German Quirks: Class Awareness, Exchange Huts, and Lard Balls

The graffiti in Germany is more in your face, demonstrating a much greater awareness of class positions.  I also find it interesting the German quirk of having what I think of as "sticker graffiti," stickers printed with what would normally appear as painted graffiti and plastered on signs and poles.

And, while this is exactly typical, the other day I ran across an "exchange hut," where folks can leave things they no longer need and pick up things others have left. This one is from the Altona neighborhood of Hamburg.

And to add to the list of peculiarities not available in the States, let us look at the at the German meat counter.

Here we see Schmalzbällchen, balls of lard that one can get with onion or with raisins and apple pieces.  The first time I visited Germany, I went with my wife-to-be to a New Year's party where we were served schmalz smeared on bread.  In Alabama, we pour pork fat into an old coffee can and then throw it away.  What a waste.

Germans have a seemingly endless variety of aspic with vegetables and/or unidentifiable pieces of meat that they cut like salami or bologna.

Five One-Handed Economists, Paying German to Hold Your Money

Planet Money, consistently producing the best economics journalism around, have a couple of recent stories of interest.  (Hey, Adam Davidson: still waiting on you to broadcast the interview with me and Bob Frank that you recorded last year!):

Six policies economists love (and politicians hate),  including eliminating the mortgage deduction on personal income taxes and the health insurance deduction for companies, legalizing marijuana, introducing a carbon tax, and replacing income taxes with consumption taxes (the later two eloquently promoted by Bob Frank in The Darwin Economy). 

Investors pay Germany to hold their cash: as a sign of the topsy-turvy economic times in which we live, Germany's latest bond offering sold at a negative yield: investors are actually paying Germany to hold onto their money for them.  I wonder if I can get a deal like that from my bank.

Online Parks in Merida

At the ICA meetings I heard a fascinating paper by Gabriela Vargas-Cetina who reports on free public internet access in Merida (Yucatan, Mexico).  Merida provides an extensive network of free wireless internet access in public parks throughout the city.  The service appears to work exceptionally well (Gaby reports speeds are faster than in her university office) and, amazing, each park has a kiosk with a telephone for free technical support.

 

Underindulgence and Happiness

Elizabeth Dunn and Michael Norton report on fascinating research that suggests temporary abstinence increases pleasure--and that sharing treats increases happiness even more.  We might think that if we like something and have the means and access to consume it, the more we consume, the happier we would be.  In fact, not overindulging, or even indulging, increases our appreciation for the object.  Dunn and Norton call this underindulgence.  This links to the argument in my new book manuscript, described in a previous post, that regulating our choices can, counter-intuitively, increase our wellbeing.

Pennsylvania or the Netherlands?

Barnachy: Trading States for Countries: U.S. States renamed for countries with matching GDP- interesting. What's more interesting?  Considering the possible trades.
From the excellent new blog, Barnach, by Brent Savoie

Merle Hazard's Fiscal Cliff

Merle Hazard has done it again! Capturing neatly the political and economic conundrum we face come January, this time Merle pays tribute to the surf songs of yesterday.  Another must listen from that pioneer of "Country and Eastern."  Also check out Merle's lyric contest on the PBS NewsHour website. 

BruceBarry.net

My friend Bruce Barry has not only a sharp mind but a sharp pen to go with it.  Like H. L. Mencken, Bruce is always ready with clever and to-the-point analysis tempered by just the right tone of levity.  We are fortune that Bruce's running commentary is now available at BruceBarry.net.  Check it out.

Waving the German Flag

Germans have, understandably, had a complicated relationship with their flag and other symbols of nationalism since the Second World War.  When I first started coming to Germany in the early 1990s, I was struck by how seldom one saw a flag in contrast to the States.  But things have been changing since then.  When we were here during the 2006 World Cup, I saw for the first time folks hanging flags on their houses and their cars, publicly proclaiming their pride in Germany.

