World

On Top of the World: This Could Be the Start of a Century of German Success

Bastian Schweinsteiger holding the World Cup
07/25/14
COVER STORY
Germany's Bastian Schweinsteiger holds up the World Cup trophy during celebrations to mark the team's 2014 Brazil World Cup victory. Alex Grimm/Reuters

Ride a bike south from Munich city centre along the Isar river’s recently renaturalised shores – stony expanses that protect the Bavarian capital from flooding on rainy days and invite picnickers on sunny ones – cross a shady island with its own beer garden, turn up a hill, and you’ll soon find yourself at the practice grounds of a football club that helped mould eight of the players who won the World Cup for Germany.

On selected weekdays during the professional football season, a scattering of fans gather around the perimetre of the pitch to watch Bayern Munich’s senior team practice in the open. In a few months, you’ll be able to spot Manuel Neuer, Bastian Schweinsteiger, Jérôme Boateng, Toni Kroos, Mario Götze, Philipp Lahm or Thomas Müller doing squats. From 2007 to 2011, Miroslav Klose would have been there, too.

But on other days you can catch the youth team, part of a system that most experts credit with Sunday’s victory in Brazil. Germany revamped its youth development programme after the national team turned in a dismal performance at the European Championships in 2000. In the following years, the German Football Association invested €1 billion in coaches, facilities and workshops and rethought the German approach to the game – and in doing so created the generation of fit, flexible, creative players who dazzled fans at the World Cup.

That feels typical of today’s Germany. Spot a problem – a weak national football team, a city exposed to run-off from the Alps – analyse it, solve it. The pattern extends from home life to business to geopolitics. Where American working women can only dream of a system that encourages men to share more of the burdens of family life, Germany has replaced maternity leave with “parent time”, offering up to 14 months’ paid leave to couples who both take time off after their child’s birth.

Where French unions and companies go at each others’ throats over working conditions, Germany has loosened labour laws just enough to encourage hiring, helping push down unemployment to record lows today. And where the UK waxes nostalgic about its manufacturing past, Germany – which faced the same market forces over the past 40 years that prompted Britain to shift towards a service economy – today boasts higher export figures for high-tech products than any country on earth.

Miroslav Klose Game on: Miroslav Klose celebrates scoring a semi-final goal against Brazil. Robert Cianflone/Getty Images

THE RELUCTANT MEISTER

Some of this progress has only happened in the past decade or so, and even then, the rest of the world is often tempted to brush off Germany’s successes – or let its dark past overshadow them. But the challenges of globalisation, global warming and a global recession are causing many to look again. “The truth is that there is much to like and admire about Germany,” wrote the UK Labour politician Stewart Wood in the Guardian recently. “And – whisper it softly – there is a lot we can learn from them too.”

Take environmentalism: green, do-gooding Germans have long been at the sharp end of jokes, often for good reason. Their water conservation efforts were so enthusiastic in the 1990s and early 2000s that by 2009 sewage systems were suffering from too little water running through them. But today there isn’t a government on the planet that wouldn’t want its own citizens following suit. Similarly, the Mittelstand is the envy of the western world – and beyond. The Economist reported last week that officials from South Korea, Iran and Egypt have been in touch with the German trade body for mid-sized companies, asking for advice on how to emulate its members’ success. In fact, the German model is already being exported in very concrete ways: several German companies with manufacturing facilities abroad have decided to address local skills shortages by recreating overseas versions of Germany’s apprenticeship system, with future workers recruited young and given a mix of classroom and on-the-job training that both prepares them for solid middle-class jobs and inspires loyalty. It’s proved so successful that, in the US, American firms are following suit, and in China, the government is adapting Germany’s apprentice training exam for its own young people.

One hundred years after the start of the first world war, the society that self-immolated between 1914 and 1945 and spent six decades slowly inching back to a state of grace is experiencing a strange turn. The German way of doing things that emerged out of the ashes has not only been deemed acceptable  neither hated nor feared – it is also emerging as the best path forward for Europe, the west, the world. “Germany has become increasingly comfortable in its own skin,” says Stephen Green, author of Reluctant Meister: How Germany’s Past is Shaping its European Future. “The last thing Germany would want is to be thought of as a dominant or hegemonistic figure, but it is becoming more and more influential.”

HIDDEN CHAMPIONS

Where Britain’s dominance during the 19th century had to do with its colonial reach, and the American century grew out of military might and cultural hegemony, Germany’s ascendance in the global imagination is more likely to stem from the peaceable export of political and business models that have proven remarkably successful in their mother country. What are those models?

