Doing It the German Way

Traders are pictured at their desks in front of the DAX board at the Frankfurt stock exchange July 16, 2014. Reuters

Ride a bike south from Munich city centre along the Isar river’s recently revitalized 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 soccer season, a scattering of fans gather around the pitch to watch Bayern Munich’s senior team practice. 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.

On other days you can catch the youth team, part of a system that most experts credit with the recent victory in Brazil. The German soccer team revamped its youth development program after 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 their approach to the game – and in doing so created the generation of players who dazzled at the World Cup.

That feels typical of today’s Germany. Spot a problem – a weak national soccer team, a city exposed to destructive run-off from the Alps – analyze it, solve it. The pattern extends from home life to business to geopolitics.

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 globalization, 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 that wouldn’t want its own citizens to follow suit.

Similarly, the Mittelstand -- the name given to small and medium-sized businesses -- is the envy of the world. The Economist reported recently that officials from South Korea, Iran and Egypt have been in touch with the German trade body for mid-sized companies, asking how to emulate its members’ success.

In fact, the German model is already exported in 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 middle-class jobs and inspires loyalty. It’s proved so successful that some American firms are following suit and in China the government is adapting Germany’s apprentice training exam for its own young people.

A hundred years after the start of World War One, 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. “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.”

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 abroad, 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, author of the book Germania, argues that 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,” he says. There were exceptions to this model, he concedes, but they by and large gave way to “quite a broad base of individuals working together at least to improve things”.

Of course, that gave way in the 20th century to two disastrous experiments in top-down rule, Nazism and Communism. Winder puts this down in part to the enormity of the devastation of World War One and the following years, including hyperinflation and the 1918-19 influenza pandemic. But the Germans themselves were responsible for much of the ruin, leaving civil society fundamentally undermined.

“Today, we think a serious crisis is the price of our houses going down,” says Winder. “A serious crisis is if you randomly kill every fifth family member down a street, wipe out their savings and get rid of their jobs. The last straw is the collapse of Wall Street, but by then there's almost nobody across central Europe that you would point to today as being classic middle class, who believes in order and security and parliamentary government. And so the world in which the Third Reich grows up is a very simplified, dog-eat-dog world.”

After World War Two, a renewed devotion to localism and accountability was forced on Germany by outside forces, with the Yalta Conference that redrew the boundaries of post-war Europe and the American Marshall Plan devolving power once again. But it also grew out of hard work from within. “It was not painless and it didn't happen overnight,” says Green, “but the Germans have been thoroughgoing in dealing with their past – which is a lesson for a number of other countries, including, I would say slightly provocatively, for the British.”

Today, Germany boasts a civic environment that encourages people to change things they don’t like – and a devolved political structure that eases this process. If the American dream is about individuals moving up in the world – a headlong thrust to be part of the 1 percent – the German dream might have more to do with individuals changing it to ensure that life isn’t too bad for the 99 percent.

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 as the European Union’s leader following the 2008 credit crisis, the subsequent Great Recession and the small European nations’ sovereign debt crises – and reviews of its time in the hot seat have not been kind. The austerity measures Berlin insisted on for the rest of Europe, and particularly for indebted Eurozone countries such as Greece and Spain, remain controversial both for the hardship they dealt individuals and the likelihood that enforced austerity is slowing growth in those countries.

The anger with Germany is real. It's not just the placards of protesters in Greece, Spain and Portugal that depict Angela Merkel as Hitler. Magazine editors and newspaper columnists make reference to the Third Reich, too. And even as Germans rightly reject such stark comparisons, some admit the country's sometimes strident tone has been regrettable.

“It should have been made clear in recent months that the act of providing aid is a part of European solidarity and not, say, the act of someone who knows everything better,” Olaf Schwencke, president of the German Association of the European Cultural Foundation, told Deutsche Welle last year.

No one is arguing that the economies on the Eurozone periphery had been well run, but critics say Germany can’t insist on its neighbors 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 the Germans’ anaemic spending habits and ferocious selling style has been, according to the US Treasury, “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 conquest. While Germany has not physically 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 appears to be little delight in Germany over its new-found dominance. “The last thing Germans want is to even have a view on these issues,” says Winder. In terms of non-Eurozone European relations, German chancellor Angela Merkel has tried to keep the UK engaged in EU politics rather than withdraw – the favored option of many both within and outside British prime minister David Cameron’s ruling Conservative party. 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, argues 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.” “Merkel applies her domestic model – check how the winds are blowing, go with the flow – to foreign policy,” says Josef Joffe, publisher-editor of Die Zeit. 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’.”  

In business, however, the rest of the world keeps knocking at Germany’s door. 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, which only Muslims are permitted to visit. But this was a project that required specialists and so a meeting was arranged 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 the German author 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 globalization 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 young people needn’t head to the big city to find success.

It’s another way power – this time economic – is decentralized. 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 $2.7 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.

As for the US, the Mittelstand's talent pipeline – Germany's apprenticeship system – is being adopted and adapted. Last month, Trident Technical College in North Charleston, South Carolina, hosted a “signing day” in the mould of college football for high school students starting apprenticeships with one of five area businesses – three German companies (Bosch, IFA Rotorian and Hubner Manufacturing), one American (Detyens Shipyards) and one British (VTL Group). Brad Neese, director of Apprenticeship Carolina, says this underscores a recent trend: whereas American companies used to recruited apprentices in their 20s, “we're starting to see them adopt a youth model. It feels a lot more like the German model.”

If there were ever 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 3 million 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?’,” he says.

That changed 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 2005 to 2010 might have seen Germany catch up with its European peers when it comes to immigration, but it’s the years since then 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 recognizing 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 eurozone crisis are having a better experience than previous generations of immigrants.

On the ground, however, there is still a way to go; the German national soccer team may boast players from a range of national 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 less rosy than at first appears. German women are still under-represented in politics and business compared with the US, the UK and Nordic countries. The country’s support for solar power looks from some angles as if it has done more to fill the pockets of solar-cell installers than create a sustainable model for green energy. The changes to labor law have created a two-class system of jobs, where new positions offer workers much less security than old ones.

The act of attempting to reach perfection, then, rather than reaching perfection, 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 a centralized government prompts secessionist movements, or anger over immigration and unemployment wins elections for ultra-conservative or nationalistic politicians.

Winder lives in London and has no plans to move to Berlin. But he thinks it’s time for some degree of 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,” he says.

Rose Jacobs is a freelance journalist based in Munich.

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