If 2006 was the start, the European Cup this year marks a new phase for German pride in their flag.  I have never seen so many German flags--they even reach post 9/11 levels of flag display in the U.S.  THE ECONOMIST this week has a great report on why this is a healthy thing and how current German patriotism is of the unaggressive, even brotherly, variety. 

Not Available in America

In this age of globalization, of frictionless markets, it is interesting to take note of what does not travel, what is still only available in some place.  Some of this is cultural specificity, of course.  The demand for burkas in Guatemala is minimal, the appetite for German lard spread rare in the US.  But even beyond culturally quirky items (and high-end designer goods), there are a number of useful things that don’t cross our fluid economic boundaries.

Much of the difference is subtle.  The cut of clothes in Germany, for example, is different than in the US, and not just expensive clothes.  Haircuts too: they use a noticeably different technique here to cut hair, noticeable even to me.  But we find other, more noticeable things as well, things that might could or should be more widely available:

In the US, for example, it is exceedingly difficult to find good street bicycles, what the German’s call “city bikes.” With a chain guard to protect clothes and a carrying rack for hauling things, these are the commonplace workhorses of German bike culture.  Despite their yeoman’s work, there is a beauty to a well made city bike, a simplicity, durability, and responsiveness that helps meld the bike to rider.  The bike I drive in Nashville was bought in Amsterdam, and I have been looking into getting a replacement while I am in Germany.  The bike shop here is generally a pleasure to deal with, very professional and very knowledgeable.  If I do buy the one I am looking at, however, I will need to pay cash, as the store, which sell bikes costing thousands of Euros, doesn’t take credit cards.  And they looked at me funny for even asking.

Speaking of bikes, Deutsche Bahn has a great system of “Call-a-Bike.”  All around Cologne are these DB bikes locked to bike racks and poles.  To use one you call from your cellphone the number on the bike; you get a code that you enter into the lock and then you use it as you like (6 Euro cents per minute) and lock it where you wind up.  There is, of course, an app to find nearby bikes.  Lots of cities are exploring bike sharing, but the cell phone angle (and even more important, the ubiquity) makes a big difference.

Some beauty products don't seem to travel well, and the Germans have a well developed personal grooming market.  The most popular toothpaste (by a wide margin) comes in two tubes: you use one in the morning (for cavities) and one at night (for gums); I think the Crest we use in the States puts all of this into one (indeed, from the label it does everything but spit for you).  And then there are earwax removers.  No you probably aren't supposed to put metal wires into your ears, but sometimes you just need to get something out of your ear.  And there is no better way, really, than the Maya Ohrenreiniger.

The best way to drink coffee is brewing single cups; it takes more time, but slowing pouring hot water over a single cup produces superior results. But it is always awkward when you have more than a couple of folks over.  So, now, if you have three people over for coffee, neighborhood kitchen store has the answer: 

 

Lamy, Kim, and Gauck: Changes Afoot in the WTO, World Bank, and Germany

An optimist at heart, I always look for those bits of news that suggest positive change is afoot.  This week there were several.

Pascal Lamy, the head of the World Trade Organization (WTO), wrote a piece in The Globalist arguing that "Capitalism will not survive the [current] legitimacy test without stronger domestic safety nets and a more effective multilateralism."  If not quite Occupy Wall Street rhetoric, it is remarkable coming from the (albeit French) head of the WTO, which has long served as a strong proponent of open markets and free trade at all costs.  Economists going back to Adam Smith long assumed that more trade is always better--if it is free trade, both parties must come out better or they wouldn't engage in it.  But recent research in international trade recognizes that in fact there are often winners and losers as well as cases of clear mutual benefit.  This does not mean that markets are good or bad, just that they can be used towards many ends.  And the points Lamy raises lead us toward the moral and political decisions we have to collectively make if we are to structure markets to best promote overall wellbeing.

