Essay by Eric Worrall
“Transformation means change. Change means often consolidation. Companies need to shrink in order to be able to invest and develop new technologies,”
More job cuts on the way as German economy struggles to recover
By Liv Stroud
Published on 06/09/2024 – 14:10 GMT+2•Updated 14:55
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“German companies have located already a lot of production to China, to India, elsewhere, and this will continue,” Fratzscher said.
,,,
Can the German government help?
Fratzscher said he doesn’t think the government should interfere to retain workers.
“Transformation means change. Change means often consolidation. Companies need to shrink in order to be able to invest and develop new technologies,” he said.
Fratzscher also noted the government trying to keep the old structures in big companies is not just limited to Germany, but also a European phenomenon.
“Often old parts, redundant parts of an economy need to disappear for new parts to be able to happen and to to reappear or to be developed,” he added, suggesting that these crises do not have short-term solutions.
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Read more: https://www.euronews.com/business/2024/09/06/more-job-cuts-on-the-way-as-german-economy-struggles-to-recover
“Fratzscher” is Marcel Fratzscher, President of The German Institute for Economic Research (DIW).
Marcel Fratzscher, despite his no doubt impressive economic qualifications, has misunderstood the situation.
The Germany companies aren’t “disappearing” redundant parts of their businesses, they are relocating them to Asia. If those business activities were truly no longer useful, they would disappear worldwide.
When kerosene replaced whale oil for heating and light in the 1860s, companies didn’t relocate their whale industry to other nations to cut costs, they got into the mineral oil business – or were rapidly annihilated by those who did.
The only thing preventing automobile manufacturers and other energy intensive businesses from prospering in Germany is German politicians. Germany companies have no problem recovering at least some measure of economic competitiveness after they relocate to nations with cheaper energy.
As for Fratzscher’s prediction that the Germany economy will recover in a few years, why should the German economy ever recover? A shop which charges too much, and which refuses to accept the direction of the free market, has no hope of ever achieving future prosperity.
There is no chance green energy will ever be competitive, there is no economically viable means to transform unreliable green energy into dispatchable energy, which is what a modern economy needs. The German economy will continue to decline until politicians who have set this disastrous economic direction are replaced by politicians who are less ignorant of real world economics.
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This makes no sense to me. If I as an individual working out of my garage running a start-up, need to invest and develop new technologies, I need to grow my business, not shrink it. If I have a business that’s already well-developed and manufactures goods, cutting staff on the factory floor to fund R&D is simply going to render it unprofitable as sales and income drop. How do you get to the conclusion that shrinking a company is going to allow investment in R&D?
That moron probably adheres to the belief in the modern monetary theory.
Citing a comment by Wolfgang Pauli on a physics paper:“Das ist nicht nur nicht richtig; es ist nicht einmal falsch!”
“That is not only not right, it is not even wrong.”
One of the founding fathers of the U.S., Benjamin Franklin, once stated something to the effect that ignorance leads to tyranny. Following Fratzscher’s guidance will lead to authoritarian control of every aspect of life where lives for the majority will be brutal and short.
What you guys do not understand.
This is not about making sense nor is this guy a moron.
His answer is 100% from the communist playbook – Maoism to be precise.
Mao said the same thing about the destruction of the 4 olds(culture,ideas,habits,customs) and to replace them with the 4 news.
And destruction of industry has become part of it – to save the world from the west (Frankfurt School)as the west was considered the only real obstacle to global communism according to Adorno and Lukasz etc,
and the destruction of western economy by deindustrilasation has been started in the 1970ies with the Lima-agreement.
(the flooding of the west with illegals was already planned in the 60ies = Cloward Piven Strategy, while in fact it goes even back almost 100 till Kalergi).
Of course his statement does not make real sense as you do not get more or better by worsening your position ;
but – when you destroy energy supply on purpose and have to rely on unreliable energy
you need to outsource energyintense industry to keep the lie alive that solar and wind are a good and adequatereplacements.
His BS- answer is the same strategy the Green Party already used with Baerbock (who is indeed low IQ ) when she was asked how she can give money to Ukraine to run their nuclear plants while shutting down German nuclear power plants.
She answered:” Germany is not Ukraine “.
Of course this answer is BS – but they know that the majority will go along with it.
And while he says ” the government shall not interfere “,
it was the government that created this situation by interfering = shutting down nuclear plants.
And at the same time the Green Party is crying for massive interference = censorship.
I agree 100%. Wow, great insights.
Luckily, the US has Trump to hopefully stop and reverse these idiotic trends for at least 4 years, and Vince after that for another 8 years.
Who in the enfeebled EU will rise as a Phoenix from the ashes?
