-->Germany is plagued by a severe economic malaise
and by uncertainty about its place in the world,
says Xan Smiley

AT THE heart of Germany's old-new capital, Berlin, a
heady mixture of symbols confronts the visitor. Start
with the Reichstag, restored as the unified nation's
parliament: a ponderous Prussian hulk of a building
with an awkward history, renovated and now capped
with a delicate glass dome, proclaims a peculiar yet
suitably mixed message of old solidity and
adventurous novelty.

Then look across to the Brandenburg Gate, a mocking
reminder of Germany's division that until 1989 stood
gloomily alone in the border wasteland near the site
of Hitler's old bunker. Now that it has been restored,
the horse-drawn chariot on top of the majestic gate
seems poised to take off eastwards into territories
soon again to fall within Germany's economic
embrace.

And the bunker itself, a place that most Germans
would rather expunge from their capital, if not from
their historical memory? The country's leaders have
courageously decided to erect, close to the site of
the bunker, a massive and eerie memorial to a crime
that must not be forgotten, however normal Germany
has now become and however blameless today's
Germans are for the appalling crimes committed by
their grandparents.

On the face of things, Germany has finally come out
of its post-war shell. Twelve years ago it emerged
united, suddenly much more populous and with a far
bigger economy than its chief counterparts in
Europe-although, by taking in the poor east, it
became less wealthy per head. It now has 82m
people, against about 60m each for France and
Britain, which makes it the undisputed giant at the
heart of one of the two richest continents in the
world. The European Union has 370m people against
America's 270m, and a combined annual GDP of $7.9
trillion against America's $10.1 trillion. In little more
than a year's time, if the 15-country EU expands as
expected to take in another ten countries, mainly in
Central Europe, the Union's population will rise to
460m. Hence the symbolism, once again, of moving
Germany's capital in 1999 from the sleepy little
Rhineland town of Bonn, a mere 55km (34 miles)
from the border with Belgium, to raucous,
once-imperial Berlin, just 80km from the frontier with
Poland.


Look east

The shift in Germany's centre of gravity to the east
has been accompanied by the departure of French,
British and Russian troops from German soil, and by
the reduction of once-mighty Russia to the economic
weight of the Netherlands. Moreover, the burgeoning
European club of which Germany is the biggest
member will soon embrace Poland and three Baltic
countries that not so long ago seemed an integral
part of Russia's empire.

Yet just as Germany seems to be retaking its place
at the head of Europe's top table of nations, there is
growing concern (in Germany as well as abroad)
about a"German malaise"-mainly of an economic
kind, but also reflecting uncertainty over how the
country might play its part on the European and
global stage. The chancellor, Gerhard Schröder,
recently won an extremely narrow election victory,
which he owes partly to his decision to thumb his
nose at the government of the United States, a
country whose friendship has been the cornerstone of
German foreign policy for half a century. Germany's
equally important post-war friendship with France has
also fallen into disrepair, although efforts have
recently been made to restore it. A third friendship,
with Britain, seemed to be taking root two years ago,
but never quite flowered.

In sum, for the first time since the second world war,
Germany has given the impression of wanting to
carve out a more independent place in world affairs
for itself-but it does not yet seem to have worked
out what to do with it.
[img][/img]
Germany's economy
remains easily the
biggest in Europe,
larger by a third than
Britain's or France's.
But the mighty
American economy is
now five times as big
as the German one,
against 3.7 times in
1990, and the gap is
widening. For the past
eight years, the
German economy has
been the
slowest-growing in the
whole of the European
Union, so in comparison with its peers it has lost
ground (see chart 1). Recently, Germany has suffered
the indignity of being formally reprimanded by the EU
for letting its deficit get too big.

True, in 1990 it was landed with the colossal financial
burden-however welcome politically-of absorbing a
bankrupt country, the former communist-run German
Democratic Republic. True, Germany's is an
export-driven economy gasping for breath during a
world economic slump. But it is also stifled by a
hugely restrictive and intrusive web of regulations,
and weighed down by one of the most expensive,
inflexible and protected labour forces in the world.


