Oliver Nachtwey: "Germany's Hidden Crisis: Social Decline in the Heart of Europe" | Talks at Google

thank you very much to be invited here I'm very excited to speak at Google in particular because my research focus has shifted very much to the history of capitalism and the relations of technology and values and normative orders and so Google is one of my god cases how the new digital capitalism is emerging maybe we find some time to discuss this topic as well but now I will start with the German hidden crisis and as you might know Germany is widely regarded as one of the European countries countries which was very stable in the last 10 years which is basically an economic powerhouse one of the best economic performances in the last five years its export industry is very good in producing cars and machines and if it is widely seen as an country with which but which has a kind of God social integration but this is only the surface of the German economy the dependent of social integration and the mechanism has have fundamentally changed in the last 30 or 40 years and Germany has become a class society in a way again this is what I want to explain you in the next 20 minutes and in my book I'm most inviting about Germany but always with the perspective to Western capitalist countries so my my thesis is what has happened in Germany has happened in a very similar way in most Western countries so what you're seeing here is an a person who is running up and down going escalate and this metaphor of this escalator I will explain later is the basis of the social condition right now in Germany first of all what happened in Germany in that Germany was regarded as such a successful country Germany and this is only the time of the 1960s had a very productive post-war period where wages basically rose from 50% in a decade and they rose from nearly 50% in the decade of the 50s as well what is particularly striking is that wages so just to see the blue line here have developed very much or very very similar to productivity so if you take and look as an sociologist of the economy you can say the workers in Germany as a whole got their fair share of the increasing world in the German economy and this was particular to of most European countries and allowed German workers to gain higher living standards to have the money resources to go on holidays invocation and to build small houses and have a kind of proper social integration this was true for basically the Golden Age of capitalism until the early 1970s and they are the economic precondition of this social ascent of German workers changed and it changed for most European countries the old regime of high growth capitalism you must know that the German across the blue line is the average gross weight of Europe and the black line is the average it's the growth rate of Germany and the dot the dotted line here is the average growth rate and the the black line is the average growth rate of Europe so what you can see here is that until the 1960s the average growth rates have been about 4% and even in the 50s have been about nearly five five percent for decade so Germany had pretty much resources for redistribution for the building of enhancing welfare state of giving people health care of building new schools kindergartens et cetera but these resources of the economy they have diminished right now and even in the last period it's now this graph is only going to 2011 but it's the same pattern Germany was on the heights of its business cycle last year but it had only 2% real economic rose so even at this times they're doing a good business cycle the German economy couldn't afford anymore this kind of growth which is necessary to provide the welfare states with the necessary resources and this changed the basic pattern of German capitalism the old German capitalism until the 80s was coined by the German sociologist or look back like the elevator effect and his point was that class society is driven one floor higher overall his metaphor was that which people and poor people are standing together an elevator but if you're standing together elevator despite all the differences between them class doesn't matter anymore because everybody has a better life so his in this quote he says there's a collective increase in income education mobility law science mass consumption in spite of all new inequalities that have settled or persisted and back claimed like many other sociologists that with this pattern class society is over and Pegg was correct in the 1980s wages have been risen living standards have risen but even after he published his book in 1968 something changed and here you can see that the change had had already begun so in the I showed you that productivity and real wages have been developed very similar during the 50s and 60s and for the first time this this pattern changed in the early 70s and this was basically exact the time of the first global economic crisis and the the problem of the world economics province of the world economic system the Bretton Woods system was cancelled so we have now a more flexible economic system worldwide and many German companies who reacted to the situation in a way then they tried to build new labor force they built a new labor force and the kind of dual ization of the labor force they substituted many old permanent workers with temp workers or with some with more flexible workers with with new labor contracts and so the productivity was still going on but wages still have risen but not in the same pattern anymore and the real change came after German unification and this is this is the most drastic development where Germany has seen since World War two productivity is still going up it's not going up like the 40 years before but it's still rising but real wages have fallen from nearly 20 years and these are the average middle ages so in this graph there are even the high incomes of the managers and the the productivity gain us inside and if we look at this graph this is the most striking development