Ist Es Vorbei? The Downfall of Deutschland
While for years the German economy was touted as an example of national stability and industrial resilience, an impending political shake-up coincides with a new era of German decline. The 2008 financial crisis had much less effect on Germany than the rest of the world, and German dominance and safety was expected. A long history of extremely conservative economic policy seemed to prove that there was a right way to seek growth while still protecting the industries that made a country great. Germany seemed to be able to do it all, from strong global ties to cutting-edge industry. Many on different sides of the political spectrum found things to cherish in how Germany conducted itself as an international power.
Olaf Scholz and the SPD’s coalition has lost a large amount of ground to the far-right AfD, and Sunday’s upcoming election has all the signs of being a historic tipping point. Germans are distraught with the state of their country in many realms, and their economy is near the top of the list. Economic optimism is exceedingly low, and there is no reason for these expectations to change. Much of German auto manufacturing is threatening to become former German auto manufacturing. Rising prices and international competition have made it difficult for German car manufacturers to stay afloat. This is an outsized issue in the German imagination, as the car industry is such a flagship for German productivity.
The previously underlooked problem with Germany’s economic stability is that it was primarily based on industrial production. The rest of the world’s growth in tech industries outpaced Germany all while Germany was blissfully unaware of the shifting market. Germany felt safe industrially because it had an unshakeable faith in its historic success. The same sources of stability that mattered in 2008 no longer have as much relevance in the disrupted economic landscape. Even if Germany’s production industries were strong, they would still have to face the fact that technological innovation is the backbone of 21st century economic growth. Germany cannot maintain a modern economy while outsourcing the most uniquely modern industries. The German tech market is lackluster because the government thought it could ensure its success by doubling down on what it had done right in the past. The national focus was always on advancing industrial technology rather than the powerful types of technology that have somehow reorganized every facet of human interaction with the world.
Rather than learning from their past mistakes, the government seems to be doubling down on their focus that damned them in the past. Robert Habeck, the German Economy Minister, scheduled a meeting with leaders in the auto industry to discuss the creation of a rescue plan as they fall behind American and international auto producers. German auto producers failed to keep up with other countries in EV development, and that failure has cost them greatly. Just like their economic strategy in general, they clung to the past and have potential to be thrown down by the future.
While the German car industry seems to be heading down a dark path, the current focus on it seems to be a much-delayed bandaid for a deeper and much wider problem. As Habeck is trying to bring back the glory and competence of old Germany through the resurrection of the car industry, the state has shown itself break down in incompetent and shockingly new ways. While often characterized as a nation where meticulously-kept order prevailed, the Federal Statistical Office (Destatis) has not even updated “time-series data for retail and wholesale sales, as well as revenue from the services sector, hospitality, car dealers and garages” for months. This information is counted on by economists and citizens alike to understand how their country is doing and how to make their own choices navigating the fluid markets. This misstep would not be so calamitous if it were not so exceedingly un-German. Because the latest version of Germany has built its identity on order, the deterioration of order is a symbol to Germans that they must find a new identity or perish.
Consumers have felt this institutional breakdown strongly and have slowed down their buying to protect themselves against the possibility of an even worse downturn. “The ZEW Economic Sentiment Index, a key measure of the economic morale held by financial experts, dropped from 19.2 points in August to just 3.6 points in September.” This lack of confidence is troubling for Germany in particular because their national spirit of positive collaboration has allowed them to weather hard circumstances in the past. As citizens lose trust in their government and turn to the far right for answers, German leaders must humbly recognize the urgent need for redirection.