Simon Winder, who wrote a book about Germany in 2010 and one about the Hapsburg Empire last year, argues the German way of doing things stems from a tradition – a pre-1914 tradition – of good government: “In large parts of Germany, particularly the old self-governing little city states such as Hamburg, Frankfurt and Lubeck, there is a strong tradition of cooperation, of an assumed community of interest between rulers and the ruled, of taxes and services being intimately tangled.” Winder says there were exceptions to this model, of course, but they by and large gave way to “quite a broad base of individuals working together at least to improve things”.

Combine that with the intimate -experience of two disastrous experiments in top-down rule – Nazism and Communism – and a devotion to localism and accountability prevails. That environment encourages people to change things they don’t like. If the American dream is about individuals moving up in the world – a headlong thrust to be part of the 1% – the German dream might have more to do with individuals changing it, ensuring that life isn’t too bad for the 99%.

Whether this ideal of a well-run, democratic, ‘can-do’ country can be exported is another question, and early tests are yielding mixed results. The first was the Eurozone crisis. By dint of its economy’s size and success, Germany emerged reluctantly as Europe’s leader following the credit crisis, recession and sovereign debt crisis – and reviews of its time in the hot seat have not been kind. The austerity measures Berlin insisted on for the region, and particularly for indebted peripheral Eurozone countries, such as Greece and Spain, remain controversial both for the hardship they dealt individuals and the likelihood they are tamping growth.

No one is arguing that the economies on the Eurozone periphery had been well run, but critics say Germany can’t insist on its neighbours changing their ways without also changing its own – namely, its habit over the past decade of running huge budget surpluses thanks to strong exports and weak domestic consumption. Good housekeeping, some might say, but hard on trading partners attempting to boost their own export power – particularly when they share the same currency.

The result of Germans’ anaemic spending and ferocious selling, according to the US Treasury, has been “a deflationary bias” – low growth and high unemployment – “for the euro area, as well as for the world economy”.

Winder sees Germany in a bind similar to that of colonial powers like Britain and France in the 19th century, when occupation of, say, Egypt was more about debt management than any sort of land grab. While Germany has hardly occupied Ireland or Greece, the parallels are evident, says Winder. “The national government resents – correctly resents – being told what to do by the external power, and yet it’s that external power’s money that’s being used.”

Meanwhile, there is little delight in Germany over its dominion. “The last thing Germans want is to even have a view on these issues,” says Winder. In terms of non-Eurozone European relations, Chancellor Angela Merkel has tried to keep the UK engaged in EU politics rather than withdraw – the favoured option of many people both within David Cameron’s Conservative party and outside it. In doing so, she’s won some praise for seeking a balanced EU in which the UK’s free-market tendencies serve as an important counterweight to more protectionist impulses elsewhere.

Ulrich Speck, a visiting scholar at Carnegie Europe, argued in a blog post last month that Germany’s leadership of Europe is as a consensus-builder; if it were to use bullying tactics “an anti-German coalition would form quickly”. Josef Joffe, publisher-editor of Die Zeit: “Merkel applies her domestic model – check how the winds are blowing, go with the flow – to foreign policy.” That counts not just for European wrangling, but also when it comes to the current crisis in Ukraine, where Merkel is merely “manoeuvring between Kiev and Putin”.

This is in part why Joffe rejects the notion of any forthcoming “German century”. “To be able to act strategically is the condition sine qua non of any ‘XY Century’. Germany is not, nor wants to be, a strategic actor. At heart, it is a ‘Greta Garbo Power’. Who famously said: ‘I want to be alone’.”  

RTR3Y0VF German Chancellor Angela Merkel speaks during a news conference in Berlin. Thomas Peter/Reuters

MADE IN GERMANY

In business, however, the rest of the world keeps on knocking. When the kingdom of Saudi Arabia decided to build the world’s biggest clock on the world’s tallest clock tower, it had every reason to seek out designers close to home: the setting was Mecca, after all, which only Muslims are permitted to visit. But this was a project that required specialists, and so a meeting was arranged at a Geneva hotel between a representative of the Saudi royal family and three men from Calw, a small town 30km west of Stuttgart. The German company, Perrot Turmuhren, opened its doors in 1860, employed Herman Hesse for a period and is today run by a fifth generation of the founding family. A world leader in “tower clocks, electronic bell ringing machines, automated carillon mechanisms as well as all other related clock and clockwork technology” it won the Saudi contract.

This is the definition of Mittelstand success: to be a world leader in a niche market, the ‘go-to’ company even if the customers are half-way around the world, a “hidden champion” (in the German catchphrase) that benefits from globalisation rather than being washed away by it. To be part of the Mittelstand is also to be capable of employing 50 to 500 people in a small town, meaning -talented youth needn’t head to the big city to find success. It’s another way power – this time economic – is decentralised. The success of the Mittelstand, which generates the bulk of corporate revenues in Germany, is deeply intertwined with the country’s support for manufacturing. The federal and state governments help fund research – often through NGOs such as the Fraunhofer Institute, with a research budget of €2 billion – that small and medium-sized businesses can use to maintain and improve the quality of their products.

