Flaunting your Deutsch?
Not really. ‘Geiz ist Geil’ is German for ‘Thriftiness is sexy’. This was a slogan once used by a popular electronics retailer and has made its way into an art exhibition in Berlin which looks into Germans’ curious habit of saving money.
Really? Germans save a lot?
Yes. The act of saving is so fused into their psyche that it defines the national character, according to the curators of the exhibition ‘Saving — History of a German Virtue’, running at the German Historical Museum. The show, which features saving boxes, money socks and piggy banks since the birth of Germany in 1871, highlights the umbilical link between German life and the habit of saving. According to historians and economists, in Germany, the saving mindset shares equal space, or more, with personal morality in social life.
But what makes the German way of saving so important?
The idea of saving has been central to most Germans’ lives. The world’s first savings bank came up in Northern Germany’s Hamburg (part of Prussia then) in 1778. Granted, the bank was meant to help the poor in urban areas and was inspired by the ideals of enlightenment. But that was a great beginning, and many geographies/nations followed suit.
Savings soon went viral and by 1875, the region had 2.21 million savings accounts — was a world record for that time. This number went up to some 9 million in another 25 years. By then almost a quarter of Prussia’s population were “officially” savers. Experts are divided on the exact roots of this habit. Some say it belongs to the Protestant work ethic which greatly influences German life even now; or the influence of the Catholic church.
Imagine! At a time when even the idea of wages was alien to people, forget savings!
Indeed! Interestingly, people started seeing savings not just as a means to get out of poverty but as an instrument for nation-building. Even in the late 1800s, the exhibition points out, local bodies used ‘sparkassen’ (local savings banks) to fund the newly born Germany’s infrastructure.
A great virtue.
Not quite. Some people think this obsession can have a damaging impact especially when the country’s economy demands a Keynesian (spending-oriented) approach to boost demand and jobs, especially during economic crises. The fact that Germans kept saving even when interest rates were the lowest in history, was harmful. For instance, in 1923, a wave of hyperinflation hit savings so badly that some 150 billion marks could get them only 625 grams of meat. (Just six months earlier the same amount could have got them an apartment!) That’s why some Germans feel ‘Geiz ist Geil’ is the worst slogan since ‘Heil Hitler’.
Touché!
When Hitler came to power in early 1930s, the Nazis laid strong emphasis on savings. The art exhibition displays a small box from the Nazi era inscribed: “The fate of the nation rests solely in our own (financial) strength”. The Nazis promoted what they called the “iron saving” to fund their wars. A poster from 1917 Germany screams: “The best savings bank: war bonds!”
OMG!
The savings mania continued even after Hitler. In fact, some economists and historians were quick to spot the German obsession with savings during the Euro Zone crisis when Germany reportedly was harassing the impoverished PIGS of Europe (Portugal, Italy, Greece and Spain). Its insistence on clamping austerity measures on Greece drew much flak, illustrating that old habits die hard. A new study shows Germans still prefer safe deposits to risky investments. The Sparbücher, the most common savings instrument, earned just over 3 per cent over the past few years
The bottomline?
Rain or shine, save you must. Better safe than sorry.
(The article first appeared in The Hindu BusinessLine.)