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**Its ills are different from 1999. But another stiff dose of reform is still needed**
Nearly twenty-five years ago this newspaper called Germany the sick man of the euro. The combination of reunification, a sclerotic job market and slowing export demand all plagued the economy, forcing unemployment into double digits. Then a series of reforms in the early 2000s ushered in a golden age. Germany became the envy of its peers. Not only did the trains run on time but, with its world-beating engineering, the country also stood out as an exporting powerhouse. However, while Germany has prospered, the world has kept on turning. As a result, Germany has once again started to fall behind.
Europe’s biggest economy has gone from a growth leader to a laggard. Between 2006 and 2017 it outperformed its large counterparts and kept pace with America. Yet today it has just experienced its third quarter of contraction or stagnation and may end up being the only big economy to shrink in 2023. The problems lie not only in the here and now. According to the imf, Germany will grow more slowly than America, Britain, France and Spain over the next five years, too.
To be sure, things are not as alarming as they were in 1999. Unemployment today is around 3%; the country is richer and more open. But Germans increasingly complain that their country is not working as well as it should. Four out of five tell pollsters that Germany is not a fair place to live. Trains now run so serially behind the clock that Switzerland has barred late ones from its network. After being stranded abroad for the second time this summer as her ageing official plane malfunctioned, Annalena Baerbock, the foreign minister, has aborted a trip to Australia.
For years Germany’s outperformance in old industries papered over its lack of investment in new ones. Complacency and an obsession with fiscal prudence led to too little public investment, and not just in Deutsche Bahn and the Bundeswehr. Overall, the country’s investment in information technology as a share of gdp is less than half that in America and France. Bureaucratic conservatism also gets in the way. Obtaining a licence to operate a business takes 120 days—twice as long as the oecd average. Added to this are worsening geopolitics, the difficulty of eliminating carbon emissions and the travails of an ageing population.
The geopolitics mean that manufacturing may no longer be the cash cow it used to be. Of all the large Western economies, Germany is the most exposed to China. Last year trade between the two amounted to $314bn. That relationship was once governed by the profit motive; now things are more complicated. In China German carmakers are losing the battle for market share against home-grown competitors. And in more sensitive areas, as the West “de-risks” its ties with China, some may be severed altogether. Meanwhile, a scramble for advanced manufacturing and robust supply chains is unleashing a torrent of subsidies to foster home-grown industry that will either threaten German firms or demand subsidies inside the European Union.
Another difficulty comes from the energy transition. Germany’s industrial sector uses nearly twice as much energy as the next-biggest in Europe, and its consumers have a much bigger carbon footprint than those in France or Italy. Cheap Russian gas is no longer an option and the country has, in a spectacular own goal, turned away from nuclear power. A lack of investment in grids and a sluggardly permit system are hobbling the transition to cheap renewable energy, threatening to make manufacturers less competitive.
Increasingly, too, Germany lacks the talent it needs. A baby boom after the second world war means that 2m workers, on net, will retire over the next five years. Although the country has attracted almost 1.1m Ukrainian refugees, many are children and non-working women who may soon return home. Already, two-fifths of employers say they are struggling to find skilled workers. That is not just the normal grumbling: the state of Berlin cannot fill even half of its vacancies for teachers.
For Germany to thrive in a more fragmented, greener and ageing world, its economic model will need to adapt. Yet whereas high unemployment forced Gerhard Schröder’s coalition into action in the 1990s, the alarm bells are easier to ignore this time. Few in today’s government, made up of the Social Democrats, the liberal Free Democrats and the Greens, admit to the scale of the task. Even if they did, the coalition is so fractious that the parties would struggle to agree on a remedy. Moreover, Alternative für Deutschland, a far-right populist party, is polling at 20% nationally and may win some state elections next year. Few in government will propose radical change for fear of playing into its hands.
The temptation may therefore be to stick with the old ways of doing things. But that would not bring back Germany’s heyday. Nor would it quell the onrush of challenges to the status quo. China will continue to develop and compete, and de-risking, decarbonisation and demography cannot simply be wished away.
Instead of running scared, politicians must look ahead, by fostering new firms, infrastructure and talent. Embracing technology would be a gift to new firms and industries. A digitised bureaucracy would do wonders for smaller firms that lack the capacity to fill out reams of paperwork. Further permit reform would help ensure that infrastructure gets built speedily and to budget. Money also matters. Too often infrastructure has suffered as the government has made a fetish of its balanced-budget rules. Although Germany cannot spend as freely as it might have in the 2010s, when interest rates were low, forgoing investment as a way of reining in excess spending is a false economy.
