With the collapse of the industrial production by 3.5 percent in December, can no longer deny that the German economy is in a recession is coming dangerously close. The Federal government pointed out in its new annual economic report on the weaknesses and risks of the world economy. In order to makes it easy, because many of the problems are home-made and are also not only in the automotive industry. There is a lack of public investment in education, infrastructure, and climate protection and also good framework conditions for private investment: an inefficient and inflexible bureaucracy and regulation, high uncertainty and a related deep mistrust in state institutions deter many companies from making investments.
While the forecast for economic growth of 0.6 percent in the year 2019 improved to 1.1 percent this year, but the appearances are deceptive. The largest part of this improvement is due to the three additional days of work, more investment, or productivity. More importantly, this forecast all the risks that could hit Germany hard ignored almost: the global Trade disputes, which could put Germany on a collision course with the United States, the unresolved Brexit, a recession in the U.S. and a fragile financial system in Europe. Add to this the geopolitical conflicts in the Middle East and the Coronavirus that could meet in case of further spread of the German exports hard.
When the risks and the great need for investments in the future, it is not surprising that the majority of Economists considers it as a wrong decision of the government on the Black Zero and the neglect of public investment. The Person
The Economist, Marcel Fratzscher of the German Institute for economic research (DIW) since February 2013 and is a Professor of macro Economics at the Humboldt-University of Berlin. Previously, Fratzscher was the since 2008, for five years head of the Department for International policy analysis at the European Central Bank (ECB) in Frankfurt.
citizens hold the state for a little proficient
A large and neglected Problem, another Problem is The unreliability and inefficiency of the state has led in the last two decades to a massive loss of trust in state institutions. Companies see excessive red tape, constantly changing rules, long approval process and high cost as one of the biggest hurdles for private investment and innovation. The confidence index of the communications Agency Edelman shows that the majority of the citizens of the Western industrial countries, in Germany, to keep their state institutions for the little competent and unethical in their Actions.
And this is not wrong. Many Western governments, including the Federal government, have followed in the last two decades, a policy of grandfathering, with the powerful interests served and the Status quo to be cemented. Some criticize the failure of the German climate targets for 2020, exacerbating however, the regulation for wind turbines and other renewable energy so strong that their production breaks and the climate goals even more remote.
at the same time, the Federal government supports the coal lobby for the Coal phase out with almost 50 billion euros. The large job losses in the case of renewable energies, however, are ignored. Some complain about the exploding reject at the end of rental rates in the cities, however, new construction projects, such as on the Tempelhofer field in Berlin. Others call for future-oriented technologies for Germany, then they fight, however, the settlement of Tesla outside of Berlin in the strongest terms.
The distrust in state institutions is growing
It is therefore not surprising that the Elite, i.e., people with good income and education, the state trust, while the rest of the population has a deep distrust in their governmental institutions. And the Edelman trust index shows that the gap between Elite and normal citizens and normal citizens in almost any country as big as in Germany.
The good news is that there is hardly a state has a large financial scope and strong structures, such as Germany. Just as important as a strengthening of public investment is to reform state institutions fundamentally. A higher efficiency and speed in making decisions, a modernisation of the public administration (e.g. through E-Governance) and regulatory safety, to which both companies and citizens can leave include. A successful economic Transformation in Germany requires a strong, efficient and at the same time adaptable to the state institutions, as well as the political will to create such institutions. Is the weak spot in Germany.
The Text first appeared in the “daily mirror”.
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