NYSE merger: Lessons from Germany Inc.
A German company looks set to acquire America's capitalist icon, the New York Stock Exchange. It's one more example of German economic prowess, and a chance for the US to learn from 'Germany Inc.'
The news came as a shock to those who work on Wall Street, and perhaps to many others: A German company is negotiating to acquire the icon of American capitalism, the New York Stock Exchange – or more accurately, its parent company, NYSE Euronext.Skip to next paragraph
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The move by the Frankfurt-based exchange company, Deutsche Börse AG, reflects the globalization of the financial trading business. It also points to Germany’s increasing economic prowess and the lessons this might hold for the United States.
Germany stands apart from other Western industrialized nations for its quick rebound from the Great Recession. Its 7.5 percent unemployment rate is its lowest in 18 years. Its people didn’t borrow in excess as Americans did.
In Europe’s crisis over the euro, Berlin has basically called the shots, saying – with Paris in agreement – that countries that belong to the currency union have to do things the disciplined German way: They must increase the retirement age, add balanced-budget amendments to their constitutions, and stop granting wage increases tied to inflation.
Just as America learned from Japan Inc. in the 1980s – installing robotics on the factory floor and adopting “just in time” inventory practices – the US should pick up what it can from Germany Inc.
(For a Monitor story on Germany as the new minisuperpower, click here.)
Not all of what makes Deutschland successful can be copied by the US. A parliamentary system means that an elected government controls both the executive and the legislative branches, making it easier to turn ideas into reality. And Germany is geographically small (about the size of Montana), densely populated, and has a relatively homogenous culture. Those factors make it easier to reach a general public consensus.
And let’s not get carried away with adulation. Germany has plenty of challenges, including an aging society and difficulty integrating immigrants, particularly Muslim Turks. Its high taxes and social safety net (less social than before, by the way) would be anathema to many Americans. But much can be adopted, at least in spirit – and yes, even in practice.
For instance, Germany is focused on exports, especially to the emerging “BRIC” countries – Brazil, Russia, India, China. The US can’t consume and borrow its way to economic health; it must increase exports.