In other news, the International Herald Tribune reports that President Obama has nominate Jim Yong Kim to head the World Bank.  China, Brazil, Indian, Russia and other emerging powers are expressing a growing unrest with the standing informal agreement that Europe picks the IMF chief and the U.S. picks the World Bank head.  Putting that aside, though, President Obama's pick is remarkable for a couple of reasons.  First, he is an anthropologist, holding both an MD and a PhD in anthropology from Harvard.  Along with Paul Farmer, he co-founded Partners in Health, and his work has been at the intersection of health and development.  Anthropologists have been some of the most vocal critics of the Bank's policies in the developing world, and appointing Kim sends an important message about the institution's trajectory.

Finally,we have Germany's new president, Joachim Gauck.  The press here has played up the significance that (while born in Hamburg) Gauck was raised in East Germany; thus, along with Merkel, Germany is now led by two former East Germans.  This is a historic shift, but mostly because it doesn't seem to mean much for the workings of the country; perhaps the long discussed "normalization" is finally here, in the heights of government at least if not the unemployed youth of Brandenburg.  The other revealing aspect of Gauck's election also derives its significance from not creating much of a ruckus.  Gauck, a preacher, is married, but separated from his wife for years, and he will move into the presidential palace Bellevue with his long time partner, Daniela Schadt.  What would Rick Santorum say?

Spring Time in the Volksgarten

The weather in Cologne hit the lowers 70s (breaking into the twenties, Celsius), and it was like someone flipped a switch.  From one day to the next the parks were full of folks laying on the lawns, walking on the paths, reading books, and just soaking up the warmth.  Germans are quick to strip to bikinis and speedos, but this year the transition from parkas to beachwear was especially dramatic. 

And it is not just the parks.  The streets are full, cafes have put out their tables, and there is a general liveliness.  I like it because I like to be alone around other people.  I find even the fleeting and anonymous social interaction—seeing the other folks with whom I inhabit this city—invigorating.

My German friends accuse me of romanticizing life here, and there are lots of drawbacks to be sure.  Perhaps it is my John LeCarré inspired false nostalgia of Cold War Germany, but there is a palpable sense of socialist realism to German daily life.  For instance, I carry around plastic shopping bags with me, never knowing when I might need to buy something; there is an art to having the right size bag handy when the occasion arises.  Or the Volksgarten (People’s Garden) down the street from my institute, with its concrete table tennis tables, paths and pond, empty last week and today filled with amiable drunks, not so amiable punks, children playing, families out for a stroll, students and business people reading.

While I tend to optimistically look for the best in situations, it certainly is true that the German system is by no means perfect.  In some inconveniences, I find positive externalities.  For example, I have a small refrigerator—about the size of the larger dorm refrigerators they sell in the States; and even many well appointed German homes have what to American standards are almost comically small refrigerators.  As I result I find myself going to the grocery store all the time.  It is hassle, but it also forces me to have the sorts of even nominal social interface that oils the gears of Gemeinschaft.

There are more insidious downsides as well.  German notions of solidarity also imply exclusion, and German economic growth has been significantly fueled by guest workers long denied citizenship.  There is also a German propriety about social class.  Indeed, to American ears, it is shocking how bluntly folks speak of such things, one’s proper place in the social order.  Even on television.  I have watched a few episodes of a German reality show of real estate agents showing folks potential apartments.  It was amazing to see how they overtly guided their clients not just to what they can afford but what is most appropriate for them and their social class—all in a way that would probably break all sorts of U.S. fair housing laws.  The distance between professionals and working class is on the whole no greater here than in the U.S., but it is much more overtly recognized as such.

Kölner Karneval

Today is Mardi Gras, Fat Tuesday, the ecstatic culmination of carnival in New Orleans.  Köln celebrates carnival with equal fervor, but here the big day is not today, Veilchendienstag, but yesterday’s Rosenmontag parades. 

The season itself begins at 11:11 on November 11^th, especially auspicious last year (’11).  But things really get started the Thursday before Ash Wednesday.  That is Weiberfasnacht, Women’s Carnival, with women taking over city hall and cutting men’s ties in the streets.  Forewarned, I wore an old tie for my symbolic castration at the hands of colleagues at the Max Planck Institute.

photo courtesy of Astrid Duenkelmann

Carnival theory (from Bakhtin to Roberto DaMatta) is all about the liminal state, turning the world upside down for a bit before resuming the normal state of things.  In fact, it has been said that carnival is a sort of pressure release valve that actually supports the social order even as it mocks it.

