re: the crisis of the Mittelstand in competing VS China, I'm reminded of this tweet. It's a fictitious illustrative case not a serious study but I think it describes some of the root challenges of western industrial culture when it comes to competing against China
I guess it depends on where you would draw the line with respect to what still constitutes "Mittelstand", but in the small-town circles where my family operated our company, outsourcing wasn't really a thing. Most of the companies were around 30 to 3000 employees, and mostly operated B2B for the automotive industry. There was exactly one company which got overly ambitious and started to emit shares. It was a big deal back in the 90s, SHARES! From our hometown! Like, you could watch it in the Ticker in the evening news if you waited long enough!
But they quickly faltered when the golden 90s turned into the permanent state of crisis beginning in the 2000s.
Most of the others were still family-owned, including our own (electroplating, ~130 employees), and stuck it out much longer.
But we've since had to close doors, too, as have most of the others.
It's a combination of things. Regulations have you in a chokehold, you can't get decent employees, and every process input from energy to equipment to real estate related costs and whatnot just cost an arm and a leg and slowly bleed you dry. Nobody here ever flew business class (except maybe these flashy idiots with their shares). The families always re-invested.
This seriously needs to be repeated again and again. It's not that Mittelstand got greedy. Neither did most other small and medium companies in Europe and US. They gradually became less competitive by overregulation, high input costs, and complete lack of state support. The last sometimes bordering on hostility.
Anecdote time re: Over-regulation:
We had a side-hustle, automatic sorting machines. Mostly nuts and bolts, but other stuff, too. About 10 employees. By some miracle, it managed to survive the loss of it's biggest customer (the aforementioned electroplating company). But we had to move shop. After we got a place, the city terminated the operating permit for the building. Why?
Because, you see, the company that operated the building before had it filed as "metal working", so that is what the permit said. But _sorting_ metal doesn't alter it, so the permit doesn't hold! And they wouldn't issue a new one. Fun times.
Honestly, in my view it's not an issue of overregulation but a malfunctioning administrative apparatus. Too much power is concentrated in the hands of few administrators who can interpret the law according to their own vibes, leaving businesses with few options of recourse without resorting to spending money on lawyers. It's the mideval mindset in the local administration that makes it so difficult, not the regulations per se.
Sadly even eliminating all bureaucracy isn't the Holy Grail of saving the local workshop. The company has to pay German level taxes, the workers have to pay German cost of living, and most business owners also want to enjoy the fruit of their labor and that fruit in Germany usually wears a Porsche badge. These are the obvious and "easy" ones but probably not the most important ones.
The difficult problems are the entire ecosystems, supply chains, and tight integration that are just on very different levels between Germany and China. Every part of the supply chain has to be optimized or else it eats into the margins. China is a beast at "extreme supply chain micro-optimization". It would take decades to build equivalent ecosystems elsewhere, and in the meantime implement artificial barriers to keep China less competitive on Western markets.
This is true for all of Europe and the Western world at least.
This video [1] highlights just how big a gap there is between China and everyone else.
Germany has such a supply chain for some sectors (e.g. cars, chemicals). The question is do we want to protect it to some extent or let the free market do its thing?
Agreed, however there are only two ways to handle this, race to the bottom and then everyone has Chinese working conditions and salaries, or it is about time that we build our walls and kind of, no kidding, make each country great again, which is why right wing parties are going up all over the place.
I still remember how it was in most European companies before we started offshoring everything, textil, shoes, TVs, mobiles, software,..., the whole bunch, with the colonist mindset that of course the "slaves" would never have the skills to master the end to end production themselves, what a joke, naturally as humans they have exactly the same skills.
And it isn't only China of course, we even do it among ourselves across European countries, for the new factory in some random eastern country, a bunch of folks in western Europe join the job center line.
All for the bank accounts for the managers of course, as employees get thrown around like pawns in the MBA chess, more akin to mediaeval lords managing their feudal servants.
> race to the bottom and then everyone has Chinese working conditions and salaries
I think it’s doable to be competitive even under Western conditions assuming you have the rest of the ultra optimized supply chains because you can find ways to support them even with just a nudge here and there, compared to when the only German part if the business is the one who says “designed un Germany”.
> or it is about time that we build our walls and kind of, no kidding, make each country great again, which is why right wing parties are going up all over the place.
Right wing parties are going up to say they’ll make the country great again. Can’t think of a significant time in history when these parties actually did make a country great.
There has been at least indirect state support for some by support for the automotive industry. They might have gotten squeezed as a supplier but the ecosystem got help to keep moving.
This is why the West is getting its ass kicked in non-legacy industries.
Our MBAs have internalized the idea that you "win at capitalism" by buying out your competitors, making products shitty and expensive, and making shareholders filthy rich. Their MBAs believe that it means selling the best product possible at razor-thin margins, killing your competitors by being the better choice.
Everyone is always complaining about Chinese companies "stealing IP", "getting state subsidies", and "dumping products". No, they are just being better at capitalism! We bootstrapped their industry with outsourcing, and then killed our own subsidy system by retooling it to give free money to large shareholders. No wonder our companies aren't able to compete - we reward incompetence...