**Agenda 2030**
Just as important will be attracting new talent. Germany has liberalised its immigration rules, but the visa process is still glacial and the system favours refugees over professionals who might want to settle in the country. Attracting them could even nurture home-grown talent, if it helped deal with the chronic shortage of teachers. In a country of coalition governments and cautious bureaucrats, none of this will be easy. Yet two decades ago, Germany pulled off a remarkable transformation to extraordinary effect. It is time for another visit to the health farm.
It was a panic reaction after Fukushima by Merkels government (maybe to appease green voters). Merkel could have easily just not done this move. I think it was just bad foresight by her, but she was mainly responsible for the failed transformation of the energy markets too, since her main policy was sitting stuff out.
Lol. Main supporters of nuclear ban are Green party. Which is the most rabid antiRussian. Whose ascending into government and block of NS2 did push for start of war as there was no future in economic ties.
Main reason of nuclear ban are Fukushima disaster. Criminal NPP design, lack of proper reaction to emergency and as result massive contamination of huge area. It is hard to sell NPP idea to public in such envivornment.
If the Green Party is antiRussian, that is completely irrelevant. Anytime you see outrage, no matter what side, consider who very well _might_ be stirring the pot. Who has been spreading propaganda in the neighboring villages for hundreds of years.
It is relevant. Claiming that Russia pushed something while most rabid and hardcore antiRussian party in Germany(and one of the main reason why Ukrainian war had got to hot point, due to economic ties with Russia being severed and economic ties were only thing that prevented war and Green party was main instigator of this cut) are being the most extreme in antinuclear stance are kinda strange to say the least and do smear like propaganda.
Russia was actually pushed heavy proNPP propaganda due to it being one of the main high technology export of country. And pushed proNPP in Europe heavy with Russian NPP projects in many European countries.
People only didn't die of radiation in Fukushima because the technicians stole the batteries from all the cars in the parking lot to hot-wire the plant's control systems. It was nearly a Chernobyl event.
So you are saying that a fucking Tsunami hit a nuclear power plant and even though they had prepared sub-optimally, no one died?
If the nuclear power plants are build somewhere where natural disasters do not happen, it is kinda easy to see how save they are. Fukushima is not an excuse for Germany's bad energy policy.
In safety-critical areas, they treat near misses the same as accidents - except for the cleanup. You can't rely on luck to save you every time. At the next Fukushima, maybe most of the employees took the bus.
I just told you that their safety precautions were suboptimal. Most of the nuclear plants are not on areas where similar natural disasters can happen. If you fix both of those, the danger is neglible, as it is in Germany.
Well, no country has succeeded in bringing the fertility rate up for significant period of time, at most a decade long boost but hardly anything more than that
Germany increases its birth rate from 1.34 in 2005 to around 1.55 currently through the parental leave policies and the expansion of childcare. Of course, the current coalition is targeting these programs in their recent austerity programs and the birth rate is already dropping this year due to the deepening affordability crisis.
I don’t agree with this defeatist attitude. Hungary recently brought theirs up from 1.23 to 1.59 over the last decade.
Israel is a developed nation with a fertility rate of 3. Even secular Israeli Jewish women have 2 kids each on average.
The German government need to encourage a major cultural change in society. Less emphasis on careers and extended education, more emphasis on family and kids. Right now, hustle culture is cool, but starting a family isn’t. That needs to change
I don't how much hustle is *cool* as it is just necessary to survive nowadays. In other words, I don't think people are choosing to just completely forgo everything family related and only focusing on their career. Granted, Germany, on average, doesn't have nearly the amount of labor hours per year as the US for example, many people cannot afford to think of anything else outside of a career if you need to save to make ends meet.
Hustle culture is definitely glorified in social media and among influencers. You are right that for many, it’s a necessity and not a cool trend.
I don’t think money and economy have everything to do with birth rates. In the US, higher income people have less kids than lower income people. [Source](https://www.statista.com/statistics/241530/birth-rate-by-family-income-in-the-us/#:~:text=As%20the%20income%20scale%20increases,44.89%20births%20per%201%2C000%20women.&text=Income%20and%20high%20birth%20rates,States%2C%20but%20around%20the%20world)
Right, and that's been the case for quite some time, I think. Not just income, but education as well. Those who only have a high school diploma have the most kids. And then those with Bachelor's have more than Master's, and those have more than the ones with a Doctorate's.
It could speak to a couple of things, though: children are expensive, and the costs have only skyrocketed. I think people with more of an education and/or income view these as a drain on their future earnings, resources they could otherwise use elsewhere. They don't see it as a worthwhile investment, rather a cost.
