NCPA - National Center for Policy Analysis

Changing Germany

March 27, 2000

Last week, I visited Berlin, courtesy of the American Council on Germany. It was my first trip to Germany's new capital since the fall of the Berlin Wall in 1989. In just a few short years, virtually all signs of communist languor and drabness have been replaced by vitality and creativity.

However, there are troubling indications of weakness in the new Germany. Germans are seriously lagging in adopting the New Economy of high technology and especially the Internet. They are perhaps five years behind the U.S. in Internet usage.

Most revealing, the head of IBM Europe, Erwin Staudt, said he spends much of his time giving speeches to business and civic groups about the need to embrace the Internet. I found this surprising because no business leader would feel the need to give such a speech in the U.S. To most Americans, the Internet is already a functioning reality in our day-to-day lives. We do not need to be talked into getting on line, but apparently many Germans still do.

German resistance to the Internet is not due to technophobia. Quite the contrary, Germany has been a world leader in technology for years. Rather, I believe, it is fear of change and uncertainty about Germany's role in an increasingly integrated world economy.

Germany was the first of the welfare states, but its welfare state burden is no longer bearable. Germany has the heaviest tax burden of any major country, and while others are lowering taxes Germany's are rising. As a consequence, it has double-digit unemployment and its best and brightest are leaving for greener pastures abroad.

Germany still has enormous strengths. But if it continues to resist change, it will fall increasingly behind those more willing to embrace it.

Source: Bruce Bartlett, senior fellow, National Center for Policy Analysis, March 27, 2000.


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