I have tried to go against some of the arguments because some are wrong, some are okayish, and some are just plain wrong, but I gave up. The article moves all over the place pulling random facts from all kinds of places in support of the idea that Germany is declining. Maybe that's true, maybe not. This article appears not rigorous enough to come to a right conclusion.
I found the article quite good but has missed a couple of points that need to be mentioned:<p>1. The attitude of the average German consumer<p>It seems to me that one of the national sports in Germany is to find cheaper deals for pretty much anything (and then brag about it). Even if it's fractions of a euro! After trimming down on everything that they could, the manufacturers and service providers had to finally reduce quality. This happened to such an extent that the famous "Made in Germany" is now meaningless, if not worse.<p>2. The attitude of the average German manager<p>"I am your boss, you are the employee, now shut up and do as I say" attitude does not work well in knowledge-based industries like Software. And I believe this is one of the reasons why Germany is behind in digitalization, let alone in digital innovation.
We're definitely huge fans of paperwork here and it hurts a lot.<p>Want to sell something? Company registration takes months, just getting a business tax ID was 6 weeks for me. To sell electronics, register with Stiftung EAR, then find an intermediary to get you a WEEE-Nummer and report monthly (!) sales figures of all your device types. Just that registration costs 1k and 8 weeks. And don't forget your battery and packaging license!<p>By comparison, similar WEEE fees in UK are 30 pounds and in Estonia are 12 euros, no wait.<p>But the real fun starts if you hire someone :) The paperwork there is a magnitude more.<p>I don't think we're doomed though. The schools are packed with kids, education is free and good, health services are not a concern (looking at you, US), society is healthy. I think we'll manage :) Hopefully no more self-inflicted energy crises in the works.
And obviously the reason is the lack of labour reform and not the billions in handouts currently given by the US and China which the EU refuses to match because of its brain dead insistence on undistorted markets and fiscal rigour. Ah Politico, such well researched and reasonable journalism, it warms my heart…
Opposite lots of commenters here deriding the article as "all over the place", I thought it was very well-written and comprehensive. Seems like there are concerns across a wide swath of companies and industries in Germany.<p>Reading between the lines, the proposed solution seems something like lower corporate taxes (currently making decamping to Dublin more attractive) and lower energy prices.<p>The risk brought up is that if things continue it will likely lead to increasing blaming of immigrants and a rise in the far-right AfD party, which has already started.
In addition to this general malaise, the EU Cyber Resilience Act (CRA) is going to have a big, negative impact on all of the EU, especially Germany, and especially the software industry. The CRA itself is insane, requiring, for example, that conforming software phone-home. Which is, of course, the opposite of what we should be pushing for. Note that something similar is probably coming to the US in the next few years.<p>I learned about this today from Eclipse Foundation executive director Mike Milinkovich's excellent video/tutorial/warning on the subject: <a href="https://www.youtube.com/watch?v=AmsM5_5QO5A">https://www.youtube.com/watch?v=AmsM5_5QO5A</a>
There is a similar recent article in German from the "Berliner Zeitung"<p><a href="https://www.berliner-zeitung.de/wirtschaft-verantwortung/deindustrialisierung-wirtschaft-abwanderung-der-deutschen-industrie-das-ist-ein-neuer-schlag-in-die-magengrube-li.368676" rel="nofollow noreferrer">https://www.berliner-zeitung.de/wirtschaft-verantwortung/dei...</a><p>The linked article is mentioning additional factors:<p><pre><code> - tax incentives and favorable legislation offered in the US and China.
- drawn out planning and approval procedures in Germany
- no more cheap natural gas from Russia (i guess that was a big hit for the chemical industry)
- cheaper energy (also cheaper green energy) in the US and China.