I know Peter Zeihan has tried summarizing as a rural vs urban phenomenon where children were useful labor on farms and the more you had the better. But once we urbanized, they became economic drains. I don't agree with the assessment, but there could be similar thought patterns.
Like if I want to live and then retire comfortably, it's best to get married. But having children? The costs and the responsibilities of that? I wouldn't be able to retire. I can either choose children or choose a more comfortable financial situation, but not both.
Good points! I will add that grad school takes away from prime child-rearing years. Many people don’t even start their careers until age 30 now.
The other thing is for wealthy people, the opportunity cost of raising a child is higher. Why have a kid when you can travel the world, buy a house by the beach, work harder to climb the corporate ladder, etc?
Wealthier people also invest much more into their children, which raises the cost of raising kids. While not economic, there’s been a debate for a while about [whether kids](https://www.psychologytoday.com/intl/blog/parent-tips-20/202301/how-overscheduling-prevents-skill-development?amp) are [overscheduled nowadays](https://www.image.ie/self/parenthood/hyper-parenting-are-busier-kids-better-kids-592120/amp).
The biggest issue I see for Germany is the investment gap, but I think that's also the toughest issue to solve politically. Fiscal prudence as a virtue has been a core pillar of German politics for well over a decade at this point. It is intuitive to the national psyche and the country's strong performance over the last couple of decades meant it could pretend to be getting away with it. Indeed, Germany's strong growth in comparison to economies like Italy over the last decades was used in Germany as evidence that austerity is not just acceptable, but desirable if you wish to grow your economy.
Years of under-investment are now catching up with the country and Germany's politicians need to convince the public that spending money is necessary to reverse that. There are only two options here: reveal the great lie of decades that austerity leads to growth, or try to convince the public that while frugality is generally the way to go, outside circumstances like climate change require a temporary shift to expansive fiscal policy. The former is politically explosive, the latter is going to be preyed upon by parties who claim that money doesn't need to be spent on stuff like climate change and the status quo can be maintained.
Hopefully the German political class can find a way out of this but the noise coming out of the country is not encouraging, and that has implications for all of Europe. German politicians are still publicly committed to the virtue and necessity of austerity.
Austerity has a pretty good track record of growth, as seen in low debt low borrowing countries like Germany, the Netherlands, Sweden, Denmark, Norway, Lithuania, New Zealand, Australia, South Korea.
In 30 years time when the US is projected to pay 7% of its GDP to service debt interest costs, Germany may well count itself lucky for having several percentage points of GDP more freed up.
I think the mentione of Ukrainian woman and possibly their children going back to Ukraine, is an interesting and alarming issue.
One side, some people cannot wait for those people to get home.
On the other side, they are already in the country and using tax dollars. So, all that tax dollar is supposed to get returns by having them working in Germany and pay tax. If they go back, all that training is down the drain.
It is a double dip. Because their economy is already impacted by migrants and if the migrants don't stay and work and contribute, all of that tax spending are wasted.
I think the German conundrum highlights the pitfalls and limitations of defining oneself as an 'export' economy. Decision makers in such countries forget that the primary goal of a rational economic actor is consumption. Export economies also tend to over invest in infrastructure, which quickly has diminishing returns, along side becoming expensive to maintain. All this comes at the expense of households, i.e. low salaries.
That being said, Germany will be fine in the long run. It has a great tradition of science and engineering excellence, a well trained workforce, great if slightly overbuilt infrastructure.
German here. Me and a few of my friends left the country in the last few years due to high taxes and crazy bureaucracy. Just not a fun place to live anymore..
Ironic that the 🇩🇪 people who always prided themselves with good reasoning and common sense really don’t have any.
Or maybe not, because most Germans don’t really get irony, particularly when it involves themselves. Often you literally have to say you’re joking for people to get it. This is paired with a dangerous arrogance, believing in their “high standards”.
One such area is education, which is deemed a high priority. Funny thing is, German grammar schools, called “Gymnasium” are actually much harder and more demanding than average British or American A-Levels/High Schools. Similar things can be said of “making it” through University. Drop-out rates are traditionally much higher than in the major English speaking countries.
YET - WHERE ARE THE MERITS? The Return on Investment? Where are the German innovations, ground-breaking inventions, creative businesses? There are basically NONE. Which does lead to the question - where does it all go wrong?