Come on, it's not just MBAs. I remember when patio11 (nothing against him personally, it's just the best example I can remember) became a star here on HN by saying that the solution to every problem as a consultant was to hike your rates. The idea of just asking as much money as you can get away with, which was seen as reprehensible by most of the population (my guesstimate, I don't have hard data) until more or less the eighties, Reagan and Thatcher era, has now permeated Western society at most levels, not just MBAs.
PS Chinese companies were (and probably still are, when they can) stealing IP, just like the USA did when it had more IP to steal from Europe than to protect from others. Western companies were very happy to let that happen when in exchange they could make more profits in the short term by using cheap Chinese labor and infrastructure.
Somehow MBAs, our champions of capitalism, completely forgot that capitalism only really works for society when free market competition takes place.
This is what's attractive about the "Mittlestand" - having a wide variety of companies competing in the same market so they push each other to improve services.
21st century consolidation is a direct opposite of that.
Some of these contradictions can be fixed well enough by government intervention to make capitalism the best known system. It used to work pretty well for several decades.
I don't think the fundamental premise is much of an issue - it's what a (mostly) free market is meant to do. Someone sells a chair for $100, someone else believes they can sell it for $80, so they do. There are two main complicating factors (outside of brand reputation and possibly some others?)
1) quality - someone accepts the $80 chair which is a little bit more wonky
2) the $100 company spent a few years developing the technology to steam and bend timber to make the chair so they're marking up based on R&D and ip. The $80 chair company just copied the other tech
There is absolutely a lot of profiteering (charge what we can, not what we need to) happening, but honestly I believe that happens everywhere, including China (trivial case - wild price swings on aliexpress - they're maximising profits).
Both companies are very profitable, but I'm sure IKEA shifts a lot more units. And the Aalto stool is solid wood and will last forever, while the IKEA copy is probably laminated cardboard or something.
In the digital world quality is a post purchase signal and the ability for consumers to communicate about quality has basically been destroyed by allowing paid counterparts by businesses to drown out the signal
Agreed, it's that the free market _allows_ you to do. What's concerning is that we're used to the "semi-benevolent" image of the free market where a company succeeds and then returns value to stock holders, and the employees and the investors and the country all share of the riches. Of course the executives and main shareholders get outsized returns, inequality might raise, but many people see a bit, and capitalism works, kind of.
This new Chinese "involutioned" capitalism is much more scary and robotic. The companies never really make money, becoming just an operation that maintains itself on minimum wage workers, all to the service of reducing prices. Shareholders don't make money, employees are semi-poor, nobody sees any returns.
But the customers see cheaper prices! you say. Sure, yes, the products get cheaper, but now think of yourself as an employee not a customer. Imagine the involutioned companies triumph. Your previous company, where you had a good salary goes bust. You find a job in an involutioned company where everyone is almost poor and worked to death just to reduce prices. Your portfolio goes to shit because companies don't make money anymore.... Sure, everything's cheaper now but I'm not sure that makes it better.
You forgot the last part about now no one having money anymore to buy the companies products, so you go into a deflationary spiral.
To solve that you'd want to increase wages by e.g. improving workers rights, giving them mandatory pensions etc. But that is scary: They might get too much power and revolt!
This works for China currently for a while, because they are exporting more and more. They have realized that they need to grow internal consumption, but are not managing to grow that sufficiently.
But if everything is cheaper, isn't it exactly the same as if everybody is richer?
Except that it could incentive people to put their money into rent seeking businesses and increase the real estate prices for example.
> There is absolutely a lot of profiteering (charge what we can, not what we need to) happening
I think that profiteering is the default behavior for companies. Maybe not all companies behave this way, or maybe in the past it wasn't the default behavior, but I'm very confident it is now
the article was a bit long for me to read, but when i hear "mittelstand", i think "inherited wealth", regulatory capture leading to gatekeepting of access to the trades and crafts, and employees that are getting paid less than they would in larger industries in exchange for lofty blah blah about family friendliness (sitting in a weird contrast with crazy levels of bean counting when it comes to, e.g., flexible working time and vacation entitlements).
It was providing context which some people may find useful.
The article, rather than being a strictly historical treatise, is taking the bait to propagate some narratives about the motivations behind why these companies do business the way they do.
Reframe "family values" as "paying less" and see where you land on a critical appraisal.
Reframe "rooted in a region" as follows: Being a relatively large fish in a relatively small pond is often strategically preferable to being a relatively small fish in a relatively big pond, if your strategy involves regulatory capture of local government and the formation of a cartel with the handful of other Mittelstand employers in a region that otherwise doesn't have much going on.
Reframe "excellence in crafts" as "keeping out the competition".
I've seen all of these bullshit narratives getting spun, and all of these mechanisms at play, over the last 7 years, having lived in two separate such regions in Germany. It is a scent of bullshit that is very well known to me. When I see other people in danger of being misled, I will say something, just as I will say "watch out", when I see someone about to get hit by a car.