</code></pre>
However just last year Tesla opened a big plant in Brandenburg, near Berlin, go figure... <a href="https://en.wikipedia.org/wiki/Gigafactory_Berlin-Brandenburg" rel="nofollow noreferrer">https://en.wikipedia.org/wiki/Gigafactory_Berlin-Brandenburg</a><p>... and Intel is building one big fab in Magdeburg - that one is costing 17 billion euro: <a href="https://www.intel.com/content/www/us/en/corporate-responsibility/intel-in-germany.html" rel="nofollow noreferrer">https://www.intel.com/content/www/us/en/corporate-responsibi...</a><p>So maybe not <i>all</i> of industry is leaving.
I'm terribly suspicious when an article quotes a CEO saying "profits aren't where they should be".<p>God only knows what he thinks his corporate profits "should be", but I'd bet it's a lot higher that you or I would guess.
Germany is extremely well positioned to rise again economically in the next five years or so. It's attracting migrants from all over Europe, it's located quite nicely in the middle of the continent and it's currently building a massive capacity of renewable energy.<p>The only real problem right now is efficiency of spending. Nearly all public sectors (defense, housing, transportation, education, healthcare) bemoan significant lack of financing and workers. Yet, Germany spends enormous amounts of money and employs record levels of workers there. It's like all the money and workers just vanish. This leads to the situation that it's currently difficult to hire in Germany.<p>This process leads to the attraction of skilled workers especially from eastern Europe. I don't know where this ends, but I doubt the spending and employment will get significantly more efficient. Instead, Germany might very well attract additional millions of well-educated Poles, Ukrainians, Romanians, etc.<p>I wouldn't be surprised if by 2030 we see a Germany with a population of 90M people absolutely dominating the European market.
> Nearly 20 years ago, Germany overcame its reputation as the “sick man of Europe” with a package of ambitious labor market reforms<p>Does anyone know what those were?
Keep in mind that politico is a subsidiary of Axel Springer, which is largely controlled by a man that has recently been exposed to have actively ordered chief editors write in support of the party of economic liberalism (FDP) before the last election in Germany. I.e. it is entirely possible that this article is also politically motivated.
The article mentions 'high energy prices' and 'energy costs' and alludes to 'Kremlin cutting off natural gas supplies' but otherwise provides zero discussion of the overall energy picture in Europe. A couple of major issues they could have addressed:<p>1. In retrospect, was the German decision to eliminate nuclear power wise? Could they have squeezed another decade of power out of their existing plants, even if they didn't see that as a viable long-term energy source (having to import uranium fuel is not all that better from having to import natural gas, economically speaking)? Granted, nuclear only provides electricty, while BASF needs methane.<p>2. Russian gas exports to Germany have been replaced by US LNG gas exports, but the cost differential is pretty huge. Looking around, I see this site has discussed it before (Nov 2022):<p><a href="https://www.politico.eu/article/cheap-us-gas-cost-fortune-europe-russia-ukraine-energy/" rel="nofollow noreferrer">https://www.politico.eu/article/cheap-us-gas-cost-fortune-eu...</a><p>That's an interesting article, pointing to tight markets being taken advantage of by European energy traders (though Exxon and Chevron shares are up 50% since the price boom, Permian Basin development, booming LNG exports, etc.). It also might explain why some European interests see a finacial benefit in prolonging the Ukraine war (i.e. keeping Russian gas sanctions in place).<p>3. Somewhat amusingly, if BASF moves a lot of production China, then their natural gas feedstocks will be coming from... Russia's massive Sakahalin 1 & 2 projects (built with extensive help from Exxon and Shell respectively, and ironically)?<p><a href="https://www.reuters.com/business/energy/russias-sakhalin-invites-india-china-tap-energy-resources-2023-06-06/" rel="nofollow noreferrer">https://www.reuters.com/business/energy/russias-sakhalin-inv...</a><p>Maybe blowing up the Nordstream pipeline wasn't such a smart move, after all.
I feel embarrassed for Germany. So much pride, built on dishonesty and exploitation of customers and other EU nations. Getting to the point of implementing meaningful reform will be tremendously ugly, in a country that derives such gratification from exporting carbon-intensive industry to China. Sad.