which ones stay up.
Russia used that NG to bully and dictate to it's neighbors like Poland, Hungary, Romania, and others. Germany learned to keep it's mouth shut. Divide and conquer.
It's very likely that arrangement would have still been in place had Russia's "special military operation" succeeded. Kyiv would have fallen in days, and by the time Germany and the others felt any sense of unease, it would have all been fait accompli. "Oh well, wasn't us, that's a Ukrainian matter." and life would have gone on for Germany industry.
Only that's not what happened, and Germany and the others were forced to take a good long look at things and the ugliness behind it. Poland had been ringing the alarm bell for years, and they were right.
Other notes: - There's a lot wrong with how the German economy doesn't reward risk, and that stifles their innovation. Economics Explained on YouTube has done a few videos on this, and it's more than just Germany. I think there's ways to German prosperity that doesn't require just another Google however, just as the U.S. economy isn't solely dependent on it's tech giants for it's GDP gains.
- The "useless F35" argument is a tired and uninformed one which fails to understand much about how these platforms are developed and why they're developed in the first place. I'll direct you to a link here, which, while hardly academic, is spot on with it's examples and references. https://www.youtube.com/watch?v=xxVsS9ZNUOU (TL;DW: Every plane goes through this stuff. No, drones won't replace everything; that ignores the role of the strike aircraft. And if the F35 is so bloody useless, why is China pursuing so many versions of their own? Because regardless of what the internet peanut gallery thinks, warfighters around the world know exactly what they need.)
Could have been cool. But even project like a digital medical patient journal that other countries had for 2 decades they have trouble with.
Is there any industry in Germany that will grow in the coming decade?
Has anything important been developed in Germany in the last decade?
Have there been any big IPOs in Germany in the last decade?
Germany's companies seem to have very low p/e ratios. This means the market expects them to tank. Are there companies in Germany with a high p/e ratio, say over 100? Off the top of my head, I can only think of SAP. A company that I find hard to reason about.
I probably lost years of my life expectancy just working there. In fact I think the best thing that could happen for the european tech sector would be for the german automotive industry to collapse.
The VW board even fired the CEO (Herbert Diess) because he wanted to make too many changes at once. The German car industry is a hopeless case, except maybe BMW.
Explosive growth can only continue for so long before the bubble bursts.
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- Stable Diffusion at Heidelberg University
- Biontech/Pfizer covid vaccine in Mainz
- What else?
Stability AI is not a German company and Biontech's market cap is where it was before Covid.
Dead Comment
However, it is safe to say that the policies surrounding this sector have failed quite spectacularly in bringing new talent to Germany in the past 10 years.
Now, for the alternatives; emigrating to US is rather challenging with all the H1B shenanigans going on, while my friends who has moved to Canada all eventually came to hate their lives and moved to other places. If you don't speak the local language, there are not many jobs in a lot of the European countries. Japan is not really welcoming to immigrants, and Australia is seen as too remote. This leaves you with few choices in the first world; Britain, Netherlands, and Germany. I got the first job offer from Germany, so I am here. Quite a few of my friends were thinking along similar lines, so they are scattered across these three countries.
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https://fakti.bg/en/world/939006-germans-richer-than-ever