A Neoliberal Attack on Germany and its Success

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Niccolo and Donkey
Germany’s season of angst: why a prosperous nation is turning on itself

The Globe and Mail

Doug Saunders

June 25, 2011

Here in the industrial core of Europe, things have never been so good.

Germany's western flank has become the greatest exporter in the Western world, second only to China and far ahead of the United States. The container ports along the Rhine are working day and night to deliver record orders of German products to southern and western Europe, the U.S. and especially to China. Shops are busy. Home sales are rocking. Unemployment hasn't been so low since the eighties. In terms of growth, profits and productivity, the current German economic boom has surpassed even the “wonder years” of the 1950s. These are, by several measures, the most successful people in the world.

Yet it is very hard to find anyone here who is happy about this state of affairs. Unlike the great Rhineland industrial booms of the 1950s and 1970s, this one is provoking Germans to turn against their government, against Europe, against technology and growth, against outsiders. It is an inward-looking, self-questioning moment in a country that the rest of Europe very badly needs to be involved in affairs outside its borders.

If previous German booms were marked with a national mood of confidence and optimism, this is a prosperity of angst and fear: According to one survey, 80 per cent of Germans now believe that the future will be worse than the present, that “everything is getting worse.” There is an entire consulting industry devoted to analyzing the “national angst.”

“What we're repeatedly finding is that, despite the very good economic data, there is a huge amount of unease and uncertainty,” says Stephan Grünewald, a Cologne-based psychologist who recently interviewed 7,000 citizens for his book Germany on the Couch . “There is a manifest crisis of trust. … The Germans have at the moment a mood, a feeling that things can go to pieces, a feeling of being in a situation in which one is completely incapable of action.”

In Dusseldorf and its neighbouring cities, I keep meeting people like Jurgen Klut. The 64-year-old lawyer, who advises major Rhineland companies, is the model of the stolid churchgoing burghers who have formed the core of Angela Merkel's Christian Democratic Union for decades. During the 1970s boom, he backed the CDU and supported European unification; he is an ardent supporter of the euro over the old deutschmark, even today. He spends his summers in Turkey, and has no truck with his multi-ethnic city.

But something in the past couple years of crisis and recovery has made him want his country to withdraw from its continental obligations, he says. In this year's state election, he quit the CDU and joined one of the many fringe protest parties devoted to pulling Germany out of the European Union and ending immigration. “Previously, our involvement with Europe was good for us, but now it is doing nothing but expose us to danger,” he says. “We are losing our identity because of immigration, and we are losing our savings because we are expected to bail out our neighbours.”

This is an extremely widespread feeling: that Europe's strongest economy is so delicate and fragile that the outside world could destroy it at any moment.

The signs are everywhere
You can see it in numerous places – notably, this week, in the dark public mood toward the Greek bailout, which will cost German taxpayers hundreds of millions of euros, and in the widespread public resistance to a larger solution to the Greek crisis (which would entail rebuilding Greece, perhaps with a united European fiscal plan, so it would no longer be a country prone to debt and crisis). Angela Merkel, responding to that mood amid collapsing support for her party, has repeatedly delayed, postponed and weakened successive rescue efforts, a hesitancy and timidity that many analysts feel have made things much worse in Greece.

You can see it in Germany's decision not to participate in the North Atlantic Treaty Organization operation to support Libya's rebels – a decision driven, it appeared, entirely by a lack of public or political desire to get involved.

You can see it in the internal politics of Germany, which are defined by a new, outspoken sort of protester, a citizen infuriated by progress and change, known in the media by the neologism “Wutburger” (“angry citizen”). The actions of the Wutburgers have dominated headlines here for a year; their most dramatic action is a mass blockade designed to prevent Stuttgart from building a major railway station that would make it a hub in a high-speed intercontinental line running from France through to Hungary.

There are many reasons for this protest, but there is an overarching sense that Germany should not be involved in something so high-tech and international – a mood that links it to the other great Wutburger movement, the dramatic turn against nuclear power. It is as if millions of people, faced with the technology and connectedness that built their prosperity, are together yelling, “Stop.”

And you can see it in the new politics of immigration – a decided turn against outsiders, in mood though not, really, in practice. This shift was marked last year by the publication of the anti-Muslim bestseller Germany Abolishes Itself by central banker Thilo Sarrazin, who became a celebrity among those Germans (and his book sold a million copies) who see outsiders as a threat to German society. And it was marked by an ambiguous but highly publicized speech by Ms. Merkel in which she denounced “multiculturalism.” The most telling detail, though, is that Mr. Sarrazin has not been expelled from the left-wing Social Democratic Party. After an internal debate, the party decided to keep him on board – in large part because its leaders recognized, as well as Ms. Merkel did, that those angry, frightened people who bought the book are an important bloc of voters, worth fighting to capture.

The far right at bay
So it may seem surprising that we have not seen a major far-right-wing, anti-immigrant political party come to the fore in Germany. A dozen tiny parties, some of them fronts for genuine racists and others simply “Wutburger” protest movements, have made headlines in state and local elections, but few have captured more than 5 per cent of the vote.