Having lived for a while in New Orleans, I developed an affinity for Carnival celebration there, and the similarities and differences with Köln are striking.  There is more overt political satire here than in New Orleans.  And this year there was a scramble to rework a number of floats making fun of Christian Wulff, the German president, as he resigned on Friday.

There are more costumes here as well.  From my unscientific sample counting folks walking by on the street in front of my apartment, more than 60% were dressed in some sort of costume, and this gives a critical mass to masking, making it the norm rather than the deviation.  The minimal costume is the ever present red clown nose (the Pappnas) or a Köln coat of arms painted on the face.  But there are a huge number of one-piece furry animal outfits, with maybe 20% of those in costume wearing a fuzzy rabbit or dog costume.

There is much less nudity than in New Orleans, but more mild vandalism (tearing down traffic signs, breaking bottles in the street, lots of public urination). 

But the vibe is very similar to New Orleans.  The street food here is more along the lines of mettwurst (a raw beef spread served on a roll) rather than Lucky Dogs, but other than that it feels a lot like Mardi Gras in German.

Biking Against Traffic on a One-Way Street, and other ways of managing many modes of transportation

It is striking how many modes of transportation one sees on the street in Koeln, or most German cities for that matter.  Of course, there are the cars (more German and less Asian than we see in the States) and the public transportation (here we have buses, subway, tram, and rail).  But what I find really intriguing are the many human powered conveyances.

            There are a plethora of bikes, from what seem like dangerously low recumbents to almost comically tall lamplighters.  There are cruisers and racing cycles, Amsterdam bikes and myriad just plain bikes.  The normal bike here, a “city bike,” has a chain guard, fenders, and a carrier (often with a basket)—sehr practisch for everyday use.  (And oddly difficult to get a bike so configured in a place like Nashville—I had to haul the one I use back as excess baggage a few years ago.)  You see many more unicycles here, along with skateboards and two-wheeled scooters.  And these are used by a wider demographic than we would find in Nashville—it is not uncommon to see men in their thirties on a skateboard or women of a certain age using a scooter.  That always seems a little incongruous to me, but I do find the sheer range of transportation stimulating and provocative.  Why shouldn’t I take a skateboard to run a short errand in the pedestrian zone?

            It is not all rainbows and unicorns, as my friend Brent says, or, here, unicycles and hot air balloons.  In fact, Koeln is not an especially bike-friendly city, at least compared to Hannover, where we lived before.  It was quickly rebuilt after the war, with plenty of four and six lane roads criss crossing it; some have bike lanes and some do not; although I just live a couple of kilometers away, it is not easy for me to bike to the Hauptbahnhof.

            Still, there are a number of clever public planning devices the Germans use that I wish we would have more.  It is often the case, for example, that a street with one-way car traffic will allow have two-way bike traffic.  This slows down cars, gives an advantage to bike commuters in terms of cutting route time, and is practical, recognizing bikers’ tendencies to stretch traffic rules (perhaps justified by a greater awareness of their surroundings and traffic).  There are other devices to slow cars down, including bike stands in the street, pedestrian crossings, and subtle humps in the road.  We have such techniques, of course, in the States, it just seems that we don't use them as generously.

            If, for economic, health, and environmental reasons, a city decided it would be desirable to reduce traffic, such devices provide a gentle nudge to encourage alternative forms of transportation.

 

Germany/Guatemala similarities

An updated version of an older post:

The two sites of my anthropological fieldwork have been Guatemala and Germany.  At first blush, they would seem to share little more in common than an initial "G."  While equally exotic in their own ways, looking a little deeper we find a surprising number of similarities.  Whether this is a case of ancient contact, modern diffusion, or just uncanny parallel evolution, I will leave it to the reader to decide.  But consider these traits and behaviors found in both places:
 
-a bureaucratic obsession with paper certificates, seals, tax stamps, and so forth; hard copy, notarized copies are often required for mundane tasks;

-folks make routine purchases in smaller quantities (tending more to what can be easily carried) and, subsequently, more frequent trips to the store than is the Stateside norm

-there is an attention to and use of titles, such as Ing., Diplm., Lic. In addition to Prof. or Dr.