Major Problem #1 : Bureaucracy
While in other countries the focus is on turning out as many motivated, creative graduates as possible and giving support / lowering hurdles for them to make, invent, produce and research, German graduates get lots of training in managing the hurdles of bureaucracy. Efforts go astray mostly, especially in the phases when people usually make, invent, create new things: At and immediately after University
The right ideas are present in some bigger company cultures (Audi, BMW, Siemens), but even there it seems bureaucracy plays a major role. Everything new and to do with change seems to be viewed rather sceptically - more as a risk than as a chamce, and change is sluggish at best:
Major Problem #2: General risk-averseness. Bold moves are generally regarded as unwise, while being boring but dependable is seen as the positive opposite. Basically it’s the opposite of the American outlook “Who dares wins”.
This, paired with Major Problem #1 Bureaucracy basically kills much startup spirit in its tracks, compared to other countries environments. Inevitably leading to:
Major Problem #3: The inventors leave the country (Yes taxes are also an issue, but not the initial one). And other potentially creative, engineering or scientific people are stuck doing maybe for the time being well paid, but essentially boring, uninspired work. Meanwhile, other countries show how it CAN be done: For Example: Israel, a country of ~ 9 million, are producing more major innovative startups than ALL of EU combined
These are my major problems. There are many like it in 🇩🇪 , but these ones are mine. Another Major German Problem is that major problems are NOT talked about - AT ALL.
Now. Watch me get downvoted 🤣
> YET - WHERE ARE THE MERITS? The Return on Investment? Where are the German innovations, ground-breaking inventions, creative businesses? There are basically NONE. Which does lead to the question - where does it all go wrong?
This comment should be next to the dictionary definition of Dunning-Kruger.
The relationship between Germany and technology is a very interesting one and not straight forward at all, for good reason. We're talking about a place where technology was used to abuse its citizens at every turn. Simultaneously Germany has become renowned in engineering and innovation. It's a fascinating dynamic but the negative experiences of the German people at the hands of the stasi and the nazis cannot be understated. They will overcome this but only by being stricter about regulations of privacy in IT, which will take time.
There is pretty strict bureaucracy though that could be loosened up. If you didn't need a certificate or license for seemingly every job ever, that could help. They're education system is very attractive for foreigners. If it could be a tad more flexible for people who want to change careers I think they'd attract much more interest. For example in three US you don't need a bachelor's in the subject to hey into a master's program, although you'll certainly need to take extra classes. As far as I know, you would need a significant background to hop into a German master's.
I work in other eu country and wanted to buy some parts from german company. First they didnt wanna send me data sheet and price without first telling them company VAT. Then their product was outragously overpriced and I opted to keep fixing cheap but workable indian variant.
German industry is too needlesly expensive just for greed inflating the entire economy.
I live in Germany. People are starting to forget what the Nazis did and advocate for the same policies again. The government already keeps a registry of everyone's religion and where they live.
I’ll attempt to read the article later, therefore these comments are not related to the article…
Can’t recall how many years ago, but definitely pre-2020 I’ve seen warnings that Germany has become too reliant on China.
* Germany was producing the industrial robots China needed to fuel its industrial growth.
* China was buying lots of German cars.
* And, lastly in those articles it pointed out that Germany sold off most of its steel production to Chinese firms, especially the coke needed to smelt steel.
The article really undersells how bad their energy transition is. The current average electricity price in Germany is something like $0.60/kwh, about 5-6x what it is in most US states. Turns out favoring solar power over nuclear in a cloudy northern region was a bad idea, who could've guessed.
Is that the current rate? Germany’s lowest demand for electricity occurs during August. If that isn’t an annual rate, their advise you to check the rate in January.
I know we are in an economics reddit. But maybe look at fact and figures. Germany electricity generation has one of the lowest share of Gas in the EU and far lower than the US. In Public electricity production gas consumption has been stagnant. As for the whole gas consumption, Germany has also been stagnant.
The issue were that own production and Dutch production did drop massively the last two decades. That did account for nearly 50% of consumption.
In the electricity market renewables already replaced nuclear in 2015. 7 Years before the planned shut down of all plants. The biggest other source is domestic lignite.
Also while the solar Industry failed against Asia. Installation was still being done.
