Monday, February 04, 2013

Germany's Ann Arbor Dilemma

I'm fond of saying, "You go where you know."  It's a catch phrase that conveys an important migration concept and fleshes out rational choice theory, "Move to improve." A migrant has a number of places he or she could go for better economic opportunity. As a rule, most relocations cover short distances. Proximity is a good predictor of destination because people are risk averse. For someone in Cleveland, the economy might be better in Pittsburgh and Los Angeles. Because Pittsburgh is closer and likely more familiar, it is the more typical choice. You go where you know.

Conversely, you don't go where you know if you have a negative perception of a place. You've seen all the Detroit ruin porn. There is no way you are moving there for a job, even if there are thousands of positions available in your field. Detroit's black mark extends to Ann Arbor, home to the University of Michigan. Despite being a lovely college town with a fantastic quality of life, Ann Arbor struggles to attract talent. I call this the "Ann Arbor Dilemma". Ann Arbor is cursed with the geographic stereotype (i.e. ruin porn) of Detroit.

Germany is cursed with its own Ann Arbor Dilemma. The OECD claims that the country desperately needs immigrants for economic growth. The relatively liberal immigration laws aren't helping:

The problem is perception, particularly on the part of employers reluctant to hire from abroad, as well as the notoriously difficult German language. Barriers include dwindling numbers of German speakers in the European Union – and fewer institutions offering German language training compared to English, Spanish, or French. ...

... But it’s not just highly-trained personnel the country needs. Drivers, laborers and hotel staff are also in demand. So why aren’t they coming in droves from euro-zone countries with high unemployment?

The short answer is they perceive the barriers – linguistic, regulatory, or cultural, as too high. And small to medium-sized enterprises lack awareness about how to hire them.

Instead of heading to Germany, young adults are heading from high-employment Spain to low-unemployment Mexico. This migration pattern is unexpected because the legal barriers are much lower within the European Union. Perceived barriers are more formidable than actual fences. Just ask Ann Arbor.

Germany has already lost the war for talent. Mesofacts are notoriously difficult to change. Mexico or Brazil are where it's at for the young and unemployed in Europe, particularly Spain. Where a few pioneers have ventured, thousands will follow.

1 comment:

The Honourable Husband said...

Jim, I'm an immigrant to Germany. And the comparison to Ann Arbor simply doesn't apply.

Even as regulatory barriers crumble, linguistic and cultural barriers remain—and in some cases, are deliberately reinforced.

Berlin notwithstanding, the prevailing business and social culture of greater Germany still fails to entice modern professionals who thrive under flexibility, open-ness and loose chains-of-command.

As you point out, those qualities are what attract the brains back from the drain. Or help you to attract more than your fair share of the new, well-educated, worldly and highly mobile class of skilled knowledge-workers.

The German dilemma holds a lesson for Pittsburgh, and any other city hoping to prosper in the modern first-world. Economic, educational and cultural infrastructure is great, but it doesn't matter if the social and interpersonal climate doesn't match it.

Munich, where I live, boasts a visual-art scene second only to Paris in Europe. Classical music abounds. Expensive public cultural facilities get built and are in constant use. The alps to the south are a sportsman's paradise. An enormous international airport can whisk you to all corners of the globe. And high-tech companies abound: BMW, Siemens, Linde, and the regional headquarters of Apple, Microsoft, and Yahoo. Per capita, we have one of the highest student populations in Europe.

Yet few settle here. Why would a young professional choose a German city over Barcelona? Edinburgh? Austin or Raleigh? Sydney or Melbourne? Rio? Prague? Or for that matter, Ann Arbor?

It's all about the social temperature of the city or nation. Its willingness to meet the newcomer half-way. Those trying to attract immigrants to Germany haven't quite cracked that problem yet. Berlin is a the closest we come to success—and while that city attracts residents form near and far, the city's comparative economic backwardness proves a handicap.