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.
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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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When companies who find a newer, better, cheaper way of doing business grow at the expense of companies stuck in the past, then it’s true that those new companies gather many of their employees from the firms shrinking. But that is not what is happening here. Herr Professor Doktor has things backward.
In the mid-19th century in South Africa a young spiritual leader called Nongqawuse claimed to have received a prophecy from ancestral spirits that if the Xhosa people destroyed their crops and killed their cattle, the spirits would rise, drive the British colonists into the sea, and restore the Xhosa to their former prosperity. This event is known as the **Xhosa Cattle-Killing Movement** or the **Cattle-Killing Delusion**.
Nongqawuse’s prophecy led to one of the most devastating famines in South African history. Between April 1856 and June 1857, many Xhosa people followed her instructions, leading to the destruction of their livestock and crops. The anticipated supernatural intervention did not occur, resulting in widespread starvation and death, significantly weakening the Xhosa resistance against colonial expansion.
The aftermath of this event greatly reduced the Xhosa population and land holdings, facilitating further British colonial expansion in the Eastern Parts of the country.
I think the current climate mania in the west is of the same ilk and it too is being manipulated by those who wish us harm.
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Economics is a weird mix of ideology, self evident statements, facts statistics empirical research and even some theory and in addition a lot of stupidity. This ranks among the latter. Steam locomitives did not need to disappear for diesel locomotives to appear. And diesel locomotives are still widely used despite the appearance of electrical locomotives. Why utter a thesis that can immediately be refuted?
““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.”
Ignoramus.
It is precisely the other way round – creative destruction as explained by the Austrian economist Joseph Schumpeter, put simply innovation – new uses for existing tech, and new technology destroys old.
“Companies need to shrink in order to be able to invest and develop new technologies”
Huh?
What did we use for lighting before candles mama?
Electric lights, sweetie.
I remember reading a lengthy article in the NYT around 2008 saying fracking for natural gas would never be economically viable. I thought to myself this fellow knows nothing natural gas or petroleum industry. At the end of the article he gave who were his experts 2 university economics professors. I just laughed