> people could move to places with higher wages (e.g., cities), no?
...well, often times, when you have a family and real estate in a region, it might be inopportune to do that, and my contention is that some employers capitalize on that immobility by offering worse terms.
> Being in a place where you could help shape local politics seems like a good move, no?
Sure. If you want to buy a forest, have your buddy the mayor re-zone it as industrial, and build a logistics hub there, it's a good move. Not so good, if you're the company from out of town that wants to move in and do the same thing, to compete with the incumbent (and you aren't friends with the mayor). Not so good, if you kind of liked the forest.
> What is the issue with "excellence in craft" as keeping "out the competion"? Why would anyone not want to beat the competion?
You can beat the competition by being a plumber who offers better plumbing at lower prices. Or the better plumbing and lower prices might be from the plumber who just moved here from Turkey. And then you can beat that would-be competition through regulatory capture by having your buddies in politics pass a law to assert that the craftsmanship of the Turkish feller is somehow inferior to yours and they aren't allowed to work as a plumber.
Yes, local integration has value, but also means you had to stick around to get there - comes with a cost. And local people show plenty ability to protect things/stop building etc.
The regulations on Handwerk are so old, not sure how you could put that on the Mittelstand.
> The regulations on Handwerk are so old, not sure how you could put that on the Mittelstand.
Exactly. These regulations stem from the same chapter of history as when kings used to grant monopolies (to the East India company, and similar) in their respective industries. It didn't cost the king anything and it did a political favour to those companies, which might then reciprocate. Or the monopoly might have been the king's quid-pro-quo for some favour that the company had done him.
Monopolies are now widely recognized as bad. The monopoly didn't cost the king anything, but the cost was born by all consumers.
In the centuries that passed, some countries with a more libertarian bend got rid of the guilds and their privileges, or never started them in the first place. In other countries (notably the "old world"), these constituencies have remained politically strong enough over all those centuries to still be around now.
So, this romanticizing about the "proud old tradition" is completely the wrong reaction. There are many things with an "old tradition" where it would seem quite odd if a given country hadn't gotten rid of it (like collective punishment, or whatever; the examples are easy to think of). So something being old is neither here nor there.
> Yes, local integration has value, but also means you had to stick around to get there - comes with a cost.
Not sure if you're implying that regulatory capture of local government is some kind of just reward for "sticking around." If so, I disagree.
Societies get to decide on their "traditions" and they need not be efficient - the "new world" has oddities there, too. (Not sure how guilds in cities relate to kings if we are talking about Handwerk, though.) If people were dead set against things like Meisterzwang in some areas it would not exist (and it has indeed been removed in some areas).
It isn't regulatory capture of local government: local governments want business to stick around and having demonstrated sticking around is a signal there. What you don't want is someone coming in, collecting subsidies in varies ways to then leave quickly again.
> If people were dead set against things like Meisterzwang in some areas it would not exist
I'll give you an example: When I went to a copy shop in Austria to have my thesis bound, the attendant said they were only allowed to do it up to 200 pages. Since my thesis had 210 pages it didn't fall under some exemption, and I had to go to a master bookbinder. The result is: Disgruntled consumer forced by law to pay more.
Your "in a democratic society, if it wasn't wanted, it wouldn't exist" is a bit reductionist. It's a very technical / niche kind of law making and is rarely the subject of public debate or decisive in an election. So it's easier for the CDU (in Germany) or the ÖVP (in Austria), to just give these people what they ask for and collect donations from them, than to stop and think about what's good for the economy and for consumers.
All the while these same sectors that enjoy Meisterzwang (the need to be a master craftsman, to practice self-employed) are the ones shouting Fachkräftemangel, Fachkräftemangel (labour shortage, labour shortage) into every microphone that anyone ever puts in their face. And that's another attempt to co-opt the government for their cause, which is to bend the supply-demand balance in their favour, specifically as it regards to the job market for people who will accept low wages, while keeping out anyone who might compete with them on a self-employed basis thus safeguarding their respective local monopoly/oligopoly/cartel. The net result is: no plumber, when you need one.
I'm a mid-career professional, researching opportunities to make a career change right now, in my forties. In Germany, bookbinding is one of the very few things I might actually be allowed to do. In Austria, it would mean I'd have to apprentice for next-to-no salary for 3 years with a master bookbinder, before I get to set up shop, which, at age 42 and with a family to take care of, I'm just not going to do. Anyone who actually cares about preserving bookbinding as a craft in Austria should be opposed to this nonsense, because it's making it impossible/uneconomical for most people who might like to practice the craft to actually do so. The net result is: the craft of bookbinding dies.
...and yet the spin in PBS or ARTE style romanticized documentaries is: "look at these people and their proud traditions! ...shouldn't that be the envy of all of us office dwellers."
> collecting subsidies
In Germany, except for the very largest cities, municipalities don't do subsidies. Their political currency is not money but re-zoning, parking spots, favourable placements of kids in those public schools which happen to be marginally better than the other ones, that kind of thing. It's precisely the kind of currency that doesn't allow for the kind of opportunism you suggest.