Fading lustre

Many of Germany's greatest firms and institutions are
in trouble. All of its four biggest banks-Deutsche
Bank, HypoVereinsbank, Commerzbank and Dresdner
Bank-require drastic and urgent restructuring. When
in 1999 Germany committed itself to surrendering its
beloved D-mark, the symbol of post-war stability, in
favour of a new European currency that now embraces
12 out of the EU's 15 members, there was much talk
about Frankfurt ousting the City of London as
Europe's financial hub (Britain having stayed out of
the project). But in the past few years the DAX index
of Germany's top companies has slumped even
further than the stockmarkets in New York, London
and Paris, and Frankfurt's much-vaunted Neuer Markt
for high-tech shares, having lost 90% of its value in
the past two years, is closing as a separate market
early next year. In the past couple of years, Germany
has been shocked by formerly rock-solid companies
going bust.

Germany's once well-regarded education system, too,
has lost its lustre. When the OECD last year
published the results of its Programme of
International Student Assessment (PISA) on the
attainments of 15-year-olds in 30 rich countries,
Germany came an embarrassing 21st, suggesting,
among other things, that the famously high quality of
Germany's shop-floor workers may soon start to fall.

Even standards of public morality and civic virtue
seem to be declining. A few years ago a party
slush-fund scandal tarnished the name of Helmut
Kohl after 25 years at the head of the Christian
Democrat party, 16 of them as Germany's chancellor.
In the past couple of years a rash of scandals
involving all the main parties has erupted. And note
that Transparency International, a Berlin-based body
that rates countries according to the cleanliness of
their public ethics, puts Germany in 18th place in its
latest league table, one rung below Chile.

Most German politicians these days intone in unison
that"we need reform", but few seem to recognise
how urgent and radical it has to be if their economy
is to regain its old fizz. Before the election in
September, neither of the two main parties-Mr
Schröder's centre-left Social Democrats and Edmund
Stoiber's conservative combination of Christian
Democrats and their Bavarian sister party, the
Christian Social Union-dared promote any ideas that
might rattle the country's comfortable consensus. In
the eyes of Anglo-Saxon-minded free-marketeers, the
Germans are simply in denial, their government
"sleepwalking into stagnation".


But why worry?

Many Germans, on the centre-right as well as the
centre-left, think their laisser-faire critics are
exaggerating. Carpers have been saying much the
same thing for decades, yet Germany remains a rich
and comfortable country that treats its old, its sick
and its unemployed far more generously than does,
say, America or Britain."Germans live very well. We
have a fantastic welfare system," said Alfred Tacke, a
confidant of Mr Schröder in the economics ministry.
"Our infrastructure is fantastic. Our workers have six
or even eight weeks' holiday a year." The Americans,
he says, work about 25% more hours in a year. So
what, he seems to be implying, if Germany drops a
few places in those league tables of growth and
productivity?

He has a point. For quality of life and protection of
the weak, his country remains at the top of the
league. Its welfare system is enviably generous. Its
environmental and health standards are high. Its
sense of civic virtue, despite that rash of corruption
scandals, remains pretty solid. Public discourse is
vigorous but dignified. Germany is an eminently
civilised country with a solidly entrenched democracy.
It threatens nobody. The ghosts of Hitler have been
laid as well as they can be. If compromise and
consensus slow down growth but deliver civil
serenity, then let us-say many Germans- pay the
price.

But the price could well rise. Some demographic
projections suggest that, without net immigration on
a grand scale, Germany's population could shrink from
82m today to about 60m, the same as France's and
Britain's, within 30 years. That would make public
pensions and health care at their present level
unaffordable.

