It’s been a grim election season in Germany. Spanning the harsh winter months, the campaign — set off by the collapse of the government in December — has played out against a backdrop of short days, low temperatures and dark moods. The poor level of political debate has done little to lift the country’s spirits.
For a brief spell, taxes, jobs and government spending — the meat and drink of electoral contest — got most of the attention. But in late January an Afghan attacked a kindergarten group in a Bavarian town, killing a toddler and a bystander. The incident set off a political storm that eclipsed everything else.
Politicians jumped right in. Friedrich Merz, leader of the conservative Christian Democrats, introduced to Parliament a nonbinding proposal for stricter border controls and a crackdown on illegal immigration. To pass the motion, he relied on the support of the far-right Alternative for Germany. There was uproar. The center-left Social Democrats and the Greens cried foul, casting themselves as bastions against the rise of extremism.
The debate simmered away through February. That was until last Friday, when Vice President JD Vance made an incendiary speech at the Munich Security Conference, lambasting European governments for lax migration policies and their supposed censorship of the far right. Germany was shocked, plunged into deep anxiety about its relationship with an increasingly hostile America.
This is troubling enough. But with all the recent commotion, the country has lost sight of another problem that is just as pressing as immigration or the decline of the trans-Atlantic alliance: a faltering, flatlining economy. Two years into a recession, Germany is trapped in a vicious cycle of poor growth and low productivity, and nobody seems to know what to do about it. Whatever the result on Sunday, the country is in serious trouble.
There’s agreement, to be fair, on one point: The threat of permanent decline is real. Businesses are burdened by high energy prices, excessive bureaucracy and increasing competition from China. An aging population means that there are fewer highly qualified workers to fill important jobs. Years of underinvestment in infrastructure are taking a toll. In a looming global trade war, Germany’s export-oriented economy stands to lose more than others. A jury of economists and journalists, appointed to name the “business word of the year’ for 2024, considered the likes — translated into English — of “bureaucracy monster” and “transformation backlog.” In the end, it settled on “deindustrialization.”
Whatever the term for what’s happening, it’s clear that something has to give. Mr. Merz, in pole position to be the next chancellor, portrays himself as a reformer and promises sweeping tax cuts. Yet he hasn’t given a plausible explanation of how he’s going to finance them. He talks about innovation and growth, but he’s vague on plans to reduce government subsidies and social services. In an interview with the weekly Die Zeit, Mr. Merz acknowledged there are limits to how much he’s willing to do. “An aging society that has lived in peace and prosperity for years,” he said, “is less ready for change than one that is in flux.”
The Social Democrats, led by Chancellor Olaf Scholz, are even more conflicted. They want to loosen the constitutional debt brake — which places a strict limit on government borrowing — to increase spending on education, housing and infrastructure. But the party, historically rooted in the labor movement, remains attached to the country’s tradition of mass manufacturing, which it associates with high employment and social stability. Like the Greens, Social Democrats pin their hopes on low-carbon technologies that they believe will set off p an industrial renaissance. Thanks to climate protection, Mr. Scholz has said, the economy will “see the same growth rates as we did in the 1950s and ’60s.”
That’s not an accidental allusion. Both Mr. Scholz and Mr. Merz frequently refer to the economic miracle, or “Wirtschaftswunder,” of the postwar decades, suggesting that another could be right round the corner. Deep down, they must know that the 25-year boom — a period in which all boats rose together — was a historical anomaly. Still, they clearly want to reassure voters that gain can be had without pain, so they keep pretending.
In reality, that era ended long ago. Some of today’s challenges were evident as early as the mid-1960s. A lack of investment in future technologies, a brain drain to the United States and an overreliance on a few export-oriented industries such as cars, chemicals and machinery — it was all there. Steel and coal, the former backbone of the economy, were already on the wane.
From the 1970s on, successive governments, whether led by Social Democrats or Christian Democrats, had plenty of resources to invest in long-term growth. But they did so only halfheartedly. Hoping to mitigate the impact of deindustrialization, they subsidized old industry, rescued failing corporations from bankruptcy, kept workers in blue-collar jobs and provided generous benefits to all those whose services were no longer needed. That’s how Germany, unlike some of its peers, maintained a strong manufacturing base.
The very real fear now is that cars and machinery — the sectors that carried the economy for the past few decades — are taking the same path steel and coal did a long time ago. A turnaround is possible, of course. Germany’s industrial giants could redouble their efforts in robotics, artificial intelligence and, yes, low-carbon technologies. But they’d also have to shed jobs and close or relocate units that aren’t competitive anymore. Something similar can be said for the German economy as a whole. The return to winning ways isn’t impossible, but it won’t be easy. It may, in fact, require a large dose of disruption.
Yet the most probable outcome after the election is not disruption but a coalition between Christian Democrats and Social Democrats, the traditional ruling parties. Mr. Merz has indicated that he’d consider easing the debt brake to enable an increase in defense spending. The Social Democrats, likely to be junior partners, will have to make concessions too. There would probably be a mix of some tax cuts for businesses and some beefed-up government spending — resulting in an economic policy as insufficient as Mr. Scholz’s fuzzy campaign slogan: “More for you. Better for Germany.”
In October, Andreas Reckwitz, a sociologist at Humboldt University in Berlin, published a book that got a lot of attention. Titled “Loss,” it argues — put simply — that Western culture shaped by the idea that things get better and better over time cannot cope with the prospect of fundamental, irreversible decline. Mr. Reckwitz believes that a return to progress is possible. But it’s just as likely, he suggests, that some societies will have to come to terms with loss and manage decline as best they can. By way of encouragement, he quotes a famous line by the American poet Elizabeth Bishop: “The art of losing isn’t hard to master.”
Perhaps it’s an art Germans will have to master. And who knows, maybe there’s a good life to be had without growth — so long as basic needs are met. But how do you translate the spirit of a poem into the cold language of economics? Politicians, for a start, would have to be honest and tell voters that the option of “More for You. Better for Germany” is no longer on the table. And that if nothing changes soon, it’ll be “Less for You. Worse for Germany.”
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