Can't speak to your issue in Austria with over 200 pages. Never encountered that in Germany. Germany has removed Meisterzwang for some areas - so there is that. If people want to regulate certain things they can, even if you don't like it - welcome to society.
When you look at some old craft products (like an old cathedral, for example) do you think it wrong to admire the craft, skill, and learning that went into it?
I meant subsidies in the broadest way,which for me includes re-zoning. Don't understand why that doesn't allow for what I wrote.
> Advancing the precedent set by Alfred, generations of Krupps would continue to develop the region through various private and public works, for almost a century into the 1920s.
>
> With their basic needs addressed and the workforce inculcated with the “Kruppianer spirit,” the firm crossed the fifth ring. They forged an empire that, by the late 1950s,
<insert Goose meme> “What did Krupp make in the 1930s?”
This was kind of an interesting article but could have been a great deal shorter and wasn’t particularly insightful.
I was enjoying this until this signature sentence by Claude:
>>Slowly but surely, it did, once again becoming a world-renowned brand, now separate from that of Thonet. The same town, the same factory, the same people—just a different name
The moment I see this, the piece loses all of its credibility. I cannot take any of the factual informations I was enjoying as implicitly correct now, I just can’t.
Authors should edit LLM help in a much stricter way.
As a writer, LLMs should only be research helpers and used to check for typos and syntax mistakes.
Authors, please, do better
don’t be too quick to judge, putting the text through pangram indicates it’s 100% human written. It didn’t strike me as too AI because it wasn’t superfluous; it literally was what happened. AI is using this phrase more as a stylistic device than an a factual statement
> it wasn’t superfluous; it literally was what happened.
Yeah, so I gave that sentence to ChatGPT in a new context and asked it to make it longer without saying anything additional, several times, and it still reads fine, more than. The truth is the truth no matter how you put it.
I think it's more likely model creators will up their game. I've been generating some copy for our company website. I'll be honest, not all of it is great and there are clear AI slop signs. However, you can use guard rails to limit this kind of thing somewhat. I've been doing that. But the good news is that there are pretty easy to spot patterns. And LLMs are actually really good at identifying those already. It seems spotting the patterns is a lot easier for LLMs than addressing them.
> As a writer, LLMs should only be research helpers and used to check for typos and syntax mistakes. Authors, please, do better
I know professional writers that are definitely no longer just limiting themselves like that. I think that ship has sailed.
You do know em dashes are a normal part of formal prose right? If you go through pre GPT New Yorker and the Atlantic articles, there are plenty of em dashes too.
The New Yorker has a whole style guide. Most people aren't writing "née" or "reëlected" very often but the New Yorker keeps those formats and even has a custom typeface.
Yes em-dashes are real but aside from a few NY-based magazines with real editors, writers aren't actually using them very much. I'm a bit sad because I like using them and now I think twice before doing so in case it is misinterpreted as an AI signature.
The point about concentric circles (of care) is true e.g. for workers. If you have ownership. Not corporate-speak ownership like you feel like you are invested in outcomes but real, legal ownership.
Maybe these are capitalist cooperative enterprises. Then you really have concentric circles.
Post WW1, the US was a world hegemon, lent money and set low interest rates and for the past 100 years the countries of the Western EU, fattened from their ancient trade and slavery profits were engaged in a lot of delulu thinking (we could even note franco-prussian war for this).
Effectively there is no job / value creation since at least the 90s, coupled with uncontrolled mass immigration, and what is going on is stagnation and eventually fall. Lento, then adagio, then allegro, then presto as nn taleb says.
We can see this mindset in this summers AC discourse, doing less than Pakistan on the Hormuz situation et c., et c.
re: the crisis of the Mittelstand in competing VS China, I'm reminded of this tweet. It's a fictitious illustrative case not a serious study but I think it describes some of the root challenges of western industrial culture when it comes to competing against China
https://x.com/AngelicaOung/status/1921364873444986888
I guess it depends on where you would draw the line with respect to what still constitutes "Mittelstand", but in the small-town circles where my family operated our company, outsourcing wasn't really a thing. Most of the companies were around 30 to 3000 employees, and mostly operated B2B for the automotive industry. There was exactly one company which got overly ambitious and started to emit shares. It was a big deal back in the 90s, SHARES! From our hometown! Like, you could watch it in the Ticker in the evening news if you waited long enough! But they quickly faltered when the golden 90s turned into the permanent state of crisis beginning in the 2000s. Most of the others were still family-owned, including our own (electroplating, ~130 employees), and stuck it out much longer. But we've since had to close doors, too, as have most of the others. It's a combination of things. Regulations have you in a chokehold, you can't get decent employees, and every process input from energy to equipment to real estate related costs and whatnot just cost an arm and a leg and slowly bleed you dry. Nobody here ever flew business class (except maybe these flashy idiots with their shares). The families always re-invested.
