- The radical and sudden changes of the financial crisis were early indicators of deep fragility and dysfunctionality. Slowly but surely, we may be responding to these difficult revelations by scaling back our ambitions for the economy — reinforcing negative trends that were already underway.
Even though growth in living standards has been slow, the German economy has been flexible and has appeared to be on a sustainable track. Maybe that was the best Germany could do. Who is this "Germany" who realized the economic model wasn't working and accepted lower real wages? It sure wasn't the employees. Of course the economic model isn't and wasn't working. However, the "fix" as implemented has been quite destructive. It really brought the concept of "working poor" to Germany. This in effect exported some unemployment to other European nations (who are still dealing with the results) but also requires constant and significant state subsidies to even raise millions of people's wages to a (barely) sustainable level. Those same people (along with the entirely unemployed, of which there are many more than the intentionally distorted statistics suggest) experience constant harassment (and monetary sanctions in case of noncompliance with state demands). The unemployed also suddenly found themselves being portrayed as lazy and antisocial by extensive media campaigns. This was not the way unemployment was regarded before, but general acceptance of neo-liberal "fixes" required a comprehensive change of public perceptions regarding the (unavoidable and inherent) losers of the new system. Not-so-surprisingly, wage share is at a record low and the wealth gap is playing catch-up with US proportions. Of course, GDP is doing okay and the DAX is doing okay and therefore Germany should be the model praised in international press. Because an unholy mix of US-style wealth disparity, hire&fire mentality and devaluation of human work with a strong state actively punishing people for losing their jobs certainly is a great environment for the people who actually live here.Early in the previous decade, Germany realized its economic model wasn’t working, and it accepted lower real wages for many workers.
It certainly seems like a reset from my perspective. I can at the very least least confirm the shift towards adjunct staff on 9 month contracts where I work. Most of the staff here are old and are getting paid 2-3 times as much as I am for similar or simpler jobs. They have put forth some pretty nice retirement packages encouraging people to retire early. It seems to be the story across the board when I discuss things with my peers. The older workers have a much higher wage and usually a nicer benefits package as well. I wouldn't be surprised if the average working wage falls as more of the older workers retire. I find it unlikely that I will ever properly retire unless I receive a large windfall. Other people I talk to feel the same way. Our retirement package that comes with the job pays out a minuscule amount for my generation when compared with the older generation of workers. The ramifications for this will be interesting to see. I imagine the bottom will fall out of some markets as money becomes tighter.
Yes I understand but I can't start properly squirreling away money for another couple years. Current savings are going towards bringing my fiance to the states and then saving towards a house down payment. Once I'm past that we can start saving up again but by then I'm worried that it doesn't matter the amount I save since it obviously won't be equatable to my current income and I know compound interest won't pull it up enough. I'll likely end up needing to work part time when I'm older to support myself. Maybe that will change in the future. We'll see. I'm in a kind of transition period at the moment so there is a possibility circumstances will change.
Yeah switching jobs might be your best bet. It's pretty common for companies to offer help saving for retirement. Either way, I understand it's difficult to save when there's so much ahead of you. I didn't mention it to judge you, just trying to share some extra resources. One thing about the house, the nice thing about a Roth IRA is that you can take out the money you've put in any time. On top of that, for a first time homebuyer you can take out an additional 10k. So your money will grow tax free and help you along with savings. Ideally you would be able to keep it in for retirement, but if you can't there's lots of good options.
I actually have a good portion of the downpayment in bonds at the moment. I'm just going to end up having to liquidate them when we go to purchase a house. Once all the expenditures are out of the way we'll probably start putting money into a Roth IRA and some diversified bonds similar to what I have now. I just doubt that the IRA and bonds will equate to enough savings for either me or my future wife to fully retire in our old age. I appreciate the suggestions though.
Heh, sorry can't help myself from chiming in when I see posts like that. From this blog post:
It's incredibly important to save while your young, even a small amount helps. If your company sucks, doesn't match 401ks or other reasons, Roth IRAs are a typical vehicle for this. The limit is $5,500 as long as you make under 6 figures. Why Roth's are bananas great: The money in your Roth grows tax free. On top of that, you can take out the principle (the money you put in) if you hit a life emergency and need the cash. That's why there is an income limit, its basically a really awesome savings vehicle designed for middle class Americans.John* starts putting $100 a month in his Roth at age 25 until he’s 65. When he retires he’ll have $1,100,000. (assuming compound interest around 8%)
Yep! Inflation adjusted. However $100 a month for your entire retirement is pretty small. Here's another look with a little more put into investing: http://www.getrichslowly.org/blog/2008/04/02/the-extraordinary-power-of-compound-interest/ And again, this is doing it all yourself, in a Roth, no company match. Gets a lot easier if your company helps.
This goes about as far as I'd expect the NYT to go. It stops just short of considering a lot of the possibilities that have been kicked around for a couple of decades now. Personally, I see degrowth as the most likely possibility for the future. If we could acknowledge this possibility and make strategic plans to prepare for it, that would be great. But since the people in charge are so bent on business as usual, we will probably have to deal with a messy situation in the next couple of decades.
I think the end of the article touched on this a bit, but te recover of the economy seems to be pointing towards a larger gap between upper and middle class. It should be interesting to see, in the coming years, what happens with this "reset".