- (september 2007)
Merkel's model of national unity.
Angela Merkel is now officially the most popular chancellor in the history
of post-war Germany, with an approval rating of above 70% that is twice the
approval rating of George W Bush in the USA and almost three times the
approval rating of Chirac when he was president of France.
In fact, very few leaders in the world enjoy such a high approval rating.
The reason is mainly the economy, which is at least growing at a decent
pace and is creating jobs for the first time in decades.
However, even Merkel's allies admit that Merkel did not pass any major
economic reform that would allow her to take credit for the economic
recovery. It was her predecessor Schroeder who did. Whatever is happening
today to Germany's economy is largely the result of a) Schroeder's reforms
and b) the USA recovery. Since Merkel ousted Schroeder and Germans dislike
George W Bush, it is hard for the German public to swallow the notion that
they have to thank Schroeder and Bush for their mini-boom.
Merkel's success is more likely due to her having found a simple way to
deliver to the German nation what the German nation wants: a life without
traumas. Merkel promised change, and one day she realized that, as much as
the Germans disliked Schroeder, she was about to lose the elections because
of her insistence on change: Germans did not want change, they only wanted
a more competent chancellor. Her margin of 17 points was fully eroded by
the time they went to vote and she won by the slimmest of margins (so much so
that she was forced into a parliamentary alliance with the opposition).
Merkel learned what Germans want, and now delivers it. There is no more
talk of dramatic reforms. She has left the system largely unchanged, relying
on Schroeder's timid reforms to boost the economy enough to save Germany from
collapse.
Germans love the social system that takes care of them and their children
from before birth to after death. They don't want to change it. They simply
want good administrators to run it. During the post-war period, Germans have
lost any sense of personal responsibility. Someone has always been taking care
of them, both in military terms (the USA defended them from the Soviet Union)
and in economic terms (the welfare system guaranteed a decent lifestyle no
matter what). It would be very traumatic for them to take care of their own
lives. All they want is to live in peace, without any major concerns for the
future. And, yes, they are willing to pay higher taxes than Americans for that
peace of mind.
She has also been splendid in dealing with Islamic terrorism as a
criminal issue, not a bellic issue: Bush calls it a "war" on terrorism, whereas
Merkel simply lets the police investigate like in any other case of criminals
plotting to break the law. The German public seems to like this approach
much better than Bush's call for an international crusade against the evil
forces of radical Islam. Terrorism is not an important factor in elections
the way it is in the USA. In fact, Germans are more likely to distance
themselves from politicians who emphasize the danger of terrorism.
Merkel also understood that Germans are much more interested in environmental
issues such as global warming than in political issues such as the Iraqi civil
war. They don't want to know what will happen in Iraq, but they are very
interested in knowing what will happen to an endangered species or to
planet Earth. Thus she has personally invested in issues related to climate
change to an extent that is unmatched by any other leader in the world.
She is becoming the Al Gore of Europe (except that Al Gore did not become
president).
Of course, Merkel could be on borrowed time. Schroeder's reforms paid back
nicely, but economists agree that they were not and are not enough. Germany
is simply enjoying a side-effect of the world-wide economic boom, that
mainly boosted exports of German high technology.
To start with, the USA remains the second importer of German goods.
The first, third, fourth, fifth and so forth to ninth place are all members
of the European Union, which effectively makes the European Union an economic
colony of Germany. China is a distant tenth importer of German goods.
Russia is 14th and Japan is 15th. (See this article).
A recession in the USA will almost certainly cause a major recession in Europe,
and the combined effect of these events would have devastating consequences for
Germany's unreformed economy. Merkel has learned not to talk about it anymore,
but the danger is far from over.
In 2007 Germany is celebrating a yearly growth rate of 2%: in the USA that
is considered an economic crisis.
In 2007 Germany is celebrating that unemployment declined to 9%: in the USA
a 9% unemployment rate would be the worst rate since the end of the
Great Depression of the 1930s.
TM, ®, Copyright © 2007 Piero Scaruffi All rights reserved.
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- (April 2007)
A lesson to be learned.
Not only are Germany's exports booming again, but its main customers are the
very Russia and China that people around the world complain are exporting too
much and too easily. Germany's exports
(last year they were almost a trillion of euros, a staggering amount)
have been growing faster than Germany's dependence on Chinese imports
(see for example this New York Times article).
Germany needs to import even more oil than the USA, and Germany's manufacturers
are under the same pressure from cheaper Asian products. Unlike their USA
counterparts, German manufacturers cannot take advantage of the cheap labor
of illegal immigrants (they must, by law, give their German workers some of
the best and most expensive benefits in the world).
Nonetheless Germany manages to do what the USA fails to do: export billions of
goods to China. And without having to continuously sue China at the World
Trade Organization.
Germany makes one thing right: it makes the kind of high-tech products that
nobody else can do and that the developing countries desperately need. While
the USA is trying to export Britney Spears songs and Hollywood movies, Germany
exports parts for ships, planes, and power plants.
Europe too has to learn a lesson from Germany. Countries like
France are struggling to resurrect their economies because of the internal
resistance to change. Somehow Germany managed to achieve resurrection within
the same constraints. Hence the miracle is possible. It takes, of course,
even more discipline and hard work than it takes for the USA and Britain (where
employers have a much easier time hiring and firing employees).
When employees are so protected, the government has to work even harder to
help the employers survive in the world. For all his grand talk, Chirac did
very little to help French companies. The truth is that, even in the worst time,
Germany always has more competent politicians than the rest of continental
Europe. In the long-term, it is paying off.
TM, ®, Copyright © 2007 Piero Scaruffi All rights reserved.
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