that after 1980 1998 the lower 40% of German households experienced real decreases in their household income on the other hand so this is the average and these are the upper 60% and this is one clear indication of a new German class society that living standards and in comes from the upper 60% are continually rising since the 90s but for the lower 40% of the Germany income strata they have real losses in income and it's not your only income it's real losses in health care in wellfest welfare state rights and real losses in life security I come to the speculator and what you can see here is the so-called wage share this is this shows you the the actual growth on the actual product of the economy and it shows you the the part of the share of work incomes in relation to profits and until the early 80s John the Ashiya German workers get of the whole income of the economy has risen until 1982 when Han Colgate Chancellor it was a little bit like our Reagan but not so far and after 2003 they have been major labor market reforms in Germany of a deep or transformative deregulation of the German labor market and in which she plumped really down so in an historical perspective the wage share was going down from 73 percent now to 67 percent so the actual share of worker incomes in Germany is going was going down dramatically and this reflects that the balance of forces between capital and labor has shifted very much in the German economy for American people this might seem not very familiar with in Germany we have a very German term actually it's called normal working relationship or the standard relationship it means that if you're employed you have a you've got a permanent employment relationship you have some kind of labor protection so you are protected from unfair dismissal by by your boss you are in you are integrated in the healthcare system and the social system so if you lose your job you get basically three years as you get for three years more than 60% of your form formula income and you are integrated in a system of collective bargaining and a system of code elimination so in the big companies and Germany workers have the rights to have a voice inside the company about health care regulation about work regulations and so on so this is he the definition of this normal working relationship and this normal working relationship was about eighteen nearly ninety percent in the 60s felt down to 67 percent and was even at 79 percent in the early nineties and is now by 67 percent so basically in Germany we have one third of the whole labor market of so-called precarious jobs so precarious jobs we would see as the basic job in the gig economy most people who work for you bar all lived or in other any other gig economy a company this is a precarious job you have a lot of problem of social security of wages of course and in particularly to have a good future and to have the future in your own hands maybe to build a house with mortgages and to have funds for the church for your children and this was really new for German capitalism and this relates these 30 percent in the with 30 percent of the labor market with precarious jobs are related to the 40 percent with real income losses in the last year's this decline is a result of an increase in temporary employment and you must remember or you must know that the temp work was clearly forbidden by law until the 80s in Germany and it's one now one of the most dynamic sectors we have an increase in fixed term contracts and solo self-employment like the Yuba dreamers and even the people who have this kind of permanent contract many of them are still in in poverty in statistical terms if they have this permanent kind of job people who work in the service sector with a permanent contract they are allowed of state of state help because they are so poor with a job one further development is the increase in biographical discontent in this country in continuity status inconsistency and a Demetrios zone so this is might be very particular for Germany and not very new to Americans but in Germany it was traditionally the view that people if they entry a company or a sector they will stay in this company for many many years and they wouldn't change but this has changed fundamentally in Germany so you have to change the company's you have some kinds of Bureau graphical breaks in your life and some some breaks with unemployment or precarious jobs and that you reach a kind of stabilization in your life it's becoming later and later so people became very stable in the biography in Germany formerly in the oil in the early thirties now this has changed you got your first stable job in the early forties and this is what I call the the escalator effect so this this elevator effect was about rich and poor people are going going up together but maybe you know an escalator which is going down when I was younger and had much lost weight I was able to run up and down going escalator it it's sometimes fun but you're a little bit out of steam when you are when you're in the next in the next part but for many people this this escalator which is going down is the daily experience of the life it's not the reality that everybody is experienced thing some social decline but the daily experience they have to run against escalator not in yeah in favor knots to have this experience of certainly client we have an destabilization of the center the the middle class was shrinking in the last 15 years in particular the the lower center of the middle class was both drinking so people from the form of working class who had experienced in their lives and the lives of the parents a slow upward mobility they have new new problems now and many people feel this subjective insecurities they have now fears of socially client and what has changed is the perception of inequalities so this might be very might be very different in the United States as well but in Germany the the collective mentality was always well there is this kind of capitalist system or a market system