For 99% of Americans, Germany Is Better

In America, workers are an overpriced commodity destroying shareholder value. In Germany, workers are an integral part of thriving business.

In the American version of predatory capitalism, economists and financial types say that the European model is stagnant because it prizes cohesion over innovation. Even though Germany was also impacted by the ongoing economic crisis, its unemployment rate of 7.5% is actually down from two years ago. The U.S.'s unemployment rate has doubled since then and there's no end in sight.

Despite the made-in-America financial disaster, we still believe that our version of unfettered free market capitalism is the best. That it raises all boats. This flies in the face of the rubble strewn about us, the ruined landscapes of shuttered homes and picked through garbage. The American worker is the victim of this belief, dying before his time, helpless in the face of the hopeless.

German culture emphasizes long-term thinking and sustainability:

Keep experienced people, keep their knowledge in-house. Develop a high sense of loyalty and trust so they feel like they’re part of a family, not just doing a job.

During this crisis, German businesses tolerated lower productivity, anathema to American business. American companies fired all the people they could and made the rest do more.

We hide behind our economic indicators without acknowledging their political agenda. Our official unemployment rate doesn’t count the long-term unemployed or the underemployed; counting the number of those receiving unemployment insurance doesn’t count the people getting extended unemployment, the main federal jobs program. And as of Friday, February 26, there is no more unemployment insurance.

As Mark Twain once said, “There are 3 kinds of lies: lies, damned lies, and statistics.

Here are some (perhaps) irrefutable facts: 25% of the 8.4 million jobs lost in America during the Great Recession (since August 2007) are permanently gone. They will not be coming back.

The country needs to create 100,000 jobs a month simply for the new entrants in the marketplace. For an uptick in the current 9.7% unemployment rate, we will need more than 200,000 new jobs a month.

Economic analysts note things dryly without any context, “Companies automate and shift jobs overseas or move whole assembly lines to China to cut costs.” But Germany didn’t do that. They tried to save the businesses and jobs at the same time because they believe that workers are not interchangeable commodities like soybeans or lumps of coal. They believe that good workers contribute a lot to the bottom line. “Much of the attention on saving jobs has focused on the government’s short-work program, in which taxpayers and companies share the cost of furloughing workers. But Mr. Kramer said the government-financed program of shorter workers was responsible for saving only about 20% of jobs.” In other words, in Germany 80% of jobs were saved through workers helping grow businesses out of the crisis.

The American corporate viewpoint is radically different:

“Companies, in the name of making money, substitute against labor through outsourcing or technology,” said Allen Sinai of Decision Economics. Wages and benefits make workers “so expensive that who wants to hire them? As a result, the displaced workers won’t be rehired unless we have double the growth rate we’re expecting.”

That’s not only cold, it isn’t true.

Germany has an entirely different mind set than America. The emphasis is not merely on earnings and creating shareholder value; it is also on preventing joblessness and the despair that comes with it. People truly are at their breaking point.

Can an unemployed person pay taxes?

So What’s The Diff?

For one thing, Germany did not discard its manufacturing sector. During the economic downturn Germany emphasized both returning the profitability and saving jobs. Siemens, the big manufacturer, retooled through capital investment, betting on powerful turbines, each one of which could light up a city of 3 million.

Behind the curtain of corporate propaganda underlying everything, what’s going on in America?

• Because of an estimated loss of 40% since 2007 in household equity and retirement savings, people cannot retire. Therefore the natural cycle of retirement, making way for the younger generation, is unnaturally stunted.

• 25% of homeowners are substantially underwater and cannot sell their homes. The vaunted mobility of Americans to go where the jobs are is constricted.

• People are living on extended unemployment benefits, if anything.

• 1 out of 8 Americans are on food stamps.

• Many have run out of unemployment and cash, subsisting on food stamps alone.

• One person in that position is Jean Eisen from Southern California. She lost her job selling beauty supplies to salons over two years ago and hasn't been able to find a new job. She hasn't had a paycheck or unemployment insurance for several months, and is surviving on foodstamps.

She has become effusively religious — an unexpected turn for this onetime standup comic with X-rated material — finding in Christianity her only form of health insurance.

"I pray for healing,” says Ms. Eisen, 57. “When you’ve got nothing, you’ve got to go with what you know.”

UPDATE on Layoffs Kill: Great Comment/Solution

UPDATE: Great comment from AnnSMI February 25th, 20102:52 am posted on the NYT story featured in the previous post, "At Closing Plant, Ordeal Included Heart Attacks":

Now we know.

We know that corporate greed for more and more profits and higher and higher stock values which have led to the shipping of American jobs abroad kills.

We know that treating workers as a disposable commodity kills.

We know that the pyshing the middle class to the wall with job losses and pay cuts kills.

We know that leaving former middle class workers with a bleak future of low wage jobs at McDonalds and as Walmaart greeters kills.

We know that globalization - the darling of pie-in-the-sky economists from Krugman to the Univ of Chicago- while great for third world countries and the upper 1%, isn't working for the US middle class who see their jobs and their futures disappearing and are faced with poverty after a lifetime of work, and it kills them.

