I gather from some of the reactions to my post on innovation hype that many readers don’t know about the remarkable German export story. Here’s the key point: German labor is very expensive, even compared with the United States:



And this has been true for decades. Yet Germany is a very successful exporter all the same. How do they do it? Not by producing the latest trendy tech product, but by maintaining a reputation for very high-quality goods, year after year.

If Germany seems remarkably competitive given its high costs, the United States is the reverse; our productivity is high, but we seem consistently bad at exporting — and have all my professional life. I used to think it was our cultural insularity, our difficulty in thinking about what other people might want. But is that still plausible?

http://krugman.blogs.nytimes.com/2014/06/17/german-labor-costs