Admirers of this model include the UK, where politicians are trying to stoke the country’s much-diminished manufacturing sector, and France, which has traditionally poured support into large “national champions” but recently set up a bank to direct finance toward mid-sized companies. More striking, perhaps, is the interest the German model is getting from developing countries. “Made in Germany” was a label created in Britain in the late 19th century as Germany moved from mass manufacturing to advanced manufacturing. The tag became a badge of honour. China may hope that, if it borrows from the German model, “Made in China” will follow the same path.

Clock manufacture in Germany Precision timing: Germany is a world leader in niche markets, like clock-making. Perrot Turmu Hren

BODY LANGUAGE

If there were policies not worth copying from modern Germany they were, for many years, those related to immigration. Starting in the 1960s and 1970s, when the domestic workforce alone proved insufficient to support the country’s “economic miracle”, waves of Turks moved to Germany as “guest workers”, and many wound up staying – leading to a three million-strong population of people of Turkish origin living in Germany today. And yet, says Demetrios Papademetriou, head of the Migration Policy Institute Europe, for four decades politicians insisted that Germany was “not an immigration country”. “I would sit in the office of the interior minister in Bonn and discuss this issue, and successive ministers over the years would say to me, ‘Are you nuts? You want us to become like the US?’”

That changed fundamentally soon after Merkel took office in late 2005. “In the same way that we say only Nixon could open up China, Merkel takes over and the government goes about very methodically changing the way official Germany deals with the Turkish-origin population,” says Papademetriou.

“The line ‘we are not an immigration country’ was eliminated from the language of the conservatives from 2005 to 2010, and this created an environment that has allowed Germany to open up dramatically to immigration.”

The years from 2005 to 2010 might have caught Germany up with its European peers, but it’s the time since that make it something of a model. Unlike countries such as Denmark, the UK and Canada, Germany never adopted a points-based system for immigration, where people with certain skills – usually determined by higher degrees – are permitted to enter with the idea that they’ll naturally find jobs.

It avoided the problems associated with this approach – that many immigrants are forced to take positions for which they are overqualified because their credentials are not recognised in their new countries, or have trouble finding work altogether during downturns – by waiting until it was clear that domestic employers needed more workers, and then smoothing the immigrants’ paths.

“They’ve taken EU directives on immigration seriously – whether it’s work permits or  recognising foreign credentials – and imported them into their own legislation and they’re doing better in these regards than any other European country,” says Papademetriou. Young Spaniards and Italians moving to Germany because of the economic crisis are having a better experience than previous generations did.

And if it’s leading Europe in these areas, it almost goes without saying that Germany’s policies are better than those in the US, a traditional “immigration country” but one that, in Papademetriou’s view, has never in the past 50 years been more confused about immigration than it is today.

On the ground, however, there is still a way to go; the German national football team may boast players from a range of backgrounds but Germany’s ability to build community among different immigrant groups still pales in comparison to America’s, for example. “The sameyness can be quite stifling,” says Winder. “It’s about body language,” says Papademetriou. “Immigrants know whether they are part of the society or not.”

Elsewhere, too, the picture is inevitably less rosy than at first appears. German women are still under-represented in politics and business compared with Nordic countries. The country’s support for solar power looks from some angles as if it’s done more to fill the pockets of solar-cell installers than create a sustainable model for green energy. The changes to labour law have created a two-class system of jobs, where new positions offer workers much less security than old ones.

The act of perfecting, then, rather than the act of having perfected is the appeal of the German model: the sense that change is possible, unlike in other parts of the West, where political infighting shuts down governments, or resentment of centralised power prompts secessionist movements, or anger over immigration and unemployment wins elections for far-right politicians.

How can the rest of us get a piece of that feeling? Winder lives in London and has no plans to move to Berlin. But he thinks it’s time for some degree of blatant imitation: “If you look at the 19th century, all European countries wanted to be like Britain. They go through the most amazing hoops. Everyone dresses like British people, there’s a kind of obsession, because Britain is viewed as having the middle-class system that allows people to progress. At this point it seems to me blindingly obvious that we ought to just copy Germany’s success. There’s no shame, there’s a long tradition of it, just as we’ve been copied in the past.”

Correction: This article originally stated that German women are under-represented in business and politics compared with the US and UK. This was inaccurate and has been removed - the US and UK both have a lower proportion of women in their legislatures.

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