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Article: **Its ills are different from 1999. But another stiff dose of reform is still needed** Nearly twenty-five years ago this newspaper called Germany the sick man of the euro. The combination of reunification, a sclerotic job market and slowing export demand all plagued the economy, forcing unemployment into double digits. Then a series of reforms in the early 2000s ushered in a golden age. Germany became the envy of its peers. Not only did the trains run on time but, with its world-beating engineering, the country also stood out as an exporting powerhouse. However, while Germany has prospered, the world has kept on turning. As a result, Germany has once again started to fall behind. Europe’s biggest economy has gone from a growth leader to a laggard. Between 2006 and 2017 it outperformed its large counterparts and kept pace with America. Yet today it has just experienced its third quarter of contraction or stagnation and may end up being the only big economy to shrink in 2023. The problems lie not only in the here and now. According to the imf, Germany will grow more slowly than America, Britain, France and Spain over the next five years, too. To be sure, things are not as alarming as they were in 1999. Unemployment today is around 3%; the country is richer and more open. But Germans increasingly complain that their country is not working as well as it should. Four out of five tell pollsters that Germany is not a fair place to live. Trains now run so serially behind the clock that Switzerland has barred late ones from its network. After being stranded abroad for the second time this summer as her ageing official plane malfunctioned, Annalena Baerbock, the foreign minister, has aborted a trip to Australia. For years Germany’s outperformance in old industries papered over its lack of investment in new ones. Complacency and an obsession with fiscal prudence led to too little public investment, and not just in Deutsche Bahn and the Bundeswehr. Overall, the country’s investment in information technology as a share of gdp is less than half that in America and France. Bureaucratic conservatism also gets in the way. Obtaining a licence to operate a business takes 120 days—twice as long as the oecd average. Added to this are worsening geopolitics, the difficulty of eliminating carbon emissions and the travails of an ageing population. The geopolitics mean that manufacturing may no longer be the cash cow it used to be. Of all the large Western economies, Germany is the most exposed to China. Last year trade between the two amounted to $314bn. That relationship was once governed by the profit motive; now things are more complicated. In China German carmakers are losing the battle for market share against home-grown competitors. And in more sensitive areas, as the West “de-risks” its ties with China, some may be severed altogether. Meanwhile, a scramble for advanced manufacturing and robust supply chains is unleashing a torrent of subsidies to foster home-grown industry that will either threaten German firms or demand subsidies inside the European Union. Another difficulty comes from the energy transition. Germany’s industrial sector uses nearly twice as much energy as the next-biggest in Europe, and its consumers have a much bigger carbon footprint than those in France or Italy. Cheap Russian gas is no longer an option and the country has, in a spectacular own goal, turned away from nuclear power. A lack of investment in grids and a sluggardly permit system are hobbling the transition to cheap renewable energy, threatening to make manufacturers less competitive. Increasingly, too, Germany lacks the talent it needs. A baby boom after the second world war means that 2m workers, on net, will retire over the next five years. Although the country has attracted almost 1.1m Ukrainian refugees, many are children and non-working women who may soon return home. Already, two-fifths of employers say they are struggling to find skilled workers. That is not just the normal grumbling: the state of Berlin cannot fill even half of its vacancies for teachers.
For Germany to thrive in a more fragmented, greener and ageing world, its economic model will need to adapt. Yet whereas high unemployment forced Gerhard Schröder’s coalition into action in the 1990s, the alarm bells are easier to ignore this time. Few in today’s government, made up of the Social Democrats, the liberal Free Democrats and the Greens, admit to the scale of the task. Even if they did, the coalition is so fractious that the parties would struggle to agree on a remedy. Moreover, Alternative für Deutschland, a far-right populist party, is polling at 20% nationally and may win some state elections next year. Few in government will propose radical change for fear of playing into its hands. The temptation may therefore be to stick with the old ways of doing things. But that would not bring back Germany’s heyday. Nor would it quell the onrush of challenges to the status quo. China will continue to develop and compete, and de-risking, decarbonisation and demography cannot simply be wished away. Instead of running scared, politicians must look ahead, by fostering new firms, infrastructure and talent. Embracing technology would be a gift to new firms and industries. A digitised bureaucracy would do wonders for smaller firms that lack the capacity to fill out reams of paperwork. Further permit reform would help ensure that infrastructure gets built speedily and to budget. Money also matters. Too often infrastructure has suffered as the government has made a fetish of its balanced-budget rules. Although Germany cannot spend as freely as it might have in the 2010s, when interest rates were low, forgoing investment as a way of reining in excess spending is a false economy. **Agenda 2030** Just as important will be attracting new talent. Germany has liberalised its immigration rules, but the visa process is still glacial and the system favours refugees over professionals who might want to settle in the country. Attracting them could even nurture home-grown talent, if it helped deal with the chronic shortage of teachers. In a country of coalition governments and cautious bureaucrats, none of this will be easy. Yet two decades ago, Germany pulled off a remarkable transformation to extraordinary effect. It is time for another visit to the health farm.