This seriously needs to be repeated again and again. It's not that Mittelstand got greedy. Neither did most other small and medium companies in Europe and US. They gradually became less competitive by overregulation, high input costs, and complete lack of state support. The last sometimes bordering on hostility.
Anecdote time re: Over-regulation: We had a side-hustle, automatic sorting machines. Mostly nuts and bolts, but other stuff, too. About 10 employees. By some miracle, it managed to survive the loss of it's biggest customer (the aforementioned electroplating company). But we had to move shop. After we got a place, the city terminated the operating permit for the building. Why? Because, you see, the company that operated the building before had it filed as "metal working", so that is what the permit said. But _sorting_ metal doesn't alter it, so the permit doesn't hold! And they wouldn't issue a new one. Fun times.
What I don't get in these cases is why they do this if they are not looking for a bribe? Just for sport?
Honestly, in my view it's not an issue of overregulation but a malfunctioning administrative apparatus. Too much power is concentrated in the hands of few administrators who can interpret the law according to their own vibes, leaving businesses with few options of recourse without resorting to spending money on lawyers. It's the mideval mindset in the local administration that makes it so difficult, not the regulations per se.
The is a really eye opening interview with Marco Scheel from the small German company Nordwolle, where he describes the daily struggle with German administratives: https://dts.podtrac.com/redirect.mp3/files.lagedernation.org...
Sadly even eliminating all bureaucracy isn't the Holy Grail of saving the local workshop. The company has to pay German level taxes, the workers have to pay German cost of living, and most business owners also want to enjoy the fruit of their labor and that fruit in Germany usually wears a Porsche badge. These are the obvious and "easy" ones but probably not the most important ones.
The difficult problems are the entire ecosystems, supply chains, and tight integration that are just on very different levels between Germany and China. Every part of the supply chain has to be optimized or else it eats into the margins. China is a beast at "extreme supply chain micro-optimization". It would take decades to build equivalent ecosystems elsewhere, and in the meantime implement artificial barriers to keep China less competitive on Western markets.
This is true for all of Europe and the Western world at least.
This video [1] highlights just how big a gap there is between China and everyone else.
[1] https://www.youtube.com/shorts/h7McXnWRCQY
Germany has such a supply chain for some sectors (e.g. cars, chemicals). The question is do we want to protect it to some extent or let the free market do its thing?
Agreed, however there are only two ways to handle this, race to the bottom and then everyone has Chinese working conditions and salaries, or it is about time that we build our walls and kind of, no kidding, make each country great again, which is why right wing parties are going up all over the place.
I still remember how it was in most European companies before we started offshoring everything, textil, shoes, TVs, mobiles, software,..., the whole bunch, with the colonist mindset that of course the "slaves" would never have the skills to master the end to end production themselves, what a joke, naturally as humans they have exactly the same skills.
And it isn't only China of course, we even do it among ourselves across European countries, for the new factory in some random eastern country, a bunch of folks in western Europe join the job center line.
All for the bank accounts for the managers of course, as employees get thrown around like pawns in the MBA chess, more akin to mediaeval lords managing their feudal servants.
> race to the bottom and then everyone has Chinese working conditions and salaries
I think it’s doable to be competitive even under Western conditions assuming you have the rest of the ultra optimized supply chains because you can find ways to support them even with just a nudge here and there, compared to when the only German part if the business is the one who says “designed un Germany”.
> or it is about time that we build our walls and kind of, no kidding, make each country great again, which is why right wing parties are going up all over the place.
Right wing parties are going up to say they’ll make the country great again. Can’t think of a significant time in history when these parties actually did make a country great.
There has been at least indirect state support for some by support for the automotive industry. They might have gotten squeezed as a supplier but the ecosystem got help to keep moving.
This is why the West is getting its ass kicked in non-legacy industries.
Our MBAs have internalized the idea that you "win at capitalism" by buying out your competitors, making products shitty and expensive, and making shareholders filthy rich. Their MBAs believe that it means selling the best product possible at razor-thin margins, killing your competitors by being the better choice.
Everyone is always complaining about Chinese companies "stealing IP", "getting state subsidies", and "dumping products". No, they are just being better at capitalism! We bootstrapped their industry with outsourcing, and then killed our own subsidy system by retooling it to give free money to large shareholders. No wonder our companies aren't able to compete - we reward incompetence...
Come on, it's not just MBAs. I remember when patio11 (nothing against him personally, it's just the best example I can remember) became a star here on HN by saying that the solution to every problem as a consultant was to hike your rates. The idea of just asking as much money as you can get away with, which was seen as reprehensible by most of the population (my guesstimate, I don't have hard data) until more or less the eighties, Reagan and Thatcher era, has now permeated Western society at most levels, not just MBAs.
PS Chinese companies were (and probably still are, when they can) stealing IP, just like the USA did when it had more IP to steal from Europe than to protect from others. Western companies were very happy to let that happen when in exchange they could make more profits in the short term by using cheap Chinese labor and infrastructure.
Somehow MBAs, our champions of capitalism, completely forgot that capitalism only really works for society when free market competition takes place.