-there is a formality in everyday address: use of Sie and Ud.

-one finds small kiosks on almost every corner

-one drinks coke from glass bottles that are returnable for a deposit

-on the train in Germany conductors go through after every stop and check tickets of new passengers–remembering who has been checked; this same role is assumed by the ayudantes on Guatemalan buses

-weekly markets with fresh produce, meat, artisan handicrafts

-abundance of different sorts of mushrooms, very seasonal

-willingness to make long commutes in order not to move, attachment to place

-cash-based economy–I find myself always looking to change large bills as smaller bills are needed at the smaller stores

-legacies of Holocaust violence, racialized discourses

-more public urination; drunk men and young kids will pee in the streets, for example, if a toilet isn't handy

-more developed artisanry market: cobblers, brush salesmen, etc

–annual town fiestas

-more people walking (although for different reasons) than we find in the States

-ritual drinking: a variety of public rituals that involve ceremonial drinking, often from the same glass

Turning off the Elevator and other Lessons in Workplace Safety

Since I am going to be at the Max Planck Institute for more than six weeks, I had to attend my Erstunterweisung Arbeitssicherheit (First Training in Work Safety) today.  It lasted over two and a half hours, with an hour and a half for classroom presentation and discussion and then an hour or so of practice, which included a thorough tour of the building, from the cellar to the top floor.  (The MPIfG has a little over 100 researchers and staff, occupying five floors of nicely sized building.)

Relishing this ethnographic opportunity, I was fascinated by the event, although it might just be the sort of thing I would roll my eyes at were I forced to do it at home.  Still, I admired the thoroughness, and the thoughtfulness that it provoked about the surroundings we take so much for granted.  Who knew where the master shut off switch for the elevator was?  Now I do, with a demonstration on how to use it should I need to (although, the only scenarios I can imagine tend toward the James Bond-ish).  

I do feel well protected here, I must say.  About a quarter of the employees here have undergone intensive first aid training (a two day seminar and bi-annual follow up), and each floor has a number of designated first responders.  The defibrillator is in the sick room, which looks like a school nurse’s office, complete with an exam table to lay on.  

Every piece of electrical equipment in the building is inspected by an electrician every two years (lamps, coffee machines, computers, everything); if you bring a coffee maker or electric pencil sharpener from home, it needs to be registered.  We are shown how the electrical wiring is placed under the buildings slightly raised floors (in case a desk chair breaks through the floor, perhaps, severs a cable, and electrifies the desk.  You never know.) 

All ladders, stools, and other equipment are inspected every year, with a seal attached to show approval.  We had a mini-course in ladder engineering and proper use, which was fascinating.  We learned that the Institute’s ladders are certified only for under 90kgs; it was mentioned that there are two people at the institute who are therefore not allowed to use the ladder.

We were particularly attentive to fire.  Our instructor, the head of safety here for over 20 years and a man who takes his job very seriously, had previously trained as a fireman, and the building is extensively outfitted with fire doors, extinguishers, and evacuation routes.  During the practical section, we went to different parts of the building and were presented with different scenarios, asked to describe and act out what we would do: what if the fire is between you and the stairway?  how to open the windows? When to close the fire doors? What to do with someone in a wheelchair?  When and how to call the fire department (only from downstairs).

There was also a section on suggestions for health and safety.  We were shown just how to use the ergonomic desk chairs, demonstrating the different adjustments; if we have back problems we can request a standing desk.  They recommend keeping one’s eyes about 70cm from the computer screen, and to take regular breaks to move around.

It was suggested that we not eat at our desk, or at least not while working: the keyboard is the place most filled with germs and bacteria in the office; it was recommended that we take our food instead to the cafeteria to eat.

