By Žikica Milošević
The German economy has experienced a significant slowdown in 2019, forcing many reputable analysts to resort to pessimism, especially the liberal British magazine The Economist, which is traditionally averse to the German economy. The Germans think there is no need to worry. The truth is always somewhere in between.
FIRST HALF: BIG LEAD!!
Once upon a time, in pre-EU times (before 1992 and Maastricht), Germany, Italy and France were the locomotives of continental Europe. Spain was just catching up and all the aforementioned countries had a “conservative” Keynesian approach to the economy, with the state playing a strong role of a mediator. The British were ruled by the liberal Margaret and had a completely different approach. And then, in the 1990s, a wave of neoliberalism flooded the whole of continental Europe; the fall of the USSR and Eurosocialism was welcomed in the UK and the US as a sign that “Reaganism” combined with “Thatcherism” was, in fact, the only right path and that there was no longer any need to resort to left-wing agenda. The so-called Third Road was created which involved deregulation and outsourcing. Germany did not fully address this trend and in fact, it didn’t give in to it for the most part.
Others laughed at the German machine-building giants which still made expensive factory machines, vehicles and everything that could be made by Mittelstand, the driving force behind the German economy made up of small and medium-sized enterprises, which, in other capitalist countries, formed the backbone of the economy and the middle class. It was thought that no-one would buy expensive German products when self-sourced products from Asia or Latin America cost less and carried the same brand and logo. But the Germans knew that did not matter. Lo and behold, everyone is still buying German goods, and the Made in Germany brand (paradoxically, forcibly introduced by the British to protect “quality British goods” and the British market from “the poor quality German imports”) became a symbol of quality.
Actually, the German goods never ceased to be of good quality. Mittelstand has preserved the German middle class and hundreds of cities with good quality of life and services, while in other countries, the middle class has disintegrated and large cities have “chewed up” the outskirts. Germany also survived the World Economic Crisis in a resilient way, becoming Europe’s leader under Angela Merkel, a quiet, down-to-earth, compromise-prone daughter of a Protestant priest with a conservative viewpoint and socialist education gained in the GDR. Now, everyone wants to move to Germany – from European experts and ordinary workers to migrants from the Middle East. 40% of the residents of Stuttgart, the German capital of the automotive industry, were born abroad. Victory?
SECOND HALF: TIME OF CHANGE
But now we are entering the second half, so to speak; a time when things are changing. Now that Germany is a leader with accumulated funds, which should be invested in innovation, it has the best starting position. Only if “the spirit of Wolfgang Schäuble” was not so alive and well, that is the spirit of over-saving. The slowdown of the German economy to less than 1% of GDP growth in 2019 indicates that there has been some saturation – a slowdown in China, further exacerbated by the outbreak of the coronavirus and the market saturated with quality products that last a long time all resulted in a mild crisis. Just as the good old Wolfgang was reluctant to help Greece in trouble, his successors are reluctant to invest more but would wait for their resilient conservative measures and austerity funds to mitigate the crisis. But, the time of change has begun.
Green parties want to tax airline flights and fossil fuels. Ecology and green technologies are a big thing now and Greta is young people’s idol. Germany has always been the one that has provided innovation with a competitive edge: engines, planes, motorways, high-speed trains. Now, it’s Germany’s time to dare to overcome the so-called “The Black Zero” or “Schwarze Null” policy that seeks to maintain a balanced budget and not generate new debt.
Even Macron said that the Germans have a “budget fetish” and that Europe needs incentives to invest in new technologies because China and the US will take over the world. So, the time has come! Germany’s will to innovate, to realistically see its faults, to respect social justice and security of the Bismarck era, and to welcome new people to its country by transforming them into new German citizens who contribute to the economy, will make Germany a leader again in the new online, green or any other technologies. All Germany has to do is to “push” itself away from the Black Zero concept. Ready to Change? Genau! Reinvent yourself or bust! I would not put my bet on the latter outcome since it is not German at all.