Germany is a much less federal country than most people think. Its "consensual centralism" makes reform very hard to achieveby Ulrich Pfeiffer / January 20, 2003 / Leave a comment
The German economic miracle ended at some point during the 1980s. Productivity growth fell and unemployment rose-it is now 7 per cent in the west and 18 per cent in the east. Moreover, the demographic situation is worse than in most European countries. Ten Germans today will average six children between them and they will have no more than four grandchildren. Forty per cent of women graduates will be childless.
One could go on and on citing figures of Germany’s relative decline. But in order to understand why Germans are not more urgently seeking solutions to their problems one must also remember that 30 years of high growth cannot be eroded in ten or 15 years. The Germans are still richer than the British. Germany is also still a country of relatively low inequality-lower than in Britain. The welfare state is still more generous than in almost all other EU countries-the pension system, for example, promises all participants 64 per cent of their final income after 45 years of work.
This is a country whose trademark in the past was a cool economic realism. Germans accepted the rules of a competitive society. The 6m refugees from the east had lost everything during the war except for their qualifications, their energy and the absolute will to regain their former social status. Following the introduction of the new currency in 1948, Germany was the most deregulated and competitive country in Europe. We know the result: high economic growth and full employment for more than 20 years. This success generated a new consensus-the unions made their peace with a market system earlier than in most other European countries, and accepted structural changes even when it led to temporary unemployment.
Germany 2002 is a very different country. Those born after 1950 have experienced nothing but prosperity. But that is not enough to explain why political lethargy has smothered Germany for at least 15 years. Why has Germany become a political “slow-motion” country which discusses tax reforms that have been in place in similar countries for nearly a decade, or which tinkers with labour market reform for 20 years without changing anything. Time lags between new problems and their solutions have become longer and longer.
Take the issue of immigration. During the 1980s, it was higher than in the US, Canada or Australia. Between 1987 and 1997 the number of foreigners in west Germany…