While I have the luxury of relishing the experience, I also hear my friend Jon’s voice saying, in an almost sorrowful tone, that, boy, that much regulation must cost a ton of money.  And it is pretty intrusive too.  Imagine trying to start a small business and keep it running while dealing with such onerous regulatory burdens.  It isn’t easy or cheap, but the big concerns like Volkswagen or even the Max Planck Institute can manage.  But the little guy with entrepreneurial ambitions suffers.  This is true, and certainly part of a pronounced German non-embrace of entrepreneurialism, despite the talk of all the Silicon Rheines and Alleyways.

Perhaps the emphasis on security and stability over risk at the workplace is an apt metaphor for the balance (or imbalance, depending on one’s perspective) between regulation and competition in the German economy generally.

Germany's One-way Escalators and the Value of Small Travails

In Germany one frequently encounters one-way escalators, an escalator going up and stairs to come down.  In the grocery store, in the airport—if not quite the norm, they still seem to be everywhere.  In one view this reflects a German propensity of austerity: just providing the necessary, convenience that shies away from excess.  It is also emblematic of the little difficulties and challenges that fill daily life here, much more so than in Nashville.

There isn’t a good German translation for “convenient.”  “Bequem” works in some contexts, but it carries the connotation of “comfortable.”  “Praktisch” comes closest to convenience, and indeed is a high complement in German, frequently heard, but it too misses the nuance of the English sentiment.  Praktisch is a rational practically, an efficient solution to a problem that maximizes benefits against costs.  Convenience implies efficiency as well, but with more of a sense of indulgence and greater trade-offs with costs and quality.

I find the little difficulties of German daily life to be sometimes aggravating but generally fulfilling.  It forces one to be more aware of certain aspects of life, especially in terms of consumption, that serve to promote a common good.  The grocery store closest to my apartment is in a pedestrian zone; as would commonly be the case in Manhattan (but not Nashville), I have to haul everything I purchase home (in bags that I brought to the store).  It makes one more conscious of the marginal costs of any extra purchase.  This is a hassle when buying bunch of drinks or bottled water, for example, and then, on top of hauling them home, I have to carry all the empty containers back to the store for the deposit.  (And carry them in the bags I will put the new groceries in—very praktisch.) 

One also is made keenly aware of the amount of waste one produces.  I have to sort all of my trash into a confusing array of color-coded trash bags and rubbish bins, the bags carry taxes corresponding to the type of refuse.  I have to look closely at each piece of trash I produce, a process that seeps into the consciousness, affecting the way I look at all sorts of quotidian activities and anchoring a certain form of prudence.

Washing machines here are super efficient in terms of water and energy usage.  But a normal cycle may take almost two hours to complete.  Many houses and apartment buildings have only a washing machine, and clothes are hung up to dry.  This is changing as dryer sales increase, but the German dryers are as slow as the washing machines.  This requires a serious time commitment to do the laundry.  No wonder Germans tend to wear their clothes more often between washings than Americans do.

Robert Nozick famously poised the question if one would prefer real life or an “experience machine” that could fully replicated reality with all of the good and none of the bad.  He suggests that most folks would choose real life.  We want the challenges, we want to create our own destinies, the work of becoming is what gives meaning to our existence.  It is in this light that I appreciate the little inconveniences of life in Germany, as much of a hassle as they may sometimes be; the little extra effort and forced self-reflectivity give greater meaning to life’s little chores.

Financially Suspicious Minds

Merle Hazard, pioneer of the finance country genre, takes his satirical observations from the airwaves to the page:
 

Worker's Paradise? German Labor Demands for More Pay and Less Work

The German news today brought reports of an upcoming doctor's strike.  And this is not the first.  It seems like German doctors strike all the time.  This speaks to two key differences with the U.S. system.  First, most German doctors are employees of hospitals and clinics, with a set salary.  Several of my friends in healthcare say that the U.S. will inevitably move toward this model.  What would be harder for U.S. physicians to swallow would be German salaries, in the 48,000 - 60,000 Euro range (and that before high taxes).  It also reflects Germany's more powerful organized labor (even of professionals) and a willingness to agitate for distributional issues.