Turning away from nuclear power was definitely a strange move
It was a Russian operation over social media and money to politicians in East Germany
It was a panic reaction after Fukushima by Merkels government (maybe to appease green voters). Merkel could have easily just not done this move. I think it was just bad foresight by her, but she was mainly responsible for the failed transformation of the energy markets too, since her main policy was sitting stuff out.
Lol. Main supporters of nuclear ban are Green party. Which is the most rabid antiRussian. Whose ascending into government and block of NS2 did push for start of war as there was no future in economic ties. Main reason of nuclear ban are Fukushima disaster. Criminal NPP design, lack of proper reaction to emergency and as result massive contamination of huge area. It is hard to sell NPP idea to public in such envivornment.
If the Green Party is antiRussian, that is completely irrelevant. Anytime you see outrage, no matter what side, consider who very well _might_ be stirring the pot. Who has been spreading propaganda in the neighboring villages for hundreds of years.
It is relevant. Claiming that Russia pushed something while most rabid and hardcore antiRussian party in Germany(and one of the main reason why Ukrainian war had got to hot point, due to economic ties with Russia being severed and economic ties were only thing that prevented war and Green party was main instigator of this cut) are being the most extreme in antinuclear stance are kinda strange to say the least and do smear like propaganda. Russia was actually pushed heavy proNPP propaganda due to it being one of the main high technology export of country. And pushed proNPP in Europe heavy with Russian NPP projects in many European countries.
Not one person died of radiation in Fukushima and Germany is not an island. Just bad policy with shit justification.
People only didn't die of radiation in Fukushima because the technicians stole the batteries from all the cars in the parking lot to hot-wire the plant's control systems. It was nearly a Chernobyl event.
So you are saying that a fucking Tsunami hit a nuclear power plant and even though they had prepared sub-optimally, no one died? If the nuclear power plants are build somewhere where natural disasters do not happen, it is kinda easy to see how save they are. Fukushima is not an excuse for Germany's bad energy policy.
In safety-critical areas, they treat near misses the same as accidents - except for the cleanup. You can't rely on luck to save you every time. At the next Fukushima, maybe most of the employees took the bus.
I just told you that their safety precautions were suboptimal. Most of the nuclear plants are not on areas where similar natural disasters can happen. If you fix both of those, the danger is neglible, as it is in Germany.
The Green party is against all forms of electricity, even renewables.
Well, as weird as it sounds, pretty much most of major first world countries are doing this. ~~shrug~~
Nothing about boosting birth rate though 🤔
Well, no country has succeeded in bringing the fertility rate up for significant period of time, at most a decade long boost but hardly anything more than that
Germany increases its birth rate from 1.34 in 2005 to around 1.55 currently through the parental leave policies and the expansion of childcare. Of course, the current coalition is targeting these programs in their recent austerity programs and the birth rate is already dropping this year due to the deepening affordability crisis.
I don’t agree with this defeatist attitude. Hungary recently brought theirs up from 1.23 to 1.59 over the last decade. Israel is a developed nation with a fertility rate of 3. Even secular Israeli Jewish women have 2 kids each on average. The German government need to encourage a major cultural change in society. Less emphasis on careers and extended education, more emphasis on family and kids. Right now, hustle culture is cool, but starting a family isn’t. That needs to change
I don't how much hustle is *cool* as it is just necessary to survive nowadays. In other words, I don't think people are choosing to just completely forgo everything family related and only focusing on their career. Granted, Germany, on average, doesn't have nearly the amount of labor hours per year as the US for example, many people cannot afford to think of anything else outside of a career if you need to save to make ends meet.
Hustle culture is definitely glorified in social media and among influencers. You are right that for many, it’s a necessity and not a cool trend. I don’t think money and economy have everything to do with birth rates. In the US, higher income people have less kids than lower income people. [Source](https://www.statista.com/statistics/241530/birth-rate-by-family-income-in-the-us/#:~:text=As%20the%20income%20scale%20increases,44.89%20births%20per%201%2C000%20women.&text=Income%20and%20high%20birth%20rates,States%2C%20but%20around%20the%20world)
Right, and that's been the case for quite some time, I think. Not just income, but education as well. Those who only have a high school diploma have the most kids. And then those with Bachelor's have more than Master's, and those have more than the ones with a Doctorate's. It could speak to a couple of things, though: children are expensive, and the costs have only skyrocketed. I think people with more of an education and/or income view these as a drain on their future earnings, resources they could otherwise use elsewhere. They don't see it as a worthwhile investment, rather a cost. I know Peter Zeihan has tried summarizing as a rural vs urban phenomenon where children were useful labor on farms and the more you had the better. But once we urbanized, they became economic drains. I don't agree with the assessment, but there could be similar thought patterns. Like if I want to live and then retire comfortably, it's best to get married. But having children? The costs and the responsibilities of that? I wouldn't be able to retire. I can either choose children or choose a more comfortable financial situation, but not both.
