Germany’s Chained Economy: The Social Contract Frays

The fanciful novel reads, "Guangzhou, January 4, 2022. The first world's fair in the supermodern convention center of the south Chinese metropolis has just opened." At the center of the exhibition, perpetual economic leaders such as Japan and the United States have set up their stands. Germany, however, is nothing more than a tiny, unimportant player relegated to a far corner. There, its diplomats to the world's fair "wait around with embarrassment for a call from the Korean prime minister . . . [he] had important commitments, but he has agreed to appear out of old loyalty."

This particularly German nightmare of geo-economic humiliation comes from Can the Germans Still Be Saved?, a 1994 book by Herbert Henzler, chairman of McKinsey Germany, and Lothar Spaeth, a former state governor and chief executive of the firm Jenoptik. Their scenario, of course, is exaggerated. After all, Germany is currently bursting out of its recession; 1994 in the newly enlarged Federal Republic, as in the United States, will go on record as a year of growth. The Deutsche mark dominates the European economy. Time and again since the birth of the Federal Republic, German leaders and economic analysts have wrongly predicted German decline. Just 12 years ago, warnings of Eurosclerosis possessed the land. National worries about competition from new, cheaper markets entering the European Community sent Germans into a funk. Gloom that Germany had hit a fateful unemployment level of two million (a bit more than half of the current level) helped topple one of the republic's most successful chancellors, Helmut Schmidt. An ordinarily foresightful columnist from the Wall Street Journal, Vermont Royster, published an October 1982 column entitled "End of a Miracle." A few years later, Germany was booming.