Archive for the ‘CBYX’ Category

Last week in Berlin one of several events I was compelled to attend was a Q&A session between mostly American high school exchange students and members of the Bundestag. Most of the question posed to the Bundestag representatives were either ill-formed, embarrassingly inappropriate, or failed to end in a question mark. But my interest was piqued by the last question of the session, which asked the representatives which US presidential candidate they felt would be best for German-American relations. The representatives disappointingly opted not to answer and instead turned the question back to the 300 high school students, whereupon the vast majority signaled their support for Barack Obama with such an overwhelming vehemence that the few John McCain supporters were made to look like a fringe group of beleaguered crazies.

I can’t imagine the representatives causing the same raucous, but it appears that had the question been asked of them, the opinion might have been largely the same:

…[I]t is no surprise to see just 25 per cent of respondents [in Germany] viewing the US as “a force for good”.
But…excitement is palpable about the prospect of a new, more harmonious, trans-Atlantic relationship.
The survey shows that those hopes are pinned squarely on one man: Barack Obama.

“Germans are very much taken with his multi-cultural background and particularly his air of aristocratic humility,” said Constanze Stelzenmüller, director of the German Marshall Fund in Berlin…

But analysts warn that enthusiasm could be misplaced.

…[W]hile most Germans, as revealed in the Telegraph poll, believe Mr Obama is best placed to lead the world economy out of its difficulties, financial experts here may take a different view.

“Non-experts don’t worry about the detail of candidates’ economic plans, but experts worry that Obama could put on a corset of isolationism over trade, which would throw a huge spanner in the works.”

To Germans I say: beware the spanner, the corset, and the mixed metaphor!

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After what has been perhaps the busiest day of my internship, I am calling it quits for the week and heading to Berlin for the final conference of my program. The break will be welcome, as not only today but also most of the past two weeks have wholly consumed many in my office as we prepare to send off a political and business delegation to the USA next week. So busy were we—and so crucial was I, it seems— that my boss tinkered with the idea of excusing me the conference due to “sickness.”

One of the more time-consuming tasks was translating about 50 pages of speeches for the minister of economics of Mecklenburg-Vorpommern. One element present in two of his speeches makes for a funny intercultural story that I hope to share on the blog when I return.

Until then, however, I’m going to Berlin.

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As the third phase of our program draws nigh, many of my fellow PPPlers are still scrambling to secure internships. As the details of the work arrangements are being finalized, an interesting thing is occurring–namely, that some are actually requesting lower salaries than their employer initially offered them. Though this seems at first blush to be irrational, it is in fact the product of cold, calculating logic on the part of the program participants (and provides a neat case study in welfare policy, to boot!).

For the first two phases of the program, InWent, the German sponsoring organization, subsidizes most expenses both in-kind (e.g. such as providing free insurance coverage) and by providing a monthly stipend that helps cover daily expenses. For the third phase of the program, however, the subsidy InWent provides the participant is contingent on the size of the paycheck from the internship–as the paycheck gets bigger, the subsidies get smaller. This makes the biggest difference when it comes to rent: if the participant earns more than 715 € per month, he must pay the rent out of pocket, while any salary less than 715 € per month means the rent will be payed by InWent.

The calculation is then clear:

If (monthly salary-715) > (monthly rent), then accept salary; else request lower monthly pay of 714 €.

This is just common sense. If one is offered 800 € per month but would have to pay 200 € in rent, he would be much better off by forgoing the 86 € in income to gain 200 € in free rent, and that is exactly what some PPLers have done. The arrangement is not optimal, however–insofar as participants respond to the incentives in place, lower salaries are earned and InWent pays out more in rent than would otherwise be the case. Indeed, only the employers benefit by paying out less in wages.

Luckily, United States welfare reform in the mid-90s provides a good guide for an improvement. To vastly oversimplify things, prior to 1996 welfare was provided to the poor in a similar manner as InWent provides the subsidy for rent to a PPPler: one could enjoy benefits up to certain income level, above which all benefits would cease. The incentives were thus similarly crappy. Because governmental assistance abruptly ended at a specific wage, welfare recipients realized they’d paradoxically be worse off by earning more money. So instead of working harder and progressing up the ladder of success, they made sure to climb only to the highest rung that still allowed welfare assistance and then stayed put. To solve this problem, the Earned Income Tax Credit (EITC) was introduced and subsequently expanded. To again vastly oversimplify, the EITC acts as a wage subsidy on a sliding scale. Instead of the floor dropping out on benefits at a certain income level, the EITC guarantees a certain income level to the recipient. If the recipient is earning less than this income level, the EITC pays the difference. As the recipient earns more, the EITC pays him less, and when he reaches the income level where the EITC phases out it makes no difference to the recipient, who has every reason to continue progressing up the ladder.