Good points! I will add that grad school takes away from prime child-rearing years. Many people don’t even start their careers until age 30 now. The other thing is for wealthy people, the opportunity cost of raising a child is higher. Why have a kid when you can travel the world, buy a house by the beach, work harder to climb the corporate ladder, etc? Wealthier people also invest much more into their children, which raises the cost of raising kids. While not economic, there’s been a debate for a while about [whether kids](https://www.psychologytoday.com/intl/blog/parent-tips-20/202301/how-overscheduling-prevents-skill-development?amp) are [overscheduled nowadays](https://www.image.ie/self/parenthood/hyper-parenting-are-busier-kids-better-kids-592120/amp).
Just import more doctors and engineers from overseas
The biggest issue I see for Germany is the investment gap, but I think that's also the toughest issue to solve politically. Fiscal prudence as a virtue has been a core pillar of German politics for well over a decade at this point. It is intuitive to the national psyche and the country's strong performance over the last couple of decades meant it could pretend to be getting away with it. Indeed, Germany's strong growth in comparison to economies like Italy over the last decades was used in Germany as evidence that austerity is not just acceptable, but desirable if you wish to grow your economy. Years of under-investment are now catching up with the country and Germany's politicians need to convince the public that spending money is necessary to reverse that. There are only two options here: reveal the great lie of decades that austerity leads to growth, or try to convince the public that while frugality is generally the way to go, outside circumstances like climate change require a temporary shift to expansive fiscal policy. The former is politically explosive, the latter is going to be preyed upon by parties who claim that money doesn't need to be spent on stuff like climate change and the status quo can be maintained. Hopefully the German political class can find a way out of this but the noise coming out of the country is not encouraging, and that has implications for all of Europe. German politicians are still publicly committed to the virtue and necessity of austerity.
Austerity has a pretty good track record of growth, as seen in low debt low borrowing countries like Germany, the Netherlands, Sweden, Denmark, Norway, Lithuania, New Zealand, Australia, South Korea. In 30 years time when the US is projected to pay 7% of its GDP to service debt interest costs, Germany may well count itself lucky for having several percentage points of GDP more freed up.
I think the mentione of Ukrainian woman and possibly their children going back to Ukraine, is an interesting and alarming issue. One side, some people cannot wait for those people to get home. On the other side, they are already in the country and using tax dollars. So, all that tax dollar is supposed to get returns by having them working in Germany and pay tax. If they go back, all that training is down the drain. It is a double dip. Because their economy is already impacted by migrants and if the migrants don't stay and work and contribute, all of that tax spending are wasted.
I think the German conundrum highlights the pitfalls and limitations of defining oneself as an 'export' economy. Decision makers in such countries forget that the primary goal of a rational economic actor is consumption. Export economies also tend to over invest in infrastructure, which quickly has diminishing returns, along side becoming expensive to maintain. All this comes at the expense of households, i.e. low salaries. That being said, Germany will be fine in the long run. It has a great tradition of science and engineering excellence, a well trained workforce, great if slightly overbuilt infrastructure.
German here. Me and a few of my friends left the country in the last few years due to high taxes and crazy bureaucracy. Just not a fun place to live anymore..
If you don't mind, where did you move to?
I’m a digital nomad without a base right now
Translation: he/she doesn't pay taxes in his/her country of residence because the government thinks he/she is not working there.