and if you are unemployed and you're a good person and you've worked hard it's not your problem it's a problem of a system that that it doesn't create enough jobs but now this has changed if you're unemployed if you've got a precarious job you are seen as the individual problem you are not good enough to have a good job and this creates a new acceleration and new conformity of people because everybody is trying to have to be very productive and to have a good job right now and what I think is the most astonishing development is about the kind of modernization in German society so we we are going back to some kind of class of society but it is not a regression to formal societies it's based on a on a contradiction and this is a similarity of progress and regression we have more horizontal equality but at the same time more vertical inequality which means so in the German labor market now we have more women in the labor market they have better positions there's a lot of emancipation for for women too compared to former times but even in the group of women in the labor market the inequalities have become very very huge because we have now more women than ever in Co positions in the in the government leading leading positions but the lowest segment of the labor market these are mainly women with a migrant background so even in the group of women we have the highest degree of inequality and we have now this kind of yeah simultaneous as I said progress and regression and the reason for this is my view that society has become more liberalized which is a good thing but liberalisation liberalisation creates different outcomes in different fields so if you deregulate or liberate the labor market you are creating more inequality if you liberate or deregulate society as a whole you create more any more equality between the sexes or between the sexual orientations or between the Etna's so this is the main source of conflict and it creates a new status and this new status is between the market citizens so you have only rights as a consumer but not as a worker or as a social citizen any anymore this is the fundamental change in German society it creates a society based on markets and not a society based on citizens and many people have tried to resist form of society but many people on the same time having a good life to be a market citizen if you have a good if you have an income which is good enough and recently we've now experienced the same pattern as most advanced capitalist societies so that the form of resistance against developments have been that people tried to vote for wiping popular lists because they said well I can give you a safer Society if we try to help out the magnets and this pattern seems to be the new form of resistance against liberal market capitalism right-wing populism and this might be very dangerous in future times it is still an open situation but it's clearly related to this kind of social decline I analyzed my book thank you very much and let's have a calm discussion okay so what is what has changed since two thousand fifteen or fifteen basically Germany was forced to introduce a minimum wage and there wasn't an actual minimum wage in Germany before because unions have been strong enough with collective bargaining on contracts to cover the lower wages in Germany it hasn't so much changed actually inside the village sector in fact some wages are even going up a little bit but this wasn't reflect or is countered by rising rents and rising living costs so people have a little bit more money in the pockets and the in the end of the month but they have to spend more on gran and another thing so the situation is still the same I'm curious actually so you looked at any of the other countries in Europe nearby like France at a curiosity of a do they have the same sort of changes in inequality and social issues like the yeah France is a particular case they have a lot of my use employment in in the last year's Germany is an interesting contradiction because Germany is now a full employment Society and many people regard Germany as a good case but my my argument is that even in this kind of full employment society we have this 1/3 of precarious employment relationships and in France you have a lot more unemployed and particularly unemployed use people but the wage structure and the lower strata is better than in Germany so the inequality is not so big but in fact most of the European countries like France Italy and Germany have the same problems so you mentioned some labor law changes and led to this situation right like for example that now it's okey to like hire somebody temporarily for example right what other you know like factors do you think in your opinion led to this well there this is a really multicultural development there there isn't just one factor one factor is clearly the diminishing gross weights so the companies in Germany have new strategies another factor are the labor changes and if a third factor might be that the the old the old strategy and collusion of society has has changed so if you look the the classical structure of the family man women and and maybe a kid and in formal terms only or in in old Germany there was the so-called made wet' with a model so the basically the man was was a was working and the woman was doing the household and teaching the kids under or educating the kids now this pattern has changed and both parents are working but this has a price so if both parents are working for 40 hours a week who is who's taking care of the kids so mostly the woman is working but she is accepting lower standards in the in her working conditions because she is at the same time the person who is still responsible for the education of the kids so there was a pressure in the family structure for people to accept yeah weaker labor conditions question about productivity you know the I forgot what you called it but the the two thirds of people that sort of have that guarantee yeah have you compared that to other Western countries