German Labor — Reforms and Revisionism

By May 30, 2007Labor Unions

Marketplace, American Public Radio’s anti-business business show, carried an interesting report yesterday about the deterioration of the German labor model, which gives unions a place in boardroom decision making. Long held up by the left as an enlightened, effective way to promote growth and social justice, the model has produced a rigid labor market ill-equipped for a dynamic, global economy. That’s been true for a while, but now bribery scandals are hitting the unions, as well. So change is coming.

Still, what a weird, weird story, starting with reporter Ethan Lindsay’s description of the 1980s. We assume the reference to “halcyon” is ironic. And the failure to mention Germany’s 10 percent unemployment misleads through omission. (Pass the Employee Free Choice Act and you, too, could enjoy the ossified labor policies that produce double-digit unemployment.)

But that’s hardly the worst.

ETHAN LINDSEY: During those halcyon days of Ronald Reagan, American labor unions grew weaker and smaller. But in Europe and Germany, labor unions remained powerful and respected.

In fact, economist Michael Fichter at Berlin’s Free University says unions deserve a lot of the credit for Germany’s miraculous growth since 1945. In the post-war reconstruction, workers saw an opportunity to consolidate their power.

MICHAEL FICHTER: The labor unions in both East and West Germany had political demands from the very beginning. That has contributed very strongly to the economic development of Germany, and even among social scientists is given the name “the German Model.”

Got that? “The labor unions in both East and West Germany had political demands from the beginning.”

EAST GERMANY? Labor’s leaders were coopted or replaced by Communist, i.e. Socialist Unity Party (SED) hacks or brutally repressed; official unions were completely suborned to the ruling party. In June 1953, workers across the Soviet-controlled territory rose up demanding, among other things, labor reform. The tanks rolled and the Volkspolizei shot protesters down in the street. (A good summary here.)

It’s hard to see anything other than abject moral equivalency in Lindsey’s observation and Fichter’s quote. The American-born Fichter is based at the notoriously left-wing Free University Berlin but even accepting a political bias, it really is a stretch to be comparing East Germany’s labor front groups to the West’s organized labor. An offensive, ahistoric stretch.

P.S. The International Herald-Tribune reported on the labor corruption and deterioration of the German model in April, an informative and balanced story.