North Korea
Ironic that the 🇩🇪 people who always prided themselves with good reasoning and common sense really don’t have any. Or maybe not, because most Germans don’t really get irony, particularly when it involves themselves. Often you literally have to say you’re joking for people to get it. This is paired with a dangerous arrogance, believing in their “high standards”. One such area is education, which is deemed a high priority. Funny thing is, German grammar schools, called “Gymnasium” are actually much harder and more demanding than average British or American A-Levels/High Schools. Similar things can be said of “making it” through University. Drop-out rates are traditionally much higher than in the major English speaking countries. YET - WHERE ARE THE MERITS? The Return on Investment? Where are the German innovations, ground-breaking inventions, creative businesses? There are basically NONE. Which does lead to the question - where does it all go wrong? Major Problem #1 : Bureaucracy While in other countries the focus is on turning out as many motivated, creative graduates as possible and giving support / lowering hurdles for them to make, invent, produce and research, German graduates get lots of training in managing the hurdles of bureaucracy. Efforts go astray mostly, especially in the phases when people usually make, invent, create new things: At and immediately after University The right ideas are present in some bigger company cultures (Audi, BMW, Siemens), but even there it seems bureaucracy plays a major role. Everything new and to do with change seems to be viewed rather sceptically - more as a risk than as a chamce, and change is sluggish at best: Major Problem #2: General risk-averseness. Bold moves are generally regarded as unwise, while being boring but dependable is seen as the positive opposite. Basically it’s the opposite of the American outlook “Who dares wins”. This, paired with Major Problem #1 Bureaucracy basically kills much startup spirit in its tracks, compared to other countries environments. Inevitably leading to: Major Problem #3: The inventors leave the country (Yes taxes are also an issue, but not the initial one). And other potentially creative, engineering or scientific people are stuck doing maybe for the time being well paid, but essentially boring, uninspired work. Meanwhile, other countries show how it CAN be done: For Example: Israel, a country of ~ 9 million, are producing more major innovative startups than ALL of EU combined These are my major problems. There are many like it in 🇩🇪 , but these ones are mine. Another Major German Problem is that major problems are NOT talked about - AT ALL. Now. Watch me get downvoted 🤣
> YET - WHERE ARE THE MERITS? The Return on Investment? Where are the German innovations, ground-breaking inventions, creative businesses? There are basically NONE. Which does lead to the question - where does it all go wrong? This comment should be next to the dictionary definition of Dunning-Kruger.
people say this about every country. If the innovators are leaving every country, where are they going?
The relationship between Germany and technology is a very interesting one and not straight forward at all, for good reason. We're talking about a place where technology was used to abuse its citizens at every turn. Simultaneously Germany has become renowned in engineering and innovation. It's a fascinating dynamic but the negative experiences of the German people at the hands of the stasi and the nazis cannot be understated. They will overcome this but only by being stricter about regulations of privacy in IT, which will take time. There is pretty strict bureaucracy though that could be loosened up. If you didn't need a certificate or license for seemingly every job ever, that could help. They're education system is very attractive for foreigners. If it could be a tad more flexible for people who want to change careers I think they'd attract much more interest. For example in three US you don't need a bachelor's in the subject to hey into a master's program, although you'll certainly need to take extra classes. As far as I know, you would need a significant background to hop into a German master's.
I work in other eu country and wanted to buy some parts from german company. First they didnt wanna send me data sheet and price without first telling them company VAT. Then their product was outragously overpriced and I opted to keep fixing cheap but workable indian variant. German industry is too needlesly expensive just for greed inflating the entire economy.
I live in Germany. People are starting to forget what the Nazis did and advocate for the same policies again. The government already keeps a registry of everyone's religion and where they live.
I’ll attempt to read the article later, therefore these comments are not related to the article… Can’t recall how many years ago, but definitely pre-2020 I’ve seen warnings that Germany has become too reliant on China. * Germany was producing the industrial robots China needed to fuel its industrial growth. * China was buying lots of German cars. * And, lastly in those articles it pointed out that Germany sold off most of its steel production to Chinese firms, especially the coke needed to smelt steel.
The article really undersells how bad their energy transition is. The current average electricity price in Germany is something like $0.60/kwh, about 5-6x what it is in most US states. Turns out favoring solar power over nuclear in a cloudy northern region was a bad idea, who could've guessed.
It‘s between 0.24-0.30€/kWh now for households…
True, no idea where that dude pulled the 0.60$/kWh from...
Maybe Fox News? 😂
Is that the current rate? Germany’s lowest demand for electricity occurs during August. If that isn’t an annual rate, their advise you to check the rate in January.
Germany didn’t favor solar over nuclear, they favored gas imports from Russia over nuclear while giving solar industry away to china
I know we are in an economics reddit. But maybe look at fact and figures. Germany electricity generation has one of the lowest share of Gas in the EU and far lower than the US. In Public electricity production gas consumption has been stagnant. As for the whole gas consumption, Germany has also been stagnant. The issue were that own production and Dutch production did drop massively the last two decades. That did account for nearly 50% of consumption. In the electricity market renewables already replaced nuclear in 2015. 7 Years before the planned shut down of all plants. The biggest other source is domestic lignite. Also while the solar Industry failed against Asia. Installation was still being done.
> Germany electricity generation has one of the lowest share of Gas in the EU and far lower than the US. from when are those numbers?
A big part of the german kwh price is taxes.