The up front opposition may look like Harris to the general public but it is a great deal larger than that. Trump is not “playing on a level field” by any means.
History shows that politics has never been “playing on a level field”, the side that can throw the most money in the ring gets the power & control,
You have some good points but, Fratzscher is a moron and is appealing to the ignorant. He either believes the BS or he is evil.
He believes that everyone else is stupid.
This strategy will eventually backfire. The general populace may be ignorant but, when they no longer have the modern conveniences that abundant and cheap energy provide, they will educate themselves.
The upheaval could be hazardous to adherents with leaders and academics fleeing for their lives. Sri Lanka anyone?
1.) -Communists always have to break a few eggs to make the omelette.
-There’s never an omelette.
2.) -The failures of Communism are always our fault.
-The solution is always more Communism.
Any Country that thought sunshine and breezes could power a modern society and two decades later after proving it is impossible because storage is required but storage is forever, yes, forever too expensive and instead doubles down on more of the same demonstrates what Benjamin Franklin was talking about.
Doubling the cost of electricity and causing a recession hasn’t been proof enough for ending the folly. Anyone who has studied the intermittence problem understands that the higher the wind and solar penetration the greater the problem. Germany, that last time I looked was at 26% wind and solar for electrical generation consumption (not nameplate).. They’ll never get to 52% because the economy would collapse first.
The Alternative for Deutschland (AfD), the political party that all the other parties have declared they won’t join in a coalition government because they are “extremists” wants to restart the nukes, end the energiewende (W&S disaster), reestablish trade with Russia, and deport immigrants. There’s the only hope Germany has for what will other wise be a permanent recession (including a Coalition with AfD). It’s not complicated. The AFD recently won key regional elections,. We’ll see what happens next September during their National Elections. The results will be as consequential as our elections this November.
.
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if we could shed the useless regulatory activities that the government requires, then companies could divert people and funds to R&D and more efficient manufacturing, etc.
Peanut steps, compared to what is required
Well, i think it makes perfect sense. Just slash and burn existing competitive industries to make way for new and better industries. Out with the old, in with the new. That is not hard to grasp. It is of course built on completely wrong assumptions but ideology will simply bridge the gap. That is what ‘progressive’ means in reality and exactly why they lost me and countless others once affiliated w the left. In other words: the progressives have turned into regressives.
Unless you are talking about the definition of beer, No German government has ever helped anything in at least 250 years.
508 to be more accurate. Reinheitsgebot was enacted in 1516.
….
Thanks for using my cartoon. You are welcome (-:
How about one of the first social welfare systems? Under Bismarck i recall..
The problem with academics is that they have NEVER worked in industry and have no idea how it works, they just make up green platitudes that make no sense and are well paid to do it.
“A desk is a dangerous place from which to watch the world.”
JOHN LE CARRE
When they get a PhD, they think they’re Gods who can pontificate to the rest of us- out in the real world.
“old … parts of an economy need to disappear for new parts … to happen”
New parts need to happen BEFORE the old parts go away PR people will starve.
And
Those New Parts need to be better than the Old Parts were or.society won’t progress
common sense, lacking in academia and the burro-ocracies
Yep,
Stone Age…Bronze Age…Iron Age…
Stone Tools didn’t vanish before Bronze was created and remained long after
Bronze tools didn’t vanish before Iron came into being and remained long after
Old materials were still in use after new materials were made or man wouldn’t have survived
Stone tools are still made today though it is more an Art than a necessity
Though there are still tribal people existing today without Bronze or Steel
The climatistas would say “wind and solar are the next stage of energy”- but they’re going the wrong way. They really do project a superiority complex about energy- when they are actually very ignorant about it.
This means that German academic does not know elementary anthropology.
He is a totally vacant idiot, who became the head of a research institute.
In Germany, the cream is not rising to the top, which caused Germany to become less rational, which allowed irrational idiots to take over government. That happened in the US as well.
The German people have been so brainwashed and so screwed, they “forgot” up from down.
We still use Stone Age ‘obsidian’ scalpels for delicate eye & brain surgery.
If you look under the microscope at a steel scalpel edge, it looks almost like a saw. It has teeth, whereas obsidian is smooth even microscopically.
The argument for a lack of common sense presupposes that the goal is not to have masses of people starve. Looking at what is being implemented, it is hard to come to any conclusion other than the people pushing this ideology are absolutely intent on causing as much death and destruction to Western civilization as they possibly can.
“Often old parts, redundant parts of an economy need to disappear”
Yep, the Green/Socialist/Marxist agenda has to be eradicated..
They are redundant and a parasite on society.
Wind and Solar, by design and function, require redundant back-up systems to function close to traditional, reliable, high density energy sources
Sometimes it is the added obstacles that you need to have a workaround for.
