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How Does German Economy Compare to United States Economy?

 Some of our viewers may have grown up withthe idea that Europe is filled with nothing more than unorganised countries that are runby corrupt and incompetent socialists. While it may be true in some cases, Europe’seconomic powerhouse Germany, is now the fourth strongest economy in the world, only a fewplaces behind top ranked USA. Today we’re going to compare the two, inthis episode of the Infographics Show, US Economy vs German Economy. Don’t forget to subscribe and click thebell button so that you can be part of our Notification Squad. In 2016, The United States had a share ofaround a quarter of the gross world product at $18 trillion, while Germany had a takein 4.4% at $3.4 trillion. To put things into perspective, The US overshadowsGermany in terms of size and population with around 325 million people and a land areaof 3.5 million square miles (3,531,837 square miles) compared to Germany’s populationof 82 million and land area of 135 thousand sq miles (134,580 square miles).

 The USA has a labor force of 158.6 millionwhile Germany has 45.3 million. The cost of living in Germany is around 11%cheaper overall than in the USA which is comparable to the salary difference. The disposable net-adjusted income per capitafor the average household in Germany is $31,925 a year, while it’s $41,071 for Americans. Both countries have a considerable gap betweenrich and poor, with Germany’s top 20% of people earning over four times that of thebottom 20%. American’s top 20% earn a staggering 8 timeswhat the bottom 20% do. As of January 2017, the minimum wage in Germanynationwide is $9.79 (8.84 euros), while the minimum wage in the USA ranges depending oneach state and whether the job is one that earns tips. Germany has a reputable export market whichshipped goods to a value of $1.33 trillion dollars in 2016. 70.5% of that was made up of their Top 10export products – (1) vehicles, (2) machinery including computers, (3) electrical machineryand equipment, (4) pharmaceuticals, (5) medical products, (6) plastics, (7) aircrafts andspacecraft, (8) iron and steel products, (9) mineral fuels and (10) organic chemicals. The fastest growing category for the Germansis vehicle exports, with aircraft and spacecraft not far behind. In the same year, America exported only slightlymore than the Germans, with $1.454 trillion dollars of goods shipped, equating to onlyaround 7.8% of the economic output. The US Top 10 exports in 2016 were (1) machineryincluding computers, (2) electrical machinery and equipment, (3) aircrafts and spacecraft,(4) vehicles, (5) mineral fuels, (6) medical products, (7) plastics, (8) Gems and preciousmetals, (9) pharmaceuticals, and (10) organic chemicals.

 According to Professor Bernd Venohr of Berlin’sSchool of Economics, “America concentrates on the mass market and quantity, but Germanyis king of niche markets.” Germany has a strong manufacturing sectorwhich makes up around one quarter of its economy while the US sector is only twelve percent. Germany’s success relies on two importantadvantages. The first is that they have a manufacturingcommitment with support for training and offers technical apprenticeships and vocational training,along with sponsored school programmes. They also give company penalties for gettingrid of workers. The second is that they have a lower corporateincome tax rate which benefits investors and companies, who can reinvest and raise capitalmore easily. While President Trump has criticized Germanyfor its unwillingness to spend more on defence and endless trade surpluses, back in the Obamadays, government policy makers were seeking guidance from Germany to help them in doublingthe nation’s export growth, which was a promise from the then President.

 A large part of Germany’s export and manufacturingsuccess is due to its large number of small and medium size enterprises or SMEs whichhave less than 500 workers and annual sales of under 50 million Euro. 99% of companies are SMEs and employ aroundtwo thirds of workers in the country while in the USA, even though the percentage ofSMEs is the same, they only employ around 50% of the population. German workers have access to affordable andquality healthcare, while many US SME workers probably don’t, and if they do it will beof low quality. The decisions and policies of a governmenthighly affects the economy and quality of life for its people. Germany shows higher government effectivenessthan the USA with its integrity in policymaking processes and government institutions, withaccountability for its politicians and less corruption. The young adult population of Germany hasone of the lowest unemployment rates in the world and enjoy good morale in their workplaceswith a high quality of life so the fact that the German economy has been on a fast growthrate compared to the US is believable.

You could, however, wonder what manipulationhas been done to US GDP and employment statistics due to the poor corruption rating given byThe World Bank, The World Economic Forum and Transparency International. It would be safe to say that the US has alot to learn from the Germans in terms of their government and economic policies andin fact Americans could be much richer if the US Government did not, overspend on healthcareand pharmaceutical drugs, Spend $3-4 trillion on the Afghanistan and Iraq wars, Give fossilfuel companies annual tax breaks of billions of dollars, and Ruin electrical engine designsin the past which would have done away with the Middle Eastern oil dependence. So what does the future hold for these twopowerful economies? While America dominates the global economy,it might not for much longer. With only a 1.6% growth rate in 2016, it wasfar behind China’s 6.7% growth, who sit in second place behind the US in the top economyratings. Germany's quality of life has never been thishigh and the economy has almost fully recovered since the last crisis. But, although strong by European standards,their economy could see some challenges in the next few years due to the refugee crisisand the implementation of Brexit. So, which country do you think has more potentialgrowth in the future? Could Germany improve its ranking over thenext few years? Let us know in the comments! Also, be sure to check out our other videocalled American Cops vs British Cops?! Thanks for watching, and, as always, don’tforget to like, share, and subscribe. See you next time! 

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