This is what's attractive about the "Mittlestand" - having a wide variety of companies competing in the same market so they push each other to improve services.
21st century consolidation is a direct opposite of that.
But consolidation is the inherent end game of capitalism.
It's almost as if it was full of contradictions that will always result in crises and a bad way to organize a society...
Some of these contradictions can be fixed well enough by government intervention to make capitalism the best known system. It used to work pretty well for several decades.
Several decades being 1.8 decades since the last major crisis?
I don't think the fundamental premise is much of an issue - it's what a (mostly) free market is meant to do. Someone sells a chair for $100, someone else believes they can sell it for $80, so they do. There are two main complicating factors (outside of brand reputation and possibly some others?)
1) quality - someone accepts the $80 chair which is a little bit more wonky
2) the $100 company spent a few years developing the technology to steam and bend timber to make the chair so they're marking up based on R&D and ip. The $80 chair company just copied the other tech
There is absolutely a lot of profiteering (charge what we can, not what we need to) happening, but honestly I believe that happens everywhere, including China (trivial case - wild price swings on aliexpress - they're maximising profits).
The original Aalto stool, consisting of three pieces of bent wood and a circle, costs $479: https://www.finnishdesignshop.com/en-au/product/aalto-stool-...
The IKEA copy, identical except that the circle is more of a triangle, costs $19: https://www.ikea.com/us/en/p/kyrre-stool-birch-60416925/
Both companies are very profitable, but I'm sure IKEA shifts a lot more units. And the Aalto stool is solid wood and will last forever, while the IKEA copy is probably laminated cardboard or something.
In the digital world quality is a post purchase signal and the ability for consumers to communicate about quality has basically been destroyed by allowing paid counterparts by businesses to drown out the signal
Agreed, it's that the free market _allows_ you to do. What's concerning is that we're used to the "semi-benevolent" image of the free market where a company succeeds and then returns value to stock holders, and the employees and the investors and the country all share of the riches. Of course the executives and main shareholders get outsized returns, inequality might raise, but many people see a bit, and capitalism works, kind of.
This new Chinese "involutioned" capitalism is much more scary and robotic. The companies never really make money, becoming just an operation that maintains itself on minimum wage workers, all to the service of reducing prices. Shareholders don't make money, employees are semi-poor, nobody sees any returns.
But the customers see cheaper prices! you say. Sure, yes, the products get cheaper, but now think of yourself as an employee not a customer. Imagine the involutioned companies triumph. Your previous company, where you had a good salary goes bust. You find a job in an involutioned company where everyone is almost poor and worked to death just to reduce prices. Your portfolio goes to shit because companies don't make money anymore.... Sure, everything's cheaper now but I'm not sure that makes it better.
You forgot the last part about now no one having money anymore to buy the companies products, so you go into a deflationary spiral.
To solve that you'd want to increase wages by e.g. improving workers rights, giving them mandatory pensions etc. But that is scary: They might get too much power and revolt!
This works for China currently for a while, because they are exporting more and more. They have realized that they need to grow internal consumption, but are not managing to grow that sufficiently.
But if everything is cheaper, isn't it exactly the same as if everybody is richer? Except that it could incentive people to put their money into rent seeking businesses and increase the real estate prices for example.
> There is absolutely a lot of profiteering (charge what we can, not what we need to) happening
I think that profiteering is the default behavior for companies. Maybe not all companies behave this way, or maybe in the past it wasn't the default behavior, but I'm very confident it is now
the article was a bit long for me to read, but when i hear "mittelstand", i think "inherited wealth", regulatory capture leading to gatekeepting of access to the trades and crafts, and employees that are getting paid less than they would in larger industries in exchange for lofty blah blah about family friendliness (sitting in a weird contrast with crazy levels of bean counting when it comes to, e.g., flexible working time and vacation entitlements).
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It was providing context which some people may find useful.
The article, rather than being a strictly historical treatise, is taking the bait to propagate some narratives about the motivations behind why these companies do business the way they do.
Reframe "family values" as "paying less" and see where you land on a critical appraisal.
Reframe "rooted in a region" as follows: Being a relatively large fish in a relatively small pond is often strategically preferable to being a relatively small fish in a relatively big pond, if your strategy involves regulatory capture of local government and the formation of a cartel with the handful of other Mittelstand employers in a region that otherwise doesn't have much going on.
Reframe "excellence in crafts" as "keeping out the competition".
I've seen all of these bullshit narratives getting spun, and all of these mechanisms at play, over the last 7 years, having lived in two separate such regions in Germany. It is a scent of bullshit that is very well known to me. When I see other people in danger of being misled, I will say something, just as I will say "watch out", when I see someone about to get hit by a car.
Well, people could move to places with higher wages (e.g., cities), no?
Being in a place where you could help shape local politics seems like a good move, no?
What is the issue with "excellence in craft" as keeping "out the competion"? Why would anyone not want to beat the competion?
> people could move to places with higher wages (e.g., cities), no?