that don't have the same guarantee in terms of measuring you know employee productivity and things like that I haven't compared it to productivity actually there is this work by the French economist Thomas Piketty he has a very good account in terms of the inequality of words and not and not of earnings right now there there is no study and I am for myself I haven't done this and because I was trying to conduct a study on the history of German capitalism but this is what I should do the future and just to compare with other European countries one more question to add on infrastructure it's been about a year and a half since I've been to Germany but and I won't even get in I won't bring up the Berlin Airport but that's not you know internet and stuff that we really care about a lot seems to be a lot more difficult to have you know basic broadband to the home and things like that particularly in the rural areas is that is that something that that you know Germany looks at as an impediment to their growth I don't know and I don't even know how is it working Howard house apparent in the in the United States so there's this famous economist Robert Solow who said you see the internet everywhere but not only not only productivity statistics so of course the tech companies are very dynamic and everybody is admiring them in Germany but it's even yeah the the dynamics in terms of growth haven't been so big even in the United States Germany is always slower in adapting to new economic circumstances but I'm not sure what the the the best way of course internet is a problem and there are several other problems bridges airports and so on and in Germany when I think the the German emphatically automotive industry and the machine industry they are very good and in adapting and I think something like building cars is a very difficult task and if they manage to combine building cars with building cars driven by clouds or cars integrated or machines integrated in a cloud system Germany could find its own way digital capitalism but clearly they're they're really left behind and there's no actual strategy to through end of this problem I was wondering about German labor representation and corporate decision making did they try to oppose the trend towards fewer permanent workers and in the 80s and 90s and were there any sectors of the economy where they had more success doing that difficult question that they did but but German trade unions partly accepted the pressures of globalization and international competition and so they have been happy through a new law which sector and an IP at the same time so they were happy because German automotive companies have been very successful in the last 15 years at the same time it creates a lot of problems so I I conduct a lot of research in in automotive plants in fact the factories and what I witnessed was the worker was a good labor contract a good contract and inside the collective Barling gaining system and you aren't really a lot of money if you're a skilled worker but there's a blue line in this in these factories and if you stand to the left of the blue line and are income and this there's a little bit of blue line and and if you are part of the regular labor contract you and a lot of money but if your attempt worker who is always who's only allowed outside the blue line then you earn only 50% and have no no good social integration and no integration in the in the actual work force and trade unions tried to to push against this development but many local trade union officials or not situate the works council officials they were happy about this development because it made their plant more competitive so the trends that your your you alluded to that your graphs and stuff we we kind of know where they go right they go to the United States right because you know your your comment that the elevator that's that we call that the rising tide raises all boats no a lot of people don't believe that and you know the disparity between wages we see that the United States what happened after the economic classes 2000 2007 where we see you know success and rising economic people being able to recover their economic situation in the US that's mostly for the rich the poor people still suffering from not having from not being able to recover what they supposed 2007 in situation and but at the same time when you have had its issue your Germany was the main engine keeping you alive right so do you see that people are beginning to be unhappy with this are they're going to say well you know what we survived the economic situations in the 2007 based on our and all these trends we better keep going and even if it ends up driving us to the state of the United States it's both so there was a kind of resistance against this economic developments in the in the early years of the century it was just before the Great Recession there was a foundation of a new party called the D Lincoln and many workers and unemployment to join this party just to oppose the neoliberal realization of the German economy right now then there is a kind of pressure inside the economy in particular not in the automotive industry or in the world mark integrated competitive industries because their workers yeah they are so happy that they serve as you said that they survived this crisis that they are not very keen on gone strike or something or do something else but the whole situation has changed many workers in the non world market integrated industries like the caring sector of the health sector or the service sector there's a lot of resistance right now and a lot of lot of strikes people strike at the biggest airports in Germany there have been certain several labor movements inside the reproductive sector so people who work in the kindergartens and in the schools the teachers movement yes you had a big teachers movement in there in LA last year so there are a lot of similarities between this kind of people who are very responsible for the future of the sperm of society so it's the same