I’ve recently finished reading a book entitled ‘Why the Germans do it better,’ by John Kampfner, and it says some interesting things about how Germany has evolved in the last hundred years or so, and how it has transformed itself from the wreckage of two world wars into the economic powerhouse of Europe. I thought I would share some of its most interesting points with you.
Firstly, the book tackles head-on the devastating effects of World War II on Germany and its population (and the world). An internal conversation and reckoning on the country’s behaviour during the National Socialist years has been taking place for decades, but there is a growing disconnection between the generations that were alive during the war, and those that came afterwards (who can now be in their 80s) and who were not involved in any way. Today’s German youth may have no personal connection to the war years at all. The author underlines that Germans are now prepared to discuss, debate and re-interpret the past, in contrast to the frozen view of the war years in some other countries - if it is debated at all.
Kampfner points out that industry in West Ger many was jump-started by the American Marshall Plan of 1948, but that the eastern part of the country suffered not only under-investment, but pillage by the Soviet Union. The subsequent partitioning of the country in 1949 into the two countries of the old East Germany, the German Democratic Republic or GDR (Deutsche Demokratische Republik or DDR), and the old West Germany, the Federal Republic of Germany or FDR (Bundesrepublik Deutschland or BRD), had a fundamental effect that - even three decades after reunification and many billions of Deutschmarks and Euros spent - is still affecting business and industry on both sides of the old border.
The book points out that the cornerstone of today’s united Germany is in fact the west’s Basic Law (Grundgesetz) of 1949, which was extended to cover the whole of Germany upon reunification. It has the effect of a constitution, and is well known to all Germans. In its first statements, it guarantees human dignity and human rights, and explicitly states that ‘All state authority is derived from the people,’ ensuring that Germany would henceforth always be a democratic state. There are very strict limits to the role of the German armed forces - limits that are currently restricting the ability of the country to provide succour to Ukraine (alongside certain political considerations).
‘Why the Germans do it better’ is no hagiography - it points out many areas where the Germans don’t do it better. The previous reverence in Germany for the role of Russian-speaking Angela Merkel (‘Mutti’) as Chancellor has dated rather badly, since the strategic eastward-looking Ostpolitik that she continued during her tenure has not ended well. Her decision - and it seems that it was her personal decision - to open Germany’s doors to an influx of immigrants has led to nearly a decade of political turmoil and the resurgence of the German right (as well as bringing in a wave of younger workers to the country).
However, Kampfner extols at length the benefits and virtues of Germany’s approach to business - and to the Mittelstand (small- and middle-sized companies, SMEs or in German, kleine und mittlere Unternehmen or KMUs) in particular. He points out that many are family-owned, and as such have strong incentives to not only innovate and to plan for the longer term future, but also to conduct themselves with an eye on stability. The companies typically have a paternal approach to their employees, offering them a variety of benefits and social opportunities, and investing in training and equipment. Many SMEs are strongly export-oriented (as a means to continue to grow outwith the bounds of Germany) and are typically not only specialists in their field, but also world-leading suppliers. Readers may have a number of German companies in mind that operate in the cement industry, nowadays not only in terms of equipment, but also in software and services.
It is also pointed out that under Mutti, since 2008 the federal states or Länder have been prohibited from running deficits, and at the same time the federal authorities are obliged to limit the government’s structural deficit to a maximum of 0.35% of GDP, under the so-called schwarze Null or ‘black zero’ law. Each year since 2014 the German government has balanced its books, recording a surplus of Euro54bn in 2018 alone. In other countries, this might be termed ‘mending the roof when the sun is shining.’ The corollary is a decades-long under-investment in German infrastructure, but a healthy national bank balance will certainly put Germany in a stronger position going into the coming winter and Putin-caused economic and energy wars. As the economic engine of Europe, we have to hope that Germany remains in good health.
