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Münchau: Merkel’s Successor Must Confront Germany’s Decline—Noted

Since 1945 and since 1995 Germany’s economic growth trajectory has been the most successful and impressive in the entire global north. But, with respect to individual people, there is a rule that the richest are not the wisest and smartest, but rather those who have overleveraged, underdiversified, and been very very lucky. The judgment of the richest of the superrich is, in fact, on average rather poor, and always at least tinged with Dunning-Krueger monomania that the universe has not yet called to account. Is the same true of countries? The very sharp Wolfgang Münchau fears that it is—that Germany’s economic success has led it to a place in which its institutions are in fact poorly built to manage the future, producing a “misdirected focus on fiscal surpluses” and a lack of focus on the need for innovation:

Wolfgang Münchau: Merkel’s Successor Must Confront Germany’s Decline https://www.ft.com/content/b0dc8008-4f4a-11ea-95a0-43d18ec715f5: ‘The Merkel years... as the moment when Germany lost its technological edge through a misdirected focus on fiscal surpluses and lack of innovation.... Germany’s medium-sized industrial companies… are still grappling with digitalisation. The country has not made the necessary investments in mobile telecommunications.... The car industry was unprepared for the shift to electric…. Merkel’s spontaneous decision to switch off nuclear power stations has made Germany more reliant on fossil fuels, putting the country on course to miss Paris climate targets...

...Over-specialisation has made Germany vulnerable…German carmakers have invested in sophisticated software to cheat on emissions testers. But they failed to diversify into electric cars and artificial intelligence technologies at the right time.... The task of managing a first-order technology shock that has been left unaddressed for too long, is like escaping from a maze. There is usually only one way out, and many ways to get stuck…

.#economicgrowth #industrialpolicy #noted #2020-06-25