Between greed of the health insurance companies who would rather see the population die before they pay for treatments and the greed of Wall St for higher and higher profits and stock values, the US middle and working classes are being stressed - quite literally - to death.

BTW, here is a very short answer for the pretenitious and officious Prof William T. Gallo with his psycho-babble of "“We want to find out how we can intervene so we can lessen the effects of job loss, or eliminate them.”
The answer is quite simply: MONEY.

Pay these abandoned workers enough MONEY so they will not be in poverty for the rest of their lives due to the loss of their jobs in middle age and late middle age when they are too old or have too many family responsiblities to go get PhDs in some esoteric field for which they will never be hired because then they will be near 50 or 60 years old.

Pay these displaced workers enough money so they can afford to keep and use health insurance.

Forget all your psycho-nonsense of counseling, support, and magic happy pills. The answer is MONEY because such workers see poverty and healthcare bills staring them in the face.

American Tragedy: Layoffs Kill People

Today's front page of the NYT offers a horrifying story that layoffs can kill. 3 relatively young men died of sudden heart attacks within weeks of one another after learning that their employer, the steel mills in Lackawanna, NY, was closing.

Studies show that anxiety about the prospect of being laid off might even be more damaging than actually being laid off. Life expectancy is shortened significantly.

It disgusts me that all we hear about in America is "maximizing shareholder value" and "higher productivity." There are so few stories about the psychological and physical torment of the worker in these horrible times where hiring is nowhere in sight. The only place I ever see a story like this is in the New York Times. At least I can look forward to a world where investigative reporting is no longer done so I can simply concern myself with iPhone Apps and "Jersey Shore" and not the plight of my fellow human beings. Enough ranting. Here are the studies cited in the article:

A growing body of research suggests that layoffs can have profound health consequences. One 2006 study by a group of epidemiologists at Yale found that layoffs more than doubled the risk of heart attack and stroke among older workers. Another paper, published last year by Kate W. Strully, a sociology professor at the State University of New York at Albany, found that a person who lost a job had an 83 percent greater chance of developing a stress-related health problem, like diabetes, arthritis or psychiatric issues.

In perhaps the most sobering finding, a study published last year found that layoffs can affect life expectancy. The paper, by Till von Wachter, a Columbia University economist, and Daniel G. Sullivan, director of research at the Federal Reserve Bank of Chicago, examined death records and earnings data in Pennsylvania during the recession of the early 1980s and concluded that death rates among high-seniority male workers jumped by 50 percent to 100 percent in the year after a job loss, depending on the worker’s age. Even 20 years later, deaths were 10 percent to 15 percent higher. That meant a worker who lost his job at age 40 had his life expectancy cut by a year to a year and half.

A 2009 study led by Sarah A. Burgard, a professor of sociology and epidemiology at the University of Michigan, found that “persistent perceived job insecurity” was itself a powerful predictor of poor health and might even be more damaging than actual job loss.

By the time health care reform is passed, everyone will be dead.

Bill Gross of PIMCO is a housing activist

You know that things are dire when investors and community activists are banding together to try to “persuade” banks to reduce the principal on homeowners’ mortgages.

Reality has dawned for investors like PIMCO. A year ago, Bruce Marks, a housing activist based in Boston, was excoriating PIMCO and its co-founder Bill Gross for his intransigence in allowing any mortgage modifications. But as the mortgage situation grew more dire with no end in sight, enemies became allies :

Mr. Marks says mortgage-bond investors like Pacific Investment Management Co., or Pimco, a unit of Allianz SE, are "on the same page we're on." That is a significant change of tune by the well-known activist, who is chief executive of a Boston nonprofit group called Neighborhood Assistance Corp. of America. NACA counsels struggling mortgage borrowers.

Last year, Mr. Marks argued that investors were blocking loan modifications. He put a bright-red label that said "predator" over a picture of Pimco co-founder Bill Gross on NACA's Web site.

Mr. Marks also threatened to send bus-loads of protesters to bond manager Pimco's headquarters in Newport Beach, Calif. Pimco headed off the protest by inviting Mr. Marks in for a chat with Pimco Chief Executive Mohamed El-Erian and other senior executives. Mr. Marks came away persuaded that banks, not investors, are dragging their feet on loan modifications.

Now that 25% of homeowners are “underwater”, meaning they owe far more than their homes are worth, investors are seeing that the only way they may get anything on their mortgage-backed securities holdings is if the mortgage principal is reduced to some level near market value.

Homes bought at the top of the bubble may not regain their price level until 2040. In the meantime, homeowners are stuck in “house arrest”, paying out huge sums of money they can never recoup or borrow against. The strategic option of jingle mail, taking a 7-year hit on one’s credit rating and renting at a much lower level than their mortgage payments gets more attractive every day. At least that way one can save thousands a year against the next layoff or medical emergency.

The investors see that. The monkey wrench in the machinery is the banks. They much prefer the option of lowering interest to 2% or extending mortgages 40 years rather than reducing principal. But principal reduction is by far the more effective way to keep mortgage holders in their homes making monthly payments. Investors have already marked down the MBS to distressed levels.

Now housing activists and Bill Gross are on the same page (gasp!), marching against the banks, trying to keep people in their homes.