SGI 2024 | Germany | Executive Summary

Executive Summary

Recent Governments Experts

SGI experts on Germany

Friedrich Heinemann

Friedrich Heinemann is head of the public finance department at the Center for European Economic Research (ZEW) in Mannheim (Germany). He received his PhD from the University of Mannheim and his Habilitation from the University of Heidelberg. His research interests include empirical public finance, and European integration and reform processes. Mr. Heinemann teaches at the University of Heidelberg, is a board member of the Arbeitskreis Europäische Integration and member of the Scientific Board of the Institut für Europäische Politik (IEP) in Berlin.

Christoph Egle

Dr. Christoph Egle is scientific director of the Bavarian Research Institute for Digital Transformation (bidt). He received his doctorate from the University of Heidelberg with a thesis on economic and social policy reforms in Germany and France and was active in political science research and teaching at the Universities of Heidelberg, Frankfurt/Main and LMU Munich. In 2010, Christoph Egle moved into scientific policy consulting. At the German Academy of Science and Engineering (acatech), he headed the office of the German government’s Innovation Dialogue until 2018. He then worked as head of department for digital future technologies at the Bavarian State Chancellery and the Bavarian State Ministry for Digital Affairs before moving to bidt as managing director in 2019.

Reimut Zohlnhöfer (Coordinator)

Reimut Zohlnhöfer holds a chair of political science at Ruprecht-Karls-University Heidelberg (Germany), where he is also the head of the political science department. He holds an MA from the University of Heidelberg, a PhD from the University of Bremen and a Habilitation from the University of Heidelberg. Previously, he worked at the Center for Social Policy Research of the University of Bremen, at the Center of European Studies at Harvard University and at the University of Bamberg. His research focuses on economic and social policies in developed democracies.

Democratic government

Germany’s political system is strengthened by robust and resilient democratic institutions. All public entities are effectively constrained by reliable checks and balances and adherence to the rule of law. A pluralistic media environment promotes open debates and disseminates high-quality information, including critical evaluations of governmental performance. Additionally, democratic principles, human rights, and the rule of law enjoy considerable support from political and economic elites, as well as from the general public. A vibrant civil society significantly contributes to public discourse and inspires the younger generation to value democracy and open exchange.

However, the resilience of democratic principles in Germany faces significant challenges amid increasing polarization, particularly evidenced by the rise of support for the far-right party AfD. While not all AfD supporters reject democratic principles, many prominent party representatives openly espouse nationalistic and homophobic views. Issues such as immigration and the management of refugee inflows – considered the most pressing problem by survey respondents at the end of the observation period (Forschungsgruppe Wahlen 2024) – have contributed to the radicalization of certain segments of the population.

A troubling trend in policy debates is the tendency to dismiss opposing views as malevolent rather than legitimate differences. This polarization first appeared during the 2015 refugee crisis and has persisted through subsequent controversies, including government policies during the pandemic, attitudes toward Russia, and support for Ukraine.

Moreover, democratic values have not firmly taken root in certain migrant communities. In Turkish communities, for instance, a majority aligns with Turkey’s autocratic leadership. Similarly, within Arab communities, the Gaza conflict has incited open anti-Semitic outbursts. This indicates that despite residing in democratic societies, some migrant population segments do not resonate with fundamental democratic principles.

Despite these challenges, a significant majority of Germans continue to vote for democratic parties, and populist movements – unlike in some other European countries – have yet to attain political power. Nonetheless, the future remains uncertain, especially in the eastern states, where the AfD has gained substantial support in polls.

One drawback of Germany’s rules-based approach and its deep trust in an ever-expanding set of regulations is the escalating bureaucratic burden. Companies view red tape and increasingly detailed regulations as major impediments to entrepreneurial efforts. Researchers also criticize stringent constraints, citing issues such as data protection and bans on certain technologies, which they argue drive cutting-edge research out of Germany.

Governing with foresight

German governments typically make well-informed decisions, closely collaborating with scientific communities, particularly during crises with inherent knowledge limitations. Despite programmatic differences, coalitions like the current “Traffic Light” coalition (comprising the SPD, FDP, and Green parties) manage to agree on programs through comprehensive coalition agreements over the legislative term. The current government’s agenda, as outlined in its coalition agreement, is forward-looking, placing a strong emphasis on climate protection and digitalization.

However, weaknesses emerge in the realm of strategic foresight. Firstly, there is a notable lack of strategic planning for potential crisis scenarios, as evidenced by the lack of preparedness for the pandemic and the Russian war against Ukraine. Secondly, communication often devolves into cacophony, especially under crisis conditions. The government struggles to establish a unifying narrative shared by all coalition partners, hindering its ability to provide clear guidance and orientation to the country. This problem may, to some extent, reflect a lack of charisma among leading politicians, but the issue has persisted from the chancellorship of Angela Merkel to the current leadership under Chancellor Olaf Scholz.

Sustainable policymaking

Germany’s policy approach must grapple with two notable deficiencies. First, there is a reluctance to prepare the welfare state for demographic aging. Support for the bold Hartz reforms of the 2000s has waned, and some of these reforms have even been reversed. Rather than preparing for future challenges, the welfare state agenda focuses on further expanding and completing social protection. With the end of the peace dividend, rising energy prices, deglobalization, and risks to the German industrial economic model, the financial sustainability of the welfare state is now at risk. High corporate and income tax rates have become obstacles to investment and employment, undermining the economic foundation of the German model. Second, the Federal Constitutional Court’s Debt Brake ruling imposes a stringent budget constraint, further limiting available policy space. Debates on reforming the German Debt Brake often overlook the inherent fiscal constraints arising from lower growth and an aging population, which are not artificial constraints created by constitutional fiscal rules.

Citations:

Forschungsgruppe Wahlen. 2024. “Politbarometer – Langzeitentwicklung – Wichtigste Probleme in Deutschland I.” https://www.forschungsgruppe.de/Umfragen/Politbarometer/Langzeitentwicklung_-_Themen_im_Ueberblick/Politik_II/9_Probleme_1_1.xlsx