...well, often times, when you have a family and real estate in a region, it might be inopportune to do that, and my contention is that some employers capitalize on that immobility by offering worse terms.
> Being in a place where you could help shape local politics seems like a good move, no?
Sure. If you want to buy a forest, have your buddy the mayor re-zone it as industrial, and build a logistics hub there, it's a good move. Not so good, if you're the company from out of town that wants to move in and do the same thing, to compete with the incumbent (and you aren't friends with the mayor). Not so good, if you kind of liked the forest.
> What is the issue with "excellence in craft" as keeping "out the competion"? Why would anyone not want to beat the competion?
You can beat the competition by being a plumber who offers better plumbing at lower prices. Or the better plumbing and lower prices might be from the plumber who just moved here from Turkey. And then you can beat that would-be competition through regulatory capture by having your buddies in politics pass a law to assert that the craftsmanship of the Turkish feller is somehow inferior to yours and they aren't allowed to work as a plumber.
Not wanting to move might have costs.
Yes, local integration has value, but also means you had to stick around to get there - comes with a cost. And local people show plenty ability to protect things/stop building etc.
The regulations on Handwerk are so old, not sure how you could put that on the Mittelstand.
> The regulations on Handwerk are so old, not sure how you could put that on the Mittelstand.
Exactly. These regulations stem from the same chapter of history as when kings used to grant monopolies (to the East India company, and similar) in their respective industries. It didn't cost the king anything and it did a political favour to those companies, which might then reciprocate. Or the monopoly might have been the king's quid-pro-quo for some favour that the company had done him.
Monopolies are now widely recognized as bad. The monopoly didn't cost the king anything, but the cost was born by all consumers.
In the centuries that passed, some countries with a more libertarian bend got rid of the guilds and their privileges, or never started them in the first place. In other countries (notably the "old world"), these constituencies have remained politically strong enough over all those centuries to still be around now.
So, this romanticizing about the "proud old tradition" is completely the wrong reaction. There are many things with an "old tradition" where it would seem quite odd if a given country hadn't gotten rid of it (like collective punishment, or whatever; the examples are easy to think of). So something being old is neither here nor there.
> Yes, local integration has value, but also means you had to stick around to get there - comes with a cost.
Not sure if you're implying that regulatory capture of local government is some kind of just reward for "sticking around." If so, I disagree.
Societies get to decide on their "traditions" and they need not be efficient - the "new world" has oddities there, too. (Not sure how guilds in cities relate to kings if we are talking about Handwerk, though.) If people were dead set against things like Meisterzwang in some areas it would not exist (and it has indeed been removed in some areas).
It isn't regulatory capture of local government: local governments want business to stick around and having demonstrated sticking around is a signal there. What you don't want is someone coming in, collecting subsidies in varies ways to then leave quickly again.
> If people were dead set against things like Meisterzwang in some areas it would not exist
I'll give you an example: When I went to a copy shop in Austria to have my thesis bound, the attendant said they were only allowed to do it up to 200 pages. Since my thesis had 210 pages it didn't fall under some exemption, and I had to go to a master bookbinder. The result is: Disgruntled consumer forced by law to pay more.
Your "in a democratic society, if it wasn't wanted, it wouldn't exist" is a bit reductionist. It's a very technical / niche kind of law making and is rarely the subject of public debate or decisive in an election. So it's easier for the CDU (in Germany) or the ÖVP (in Austria), to just give these people what they ask for and collect donations from them, than to stop and think about what's good for the economy and for consumers.
All the while these same sectors that enjoy Meisterzwang (the need to be a master craftsman, to practice self-employed) are the ones shouting Fachkräftemangel, Fachkräftemangel (labour shortage, labour shortage) into every microphone that anyone ever puts in their face. And that's another attempt to co-opt the government for their cause, which is to bend the supply-demand balance in their favour, specifically as it regards to the job market for people who will accept low wages, while keeping out anyone who might compete with them on a self-employed basis thus safeguarding their respective local monopoly/oligopoly/cartel. The net result is: no plumber, when you need one.
I'm a mid-career professional, researching opportunities to make a career change right now, in my forties. In Germany, bookbinding is one of the very few things I might actually be allowed to do. In Austria, it would mean I'd have to apprentice for next-to-no salary for 3 years with a master bookbinder, before I get to set up shop, which, at age 42 and with a family to take care of, I'm just not going to do. Anyone who actually cares about preserving bookbinding as a craft in Austria should be opposed to this nonsense, because it's making it impossible/uneconomical for most people who might like to practice the craft to actually do so. The net result is: the craft of bookbinding dies.
...and yet the spin in PBS or ARTE style romanticized documentaries is: "look at these people and their proud traditions! ...shouldn't that be the envy of all of us office dwellers."
> collecting subsidies
In Germany, except for the very largest cities, municipalities don't do subsidies. Their political currency is not money but re-zoning, parking spots, favourable placements of kids in those public schools which happen to be marginally better than the other ones, that kind of thing. It's precisely the kind of currency that doesn't allow for the kind of opportunism you suggest.