Way back in the dark recessess of my education, I took micro and macro-economics. My prof was formerly a vp at Wyandot Chemical Corp. He once told us that your typical “academic” economics professor has no idea how the real world works. The better choice is find a prof who has worked in industry. He will tell you: “this is what the “book” tells you should work”; whereas your busines experienced prof will tell you: ” forget what the “book” says, this is how it actually gets done.”
My Statics prof was a practicing engineer teaching part time. He said the same thing.
In theory there is no difference between theory and practice. In practice there is.
There are two pieces here to analyze. The first is the evolution of technology. This could be driven by green things, if either it made economic sense to invest in green things or the government decided to provide incentives for the manufacture of green things. Neither has happened. This Fratzscher person seems to imply the latter is happening. But it clearly isn’t.
Because the second piece is production. In the past, when technology has evolved, newer technologies have replaced it. Companies invest in new equipment and gradually earn back that investment. Instead, German companies are outsourcing manufacturing or simply moving elsewhere.
Fratzscher’s government is not investing in Germany’s future. It is investing in China’s future.
Gradually, Germany is transforming from an economy that makes things to an economy that only consumes things. Which is why Putin felt so secure in launching his attack on Ukraine. Germany’s dependence on Russia just to keep the lights on meant that Putin did not have anything to fear from Germany or the rest of the pathetic EU leadership.
Companies have been relocating out of Germany for decades. Siemens relocated large parts of its heavy machinery manufacturing out of Germany starting about 1990.
Maybe they did that NOT due to energy costs- perhaps it just makes more sense making heavy machinery- to make some of it in other nations. I dunno- wild guess. At least, if it’s not moved to a place like China, where they’ll just copy/steal the production methods.
It was more cheap labor and access to developing markets then. Weaker regulations also were a factor.
Elon Musk says the Chinese are his fiercest EV competitors, by far.
Germany, Japan, etc, are not even a close second.
WV is moving mostly out of Germany
I was just watching Musk on Joe Rogan- on YouTube, now that Rogan can upload his videos there, not just clips.
I didn’t know West Virginia was in Germany! 😎
(Sorry. Did you mean VW?)
In the US, Musk can move his companies from dysfunctional California to functional Texas, where businesses are profitable and taxes and rules and regulations and other BS are less onerous.
It took Musk two times as long, and much more $dollars to build the same factory in Germany as the one in China, which tells a lot about the business savvy of the Chinese people and economy
More than a few US businesses were relocating most or all of their production to China in the 90s, either because of US regulations restricting normal practices or because of labor costs, including meeting major administrative costs (lack of unions in China played a significant part of that aspect).
“Fratzscher’s government is not investing in Germany’s future. It is investing in China’s future.”
Same in the UK, We don’t own our energy, water, railways, engineering, even many of our ports are foreign-owned.
Horse carriages didn’t need to disappear in order for automobiles to have a chance at the market.
Coal didn’t need to disappear in order for fossil fuel to replace it in home heating.
The vacuum tube triode didn’t need to disappear in order for the transistor to replace it.
Bows, atl-atls, and muskets didn’t need to disappear so that rifles could replace them.
Marcel Fratzscher is a mindless cretin. He has a undergraduate degree in Economics from Kiel University, BA in Philosophy, Politics and Economics from Oxford, a Masters in Public Policy from Harvard, a Ph.D. in Economics (2002) from the European University Institute, and the guy has no idea about how technological succession operates.
BA in Philosophy, Politics and Economics from Oxford,
Is that the famous (or infamous) PPE degree that seems to infest almost all British elites?
Yes, it is. PPE = Media Studies for rich folk.
Great resume, no common sense!
What a waste of classroom space.
Keep Government out of it and supply and demand will replace the old with the new as long as the new is better than the old.
H arguments are so sick that they not even worthy of a rebuttal!!
““Fratzscher” is Marcel Fratzscher, President of The German Institute for Economic Research (DIW).”
Maybe HIS job will have to end. Now that he’s proclaimed economic truth about “the transformation”, they don’t need him any more.
“Often old parts, redundant parts of an economy need to disappear”
“Fratzscher” is Marcel Fratzscher, President of The German Institute for Economic Research (DIW).
=======
German recovery starts by disappearing Fratzscher and The German Institute for Economic Research.
There are two potential paths forward that will make the decision for wind and solar. 1- The truth gets out and fossil fuels make an accepted comeback against the subsidized unreliables. 2- A new cheap, dense, clean energy source is developed. In both cases the wind and solar farms become stranded assets and immense liabilities.
Just because of wind and solar our Green ruinators proposed to produce only if sun is shining and wind is blowing.
24/7/365 production will be Impossible, despite of the necessity.
