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Is this warning valid about the EU?
Former Member
Posts: 1,876,323 The Mix Honorary Guru
http://www.thesun.co.uk/article/0,,2-2003172281,00.html
There was an article in the Sun, "Don't invest in Germany."
Valid or no?
There was an article in the Sun, "Don't invest in Germany."
Valid or no?
0
Comments
I do not agree with the Sun's claim that this is EU wide however, as many of the more cumbersome restrictions are due to national policies rather than EU directives.
France for example maintains competitive trans-national firms in numerous sectors of industry as do Belgium and Holland.
Financial markets also play a large role in the overall GDP of certain EU member states.
In general, this crises of cost is a Western problem, not merely a European one. Much of our own US manufacturing has relocated to more easily exploited markets and work forces in China, South East Asia and Latin America. After all, why pay $8/hr or more when you can exploit developing nations' work forces for .50 cents/hr.
In order to balance that and provide some modicum of social protection against the whims of often unscrupulous business practices, European governments adopted a more regulated approach to the market.
Like in most areas of life however, some restricitions go too far and should be ratcheted down or eliminated.
But what he is saying is dont invest in German companies based in germany- Id say the same about any company based in a western nation, TBH. Nike would be nothing without SE Asia, same with the German multinational adidas, same with GM, same with Ford. The list is endless.
Investment = reaping profits from companies. And profits only come when production cost is mimimal, and retail cost is maximal. And companies paying Western wages dont have that balance, because no-one on thsi board would work for a tenner a day FULL TIME.
Part of Germany's problems are a too rigid labour market.
In France's case (can't address Belgium or Holland) they do so with extensive Governmental support and assistance. Even with that, a number of them are having a very tough time of it (the Pharmaceutical Companies for example).
Microsoft seems to do pretty well. So does IBM. Both make very solid profits paying Western wages.
THis is part of the inbalance that freezes out the developing world markets from penetrating both the US and Europe.