Germany : Why It Works ...

I've lifted the article below from Andrew Hammel's blog via a note from AmiExpat, an American expat living in Germany.

After living for a while in America, I was surprised to see the gulf of difference between the countries, apart from the obvious differences like language, currency etc.  People find it hard to believe me when I say that it's VERY difficult to buy things on a credit card here, unless it's a German credit card.  Germans don't like debt.  At all.  I pay for all my groceries and spending on a German bank debit card, and that is normal.  Yes, you actually have to have the money before you spend it - what a concept!  This is the German way, and hey, you can't say it hasn't worked for them.  

Have a read of the article below and see what you think:-

Every summer, Volkmar and Vera Kruger spend three weeks vacationing in the south of France or at a cool getaway in Denmark. For the other three weeks of their annual vacation, they garden or travel a few hours away to root for their favorite team in Germany's biggest soccer stadium.

The couple, in their early 50s, aren't retired or well off. They live in a small Tudor-style house in this middle-class town about 30 miles northwest of Frankfurt. He's a foreman at a glass factory; she works part time for a company that tracks inventories for retailers. Their combined income is a modest $40,000.

Yet the Krugers have a higher standard of living than many Americans who have twice that income.

Their secret: little debt, frugal habits and a government that is intensely focused on high production, low inflation and extensive social services.

That has given them job security and good medical care as well as well-maintained roads, trains and bike paths. Both of their adult children are out on their own, thanks in part to Germany's job-training system and heavy subsidies for university education.

For instance, Volkmar's out-of-pocket costs for stomach surgery and 10 days in a hospital totaled just $13 a day. College tuition for their son runs about $260 a semester.

Germany, with its manufacturing base and export prowess, is the America of yesteryear, an economic power unlike any of its European neighbors. As the world's fourth-largest economy, it has thrived on principles that the United States seems to have gradually lost.

[One of those, the article points out, is a profound aversion to debt, both on the personal and governmental level].

...

Germany's lower unemployment rate also reflects its orientation toward formal vocational training.

The Krugers' older child, Thorsten, was interested in books from an early age, and prepared for a university education. Their daughter, Nadine, got a vocational diploma in social work that included three years of schooling after high school, with the final year being on-the-job training at half pay.

About one-fourth of all German businesses take part in this apprenticeship program; six of 10 apprentices end up getting hired permanently, said Dirk Werner of the Cologne Institute for Economic Research.

...

The practice, he said, is a key reason why Germany has one of the lowest unemployment rates for 15- to 24-year-olds, about 9.7%, according to the Organization for Economic Cooperation and Development in Paris. In the U.S., the comparable rate is about twice that.

Volkmar and others attribute part of the lower unemployment rate to the German work ethic. Yet Germans, on average, work far fewer hours a year than Americans, thanks partly to five or six weeks of vacation.

The article does a fine job of summarizing why the standard of living of ordinary middle-class Germans is so much higher than that of Americans, despite Americans' higher incomes: government policies consciously reduce the cost of living for the ordinary incidents of life (health care, higher education). German earn less than Americans, but also can spend less on basic necessities of life. Government policy also guarantees everyone enough time off to truly relax and recover. Further, those who don't go to college -- about 75% of the population in developed countries -- are channeled into solid middle-class jobs through internship programs run by public-private partnerships. That is, they are trained to do a job some company needs them to do, without being forced to incur thousands of dollars in debt to get that training.

Here's a link to the original LA Times article if you want to read the whole thing.