reason if everybody is going to work somebody has to care for the kids and the elderly people and they have a really great responsibility for society and meanwhile they feel they're their own labor power and that they have not the recognition they are demanding for for it so there is some kind of resistance but it's still very low and there's a new very new development because as I said wages in the last five or six years have been stagnating on the low level and there was even a very small rise the new social problem is becoming the housing so rents are really really high now and the housing companies in particular in Berlin the big housing companies make a lot of profits so there's a new source social movement which has an incredible slow it's about the dispossession of the big house income of companies they even say literally we want to expropriate this this companies and we have now the discussion basically in Germany in the biggest newspapers in the in the talk shows it's a shame if the state the shoot expropriate the biggest housing companies in favor of a more public management of housing so yes there is kind of some kinds of resistance but it's still not very connected the idea that do you have an opinion about tech workers here in the US where like the average tenure is about two years of tech workers yeah yeah well so I think there are huge differences between tech workers and particularly temp workers with low qualifications so if you're there are even a lot of tech workers in the German automotive industry industry if you're building a new car now it's not like you have this workers who who are working with their hands and it's dirty in in the line in the factory line most of the employees of a automotive company and now tech workers and they are very flex flexible because a new car is basically a computer with wheels now but the people who the engineers they they earn a lot of money they have a lot of possibility just of the qualification they have a high degree of social integration and of cultural integration and the soap it is a kind of flexibility but so long as this kind of duration of the short term duration of your labor contract creates no problems with your future integration like your your pension your cultural integration your possibilities to have a family and to have enough money for for a rent or from for your mortgages I think this is not a problem the problem Rises if you have a short-term contract with really low wages then you have no perspective to create your own life and to God your own life so the difference is basically about not the the timing frame it's about the combination of time or duration and and wages in the u.s. we are seeing two trends that help a little bit one trend is that sites like Glassdoor allowed transparency to workers so for instance if this company is paying me lower and I know that I can get more there I apply because I know that we know the pay scales between the companies fairly well that has helped us kind of make decisions and keep more more or less if we are willing to move we can actually keep good wages and we can kept the market competitive so that's one so it's competitive on both sides of offering and supply and demand effectively and the other thing in the tech workers is that a fairly big chunk of our compensation comes from effectively profit sharing which is the stock that you're being given so we are very invested in the success of the company for which we work for me it's more than half percent for instance to a perspective so and in that sense what is this something that has been tried or applied in Germany or considered even both things like kind of aligning the market or kind of equalizing the market and supply and demand of the labor force and the other thing is sharing between little profit sharing between the two sides there have been some attempt but actually we haven't such big tech industries with with this kind of parents and inside it in it and but I would suppose that we should always take the look in the hope at the whole picture and the whole picture is even in the United States the life of the tech workers is very good and most of you doing good jobs and you are very smart and have a good qualification but if you're not a tech worker in the Bay Area it's very easy that you lose your home and that you have not this kind of wages and it's so in the in the whole picture the the accumulation of qualification and and money has always and the other side of the coin and this is this is poverty so maybe maybe the one solution might be a kind of another sharing and this is the the broader sharing of worlds on a society but no society has experienced this right now thanks a lot [Applause] you

10 thoughts on “Oliver Nachtwey: "Germany's Hidden Crisis: Social Decline in the Heart of Europe" | Talks at Google”

  1. It's almost like some massive movement happened in the country that vastly disconnected it from its previous state and made it highly unlikely that it would ever recover that state. What could that possibly be?

  2. It doesn't matter the country or the ethnicities involved – you can't have a welfare state AND mass low-skilled immigration without it leading to massive social tensions and resentment.

  3. Perhaps Germany should allow an armed citizenry, and then build (another) wall, and finally they might appoint a charismatic leader who has children with Russian names. – j q t –


  5. Very interesting video. I think Germany need Google influence,for beter internet and all posibility.Google is big company and everything is perfect. Learn with and from Google.

  6. What impressed me most of all was the argument about how liberalization impacts society and the labour market. "Deregulation/liberalization of the labour market produces more inequality and liberalization of Society produces more equality". That was profound! It would be interesting to investigate these tendencies on the US and Scandinavian countries.

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