“We haven't seen this sort of party emerge, in good part because, given Germany's history, you simply can't identify yourself with the far right,” says Alexander Häusler, an expert in right-wing populism at the Dusseldorf University of Applied Sciences. “But our research shows that 35 to 40 per cent of Germans feel that if the economy takes a downturn, the foreigners should leave. And that sort of thinking is being absorbed into the major parties, both on the left and the right. There's a lot more support for these views than the election results suggest.”

This is not the way we used to think things happened in Europe. By conventional wisdom, it is economic downturns and depressions that turn voters toward isolationism, nativism and fear of the outside world; it is rising unemployment that makes people fear immigrants and turn to defensive nationalism. We base this assumption in large part on the infamous example of Germany between the world wars.

But it has turned out that the opposite is true.

To understand, you have to appreciate what economic success entails in a globalized economy.

Germany's success has not come simply from selling cars, appliances and medicine to other countries, but from becoming deeply interlinked with them. Its current boom was built on the birth of the euro in 1999, which German governments met with a deliberate strategy to keep labour costs low and productivity high; while this wasn't popular at home, it turned Europe's smaller states into huge consumers of German products – and meant that German banks could finance their consumption with huge amounts of cheap, low-interest debt. Even in the wake of the Greek, Portuguese and Irish meltdowns, this relationship continues.

Likewise, Germany's prosperity is built on high levels of immigration. With among the smallest average family sizes in western Europe and one of the fastest-aging populations, the country cannot possibly provide enough employment-age citizens to feed the manufacturing miracle.

So there is an awkward dance within Ms. Merkel's CDU: Even as she makes highly publicized speeches denouncing “multiculturalism” – taken by many Germany voters to mean immigration – her officials say privately that they are preparing for huge levels of immigration, in response to desperate requests from industry lobbies.

Or, sometimes, not so privately: Germany's federal labour office predicts that an additional 140,000 immigrants a year will be needed, but economists say it is likely that as many as 800,000 workers will come to Germany from Eastern Europe and Turkey before the end of 2012.

Ms. Merkel's Labour Minister, Ursula von der Leyen, announced quietly this month that she would be softening her country's foreign-labour restrictions in order to fill gaping holes in the work force.
“At the moment, the labour market is as absorbent as a sponge – the number of vacancies is rising and many firms are looking for skilled labour with increasing urgency,” she told reporters. She argued that this new wave of immigrants would be vital to the boom: “They will contribute to boosting our country economically and fill part of the skilled labour shortage.”

So we have a situation in most modern economies (including Canada) where prosperity intensifies our connections, economic and personal, to the less secure countries of the world, and to their people.

A nation on the couch
This, at least, explains why people like Mr. Klut feel like they are being assailed by the world outside and forced to play a part in solving its troubles. It does not completely explain why Germans, who have played such a forward and active role in Europe and in world affairs during much of the postwar period, have responded to this new interconnectedness with such alarm.

The German cocooning reflex has become a topic of intense debate in the media here. Some feel it is an inevitable response in a people who still have both guilty and traumatic memories of their grandparents' experience in the war, as both terrorizers of the world and as victims of its retaliation.

Others suggest that the postwar Germans – who, owing to their modern country's near-total reinvention, the erasure of its awful past and the American-led construction of its current institutions – have a sense of gaping emptiness that can lead to vertigo.

“Germans have, due to their history, no deeply rooted national identity; they are always in a state of restless longing,” Dr. Grünewald says. “In the postwar years there was a kind of replacement vision, a longing for growth, a kind of culture of accumulation. This was driven by the hope that the next burst of growth would release us from all of our problems.”

But the financial crisis, he says, has made this optimism impossible, and has replaced it with anxiety and fear.

“People no longer believe in this culture of accumulation, they no longer believe in growth. ... Nuclear power, speculation, Greece, these all strengthen their feeling that things cannot go on like this. There is a kind of vacuum of meaning. And that leads to a feeling of being in the rat race, of only being focused on next week or next month, but not having any overarching vision, let alone having any sense of optimism.”

It sounds irredeemably grim, almost Wagnerian. But it's not exactly a universal sentiment. For example, Steffen Bilger, a member of Ms. Merkel's Christian Democrat caucus, was part of a group of MPs who took a fact-finding trip to Greece this month, and came back chastened.

“Germans should understand that it's really tough for the Greeks,” Mr. Bilger told me this week, sobered by his experience there. “What they have to do is almost unbearable – the cuts, the taxes, the loss of jobs and standard of living – it is something that nobody in Germany would endure. And their fate is tied to our fate, so we Germans need to start fighting for European interests, and not just for German interests.”

That sort of outspoken opinion makes Mr. Bilger a minority within his party, and a rare voice in his country. But it is part of another Germany, one that waits beneath the gloom.
What exactly did this man-on-the-street/lawyer anticipate open borders and market integration w/permanently dysfunctional welfare state countries in southern Europe would lead to? A stronger currency and enriched national life?

These libs who bitch about the spoils of managerialism and liberal humanism are like alcoholics who complain when their liver develops cysts.