VW recently announced that its corporate Blackberry server will stop sending message to employee's devices 30 minutes after their work day ends and will not begin again until 30 minutes before the next shift.  This results from an agreement reached with VW's powerful work council (see the Financial Times article).  As with all large German companies, VW's works council holds just under half of the corporate board's seats.  From an American perspective, this is incredible, almost unthinkable.  But under the German model of "co-determination" that treats employees as stakeholders alongside stockholders, it works.  And as the VW action shows, workers are wary of capital's gains through increased productivity allowed by 24/7 accessibility.  They are willing to fight not only for wages, but also for quality of life, and, indeed, independence and dignity, to not be seduced into being at another's beck and call.   

BMW, in this same spirit of compromise between capital and labor, made it a policy a couple of years ago that executive wages should not exceed 25 times the company's average wage.  That is still generous by continental standards (although the U.S. is in an all together different league, with Russia and India and China, the USRICs), but is a crucial symbol of the value placed on solidarity.

Views from the Rhein

For the next three months I am in Köln (the Romans' "Colonia," which gives rise to our Cologne, the place and the scent), and so this blog will focus on life on this side of the pond and the Rhein. 

Adam Davidson, in the latest installment of his insightful new column in the NY Times Magazine, suggest "The Other Reason Europe is Going Broke": it is not just the debt and currency crisis, but labor inflexibility.  While the currently low unemployment rates in Germany are cause for envy, Davidson argues that in the long-term, the generous social benefits of social democracies (namely, making it hard to fire people) stymies the dynamism that the US economy enjoys.  Davidson cites the success of Denmark's "fexicurity" policies that make hiring and firing relatively easy while providing generous unemployment benefits and retraining programs.  Indeed, I think he gives short shrift to the virtues of the European model, not just Denmark, but Germany as well.  Germany had its own labor reform in the "Harz IV" laws of 2005.  This is still a long way from U.S. style labor flexibility (also known as insecurity), but that does not seem to have hindered the steady, slower paced engineering innovations that are the hallmark of Germany's medium-sized manufacturing sector, and the engine of its export economy.  Such skilled manufacturing creates what American politicians like to term "good jobs," well paid, with benefits, a modicum of security, and the dignity that goes with using one's particular skills and talents.  The German system might not reach the dynamic heights of U.S. innovation, but the slow and steady approach has paid off remarkably well in the current global crisis.    

For these three months, I have the great fortune to be an Alexander von Humboldt Fellow and a Visiting Researcher at the Max-Plank-Institut für Gesellschaftsforschung here in Köln. I am fond of the German approach to research institutes--intensely serious work and quirky niceties that make it enjoyable.  There is the egalitarian ethic that mandates we all wash our own dishes in the kitchen, and yet there is a consciousness of titles and formalities (I enjoy the grand sounding Prof. Dr. designation, so noted on my door as well as on my bank card and train tickets).

Income Inequality, Taxes, and Incentives

In yesterday's New York Times, Ian Ayres and Aaron Edlin make a provocative proposal for taxing not the wealthy per se but inequality.  They rightly point out, as does Robert Frank in his new book The Darwin Economy, that extreme inequality produces all sorts of negative consequences for society (from felt deprivation to health, education, and democracy).  Inequality in the U.S. is quickly approaching developing country levels (we have long been the outlier among OECD countries), and Ayres and Edlin argue that the current trajectory could lead to serious social disruption.  They note that average income of the richest 1% is currently about 36 times median household income.  They propose an inequality tax tied not to absolute income but to the ration of a household's income to median income, effectively capping total income at the current position of 36 times median household income.  Just as we have a minimum wage, they propose a maximum wage.

The idea of relating income to national medians is intriguing and suggests other possibilities as well.  Perhaps we could use it to incentivize (to use the language of executive compensation) our elected officials by having congressional pay linked to median incomes (at 1:1 or 1:2).