Can't speak to your issue in Austria with over 200 pages. Never encountered that in Germany. Germany has removed Meisterzwang for some areas - so there is that. If people want to regulate certain things they can, even if you don't like it - welcome to society.
When you look at some old craft products (like an old cathedral, for example) do you think it wrong to admire the craft, skill, and learning that went into it?
I meant subsidies in the broadest way,which for me includes re-zoning. Don't understand why that doesn't allow for what I wrote.
> If people want to regulate certain things they can, even if you don't like it - welcome to society.
...that could be a response to anyone taking a political stance in favour of changing anything and, besides being rude, adds nothing of substance.
Lol.
> Advancing the precedent set by Alfred, generations of Krupps would continue to develop the region through various private and public works, for almost a century into the 1920s. > > With their basic needs addressed and the workforce inculcated with the “Kruppianer spirit,” the firm crossed the fifth ring. They forged an empire that, by the late 1950s,
<insert Goose meme> “What did Krupp make in the 1930s?”
This was kind of an interesting article but could have been a great deal shorter and wasn’t particularly insightful.
Thanks for the meme chuckle. For the uninitiated: https://i.imgflip.com/ayibmd.jpg
I was enjoying this until this signature sentence by Claude:
>>Slowly but surely, it did, once again becoming a world-renowned brand, now separate from that of Thonet. The same town, the same factory, the same people—just a different name
The moment I see this, the piece loses all of its credibility. I cannot take any of the factual informations I was enjoying as implicitly correct now, I just can’t. Authors should edit LLM help in a much stricter way. As a writer, LLMs should only be research helpers and used to check for typos and syntax mistakes. Authors, please, do better
don’t be too quick to judge, putting the text through pangram indicates it’s 100% human written. It didn’t strike me as too AI because it wasn’t superfluous; it literally was what happened. AI is using this phrase more as a stylistic device than an a factual statement
> it wasn’t superfluous; it literally was what happened.
Yeah, so I gave that sentence to ChatGPT in a new context and asked it to make it longer without saying anything additional, several times, and it still reads fine, more than. The truth is the truth no matter how you put it.
https://pastebin.com/gKhCbmNQ
https://pastebin.com/9HpkN4tc
https://pastebin.com/J6znwxZf
https://pastebin.com/wXs84csy
https://pastebin.com/LrjVm4JT
The last one really speaks to me. I wanted to go on but it raised all sorts of questions in me that I think I should investigate instead.
It was, in that sense, a change that changed the thing that was being called something without changing the thing that was being called.
and
Everything that was not the name remained the same.
Everything that was the name was no longer the same.
Really makes you think.
"I Wouldn't Say Pangram is Broken, But I Would Say That It's Brittle": https://freddiedeboer.substack.com/p/i-wouldnt-say-pangram-i...
I think it's more likely model creators will up their game. I've been generating some copy for our company website. I'll be honest, not all of it is great and there are clear AI slop signs. However, you can use guard rails to limit this kind of thing somewhat. I've been doing that. But the good news is that there are pretty easy to spot patterns. And LLMs are actually really good at identifying those already. It seems spotting the patterns is a lot easier for LLMs than addressing them.
> As a writer, LLMs should only be research helpers and used to check for typos and syntax mistakes. Authors, please, do better
I know professional writers that are definitely no longer just limiting themselves like that. I think that ship has sailed.
Everyone with a stake in AI wants that ship to have sailed.
You do know em dashes are a normal part of formal prose right? If you go through pre GPT New Yorker and the Atlantic articles, there are plenty of em dashes too.
The New Yorker has a whole style guide. Most people aren't writing "née" or "reëlected" very often but the New Yorker keeps those formats and even has a custom typeface.
Yes em-dashes are real but aside from a few NY-based magazines with real editors, writers aren't actually using them very much. I'm a bit sad because I like using them and now I think twice before doing so in case it is misinterpreted as an AI signature.
Also people are generally more aware of the American-English usage of them. The UK (and splitters) uses them differently, as do non-English languages.
I think GP was talking about the phrasing itself, not the dash. I actually didn't notice the em dash itself when reading it and agreeing.
It has nothing to do with the em dash, you AI-dweeb. The entire construction is pure LLM slop. Go touch some AI-generated grass.
Reads like capitalist romanticization to me.
The point about concentric circles (of care) is true e.g. for workers. If you have ownership. Not corporate-speak ownership like you feel like you are invested in outcomes but real, legal ownership.
Maybe these are capitalist cooperative enterprises. Then you really have concentric circles.
Post WW1, the US was a world hegemon, lent money and set low interest rates and for the past 100 years the countries of the Western EU, fattened from their ancient trade and slavery profits were engaged in a lot of delulu thinking (we could even note franco-prussian war for this).
Effectively there is no job / value creation since at least the 90s, coupled with uncontrolled mass immigration, and what is going on is stagnation and eventually fall. Lento, then adagio, then allegro, then presto as nn taleb says.
We can see this mindset in this summers AC discourse, doing less than Pakistan on the Hormuz situation et c., et c.