There is no /sarc tag, it’s a real Green Idea !
Without the old parts there can be no new parts…. manufacturing’s little facts of life etc.
Theses morons should take Liam Gallagher’s advice: “Shut up”.
Never underestimate the power of carefully crafted bullshit…
For a company to shrink is for a company to become more specialized. A more specialized company might not have either the funding or the manpower to accommodate R&D departments to create new technologies. If that new technology fails, smaller companies can fail with it.
Larger companies may have more discretionary funding for R&D of new technologies and can better afford to have an idea fail and not go bankrupt.
Mr. Layman here.
Isn’t it generally true that when companies downsize it’s because they are loosing money?
What would they have to invest?
Getting rid of what works in hopes that something better will then be found is definitely putting cart before the horse.
“Horse Power” has long been a metric for what an engine or motor can produce.
But can 200 horses really outperform even a 100hp engine or motor? Aside from the speed, they’d need lots of breaks for water and to “refuel” (eat)? Just like EVs.
(Remember that old show “20 Mule Team Borax”? A 20hp tractor would likely have been more efficient.) 😎
“Creative destruction” is a part of free market capitalism, but it can go destructively awry when given government guidance.
These are the idiots who ape Pharaoh: “So let it be written, so let it be done.”
They know that turning up a thermostat raises room temperature, they know that turning up a stove dial boils water faster … so they probably think they could twist the speedometer and make their car go faster.
If they write a law, the fruits of somebody else’s labor will make it happen. They don’t know who, or how, but Magick!
“Often old parts, redundant parts of an economy need to disappear”
Ummm.. remind us what happened to the Green vote in those last two regional elections… 😉
I’ll be interested in what he says when their national retirement home/tourist destination model implodes and they all end up toiling as slaves for the “newcomer” Islamist overlords. Would be ironic for a bunch that saw themselves as the master race a century ago.
Yet another example of bad government. Get rid of bad government starting with leftwing/socialist politicians. Government bureaucrats and administrators can never match the free market. If something doesn’t work in the free market it goes by the wayside. If something doesn’t work in government they double down and throw more money at it and force us to do stupid things. That can not and will not work.
This is not a new suggestion, but please read Ayn Rand “Atlas Shrugged”
https://aynrand.org/novels/atlas-shrugged/
Geoff S
Yep, rearranging the economy by government diktat and expecting it to still work.
I never read “Atlas Shrugged”.
But, aside from keeping the economy honest (False advertising laws, liability for the cause of real bad designs or products that they knew were dangerous/bad but at the time still went into production, etc.) OK.
Otherwise, the market will determine what people do or don’t want to pay for.
Big problems when those in power via any form of Government tries to decide.
Involve Government and somebody is gaining big bucks or power to implement their chosen ideology.
The later is usually at the expense of Freedom.
The first BMW I admired was a 1974 2002. It was elegant for the period and vehicle engineering perfection for its period. It weighed 960kg and could transport 4 people in safety and comfort.
The current top line BMW is the i7. It weighs 2715kg and can transport 4 people in relative safety (fire risk excluded) and comfort.
So BMW has managed to cram 3 times the materials into what has become a behemoth to do the same job. The is not engineering. It is madness.
Even the BMWs i3 weighs 30% more than the 2002.
I upgraded to a much heavier, stronger vehicle. If you collide with a deer (or in my case a kangaroo), you want as much armour as possible between you and the animal. Turns out greens are incompetent when it comes to culling pest animals, as well as all their other failings.
The best strategy with roos is to drive within your headlights. Better still is to only drive in good daylight.
The only thing that bounces a bull has to be in the ilk of a Mack truck fitted with a sturdy bull bar.
A few roos have hit me on the side of the car but I have missed a lot. I missed one on a single lane sealed stretch resulting in the car being written off after I lost control trying to avoid it. .
Reminded me of an old Bill Cosby routine where he was talking about the old VW Bug.
“If you have a head on collision with a dog, you lose.” 😎
(Couldn’t find a clip of it.)
PS Back in 1973 during the Tropical Storm Ilya (*sp?), I found out the old ones really did float.
(If they had cell phones back then we might have made “The Weather Channel”!)
Some old Academics need to disappear to make way for new, rational and useful academic thinking to happen.
Marcel, pay attention: If it ain’t broke, don’t try to fix it!
Number one loathing of lefties-
Guess which country buys more Telsa Model Ys than any other car? Here’s the No.1 best selling cars around the world, from the Suzuki Swift and Toyota Yaris to the Volkswagen Golf and Ford Ranger – Car News | CarsGuide
You will all buy the Fearless Leader’s nephew’s Lada and be happy!
Perhaps no longer subsidizing useless academics would be a good start.