An EITC-type solution would seem to work well for the rent subsidy. Instead of paying the full rent up to a certain point and then nothing at all, InWent should decrease the subsidy incrementally, corresponding to incremental increases in monthly pay. InWent could, for example, pay 100 percent of rent for monthly incomes below 700 €, but for every 50 € increase in monthly pay, InWent pays 10 percent less in rent. A participant earning 800 € per month would thus have 80 percent of his rent covered. In this way, InWent pays less in rent and the participant has more money to take home each month, a delightful Pareto improvement.

Fellow PPPlers might immediately see a problem with my whole line of reasoning, however. I’ll address it in a subsequent (and much shorter) post.

Addendum: On second thought, the problem doesn’t really need a second post. All that really need be said is most PPPlers don’t earn more than 715 € and InWent is probably better off by assuming that only a small fraction of those who do will actually be willing and able to secure lower pay (and hence get the rent subsidy). This fact improves InWent’s position, and since the power in the contractual relationship is tipped in InWent’s favor, the welfare of the participants needn’t figure much into their calculations. Thus, the current arrangement may be the stable equilibrium.

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Slight Frustration

My co-participant, Travis Thompson, recently blogged about an unexpected interest he received recently from BMW about possibly offering him an internship. Problem is, the internship would be in Munich and Travis has already been placed in the state of Hessen, a several-hour train ride away. Currently Travis is e-mailing the American coordinator to see if it might be possible to change his placement. This is unlikely due to the fact that CBYX imposed a deadline of May 1 for any participant to submit a written job offer from a German employer in order to allow enough time to find housing near the job.

I can empathize with Travis because I went through a similar situation a month and a half ago.  While I was in Romania, I received an e-mail from someone at Roche asking me if I was interested in a job at their facility in Mannheim. I replied in the affirmative, but informed them that I might not be able to accept because at the time I did not know where I would be placed in Germany (turns out now that I’m placed on the other side of the country). I e-mailed the CBYX coordinator about it, and he told me that I could send him a job offer but it was probably too late to do anything about it.

Travis’ and my predicament slightly frustrates me for several reasons:

  1. Considering applicants are only informed of their acceptance around the first of March, it is difficult to provide a detailed written job offer by May 1, especially when cold-calling is the starting point.
  2. Even when interest in offering a job is expressed (such as with Travis and me), it is difficult to get a written job offer when you tell them your acceptance would be contingent on your placement. Roche was initially enthusiastic, but that sentiment died quite quickly when I explained my predicament.
  3. Securing an internship is the most difficult aspect of the trip for most people; thus, when participants seem to have a good chance of securing a meaningful internship more flexibility could be exercised, especially given that the internship doesn’t even begin until February of next year.  

I’m sure there are good reasons for the deadline and constraints on CBYX that I am not aware of, and we were told at the interview that the focus of the program was not on finding a great internship with which to pad one’s résumé. Nonetheless, having a golden opportunity slip through your fingers is frustrating.

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In just over a month I will be departing the United States to spend a year in Germany as a participant in the Congress-Bundestag Youth Exchange for Young Professionals (which, due to its intolerably long name, will henceforth forever be referred to simply as “CBYX” on this blog). As the name suggests, the program is funded by both the US and German governments and is intended primarily as a cultural exchange for young adults. Part of my time will be spent in Köln (English: Cologne) taking intensive language classes with the hopes of improving my German. The last part of my trip–in fact the vast majority of it–will be spent somewhere in the state of Mecklenburg-Vorpommern taking classes at a local university and eventually finding gainful employment.

I would be remiss if I did not mention my friend, classmate, fellow traveler, and co-participant Travis Thompson for giving me the idea to start a blog about the CBYX experience. And for letting me steal his map. You can read his blog here.

Like many things, I debated myself for quite some time as to whether starting a blog would be the ultimate in presumptuousness, vanity, and hypocrisy. I dislike when folks are ostentatious about their travels, and few people–myself included– are rarely genuinely interested in hearing about the exploits of others. Nonetheless, after much consternation and soul-searching, I decided to start blogging. My simple conceit is that I am writing this only for myself and any audience it may attract is ancillary…

…which, of course, is just a mental justification to allow me to
blog without any ex post dissonance. I hope to attract throngs of
loyal readers who will praise me for my genius.

Look for more frequent updates and continued eloquence as I near departure.

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