In his first term of office, Mr Schröder started some
reforms, albeit tentatively, in several important
areas: taxation, labour-market law and pensions. But
as election day approached, they slowed to a halt. As
Mr Tacke observed,"Reformist programmes don't win
elections." Now that the chancellor is back in the
saddle for the next four years, will he become more
reform-minded again? The first place to look for an
answer is German politics.
Quelle: Economist vom 6.12.02

-->Is Deutschland AG
kaputt?
Dec 5th 2002
From The Economist print edition


What's ailing German industry

CAN this really be the country of the
Wirtschaftswunder-the economic miracle that
brought burgeoning growth to Germany from the end
of the second world war to the mid-1980s? Since the
post-unification boomlet ended in 1994, growth has
averaged only 1.6% a year, the lowest rate in the
European Union; this year, says Wolfgang Clement,
the new economics minister, the figure may be only
0.5%; some government advisers predict even less.
Foreign direct investment into Germany has been
paltry, and virtually all of Germany's biggest firms are
setting up plants abroad to make products more
cheaply. Bankruptcies this year are a third up even on
last year's record.

[img][/img]
The hourly cost of
labour in
manufacturing industry
in western Germany,
including wages,
social-security
(including health) and
pension contributions,
is 13% more than in
America, 43% more
than in Britain and
59% more than in
Spain, according to
the US Bureau of
Labour Statistics (see
chart 3). Yet
Germany's once-admired productivity no longer
outstrips its main rivals'. And although Germany has
increased its exports (and is still the world's
second-biggest exporter), those of other countries
have grown faster. Its global share has dipped from
11.8% in 1992 to an estimated 9.7% in 2002.

When Germany agreed to swap its cherished D-mark
for the euro, it hoped that the move would do its
financial markets a power of good. It didn't. Indeed,
the country's banking system is now in crisis. In the
past few months, Deutsche Bank and Dresdner Bank
have announced lay-offs, of 14,500 and 11,000
people respectively. HypoVereinsbank, Germany's
second-biggest bank, has watched its profits dwindle
and expects to make loan-loss provisions of euro3.3
billion for this year. Rumours of a liquidity problem
have swirled around Commerzbank.

A merger between Deutsche and Dresdner failed
miserably two years ago, and the marriage of
Dresdner to Allianz, a Munich-based insurer, has been
a flop. Plans two years ago for Deutsche Börse, which
runs Frankfurt's stockmarket, to take over the London
Stock Exchange ended in a mess, and Frankfurt's
Neuer Markt for high-tech shares is to close soon
after less than six years in business. Talk of Frankfurt
taking over from the City of London as the hub of
European finance has evaporated. Investment
banking, in particular, has floundered as its big banks
have failed to consolidate or expand."We completely
missed the boat," says a leading Frankfurt
investment banker.

The Germans have been dismayed suddenly to find
their firms vulnerable to hostile foreign raiders. The
takeover two years ago of Mannesmann, an
engineering-cum-mobile-phone giant, by a British
firm, Vodafone AirTouch (as it was then called), was
a heavy psychological blow to German corporate
pride. Mr Schröder at first tried to resist the takeover
but eventually accepted the inevitable."Goodbye,
Germany AG," said Rolf Breuer, then head of
Deutsche Bank.


Bestriding the world or doing the splits?

Two years ago, a German business journalist, Werner
Meyer-Larsen, wrote a book called"Germany Inc: The
New German Juggernaut and its Challenge to World
Business". A new era, he wrote, had started in 1998
when Daimler-Benz bought America's Chrysler, and he
cited a number of other examples of German firms
"thinking big" and"going west".

Deutsche Bank bought New York's Bankers Trust.
Bertelsmann, a German publisher, bought Random
House, the biggest American book-producer.
Holtzbrinck, the owner of some weighty newspapers,
bought three leading American publishers. Hoechst, a
Frankfurt chemicals company, teamed up with a big
American rival, Marion Merrill Dow, before merging
with its biggest French one, Rhône-Poulenc, to
become Aventis. Munich-based Allianz, Europe's
biggest insurance company, had already bought
America's Fireman's Fund. And Europe's Airbus, in
which DaimlerChrysler's subsidiary, DASA, is a
partner, had become Boeing's biggest competitor.

But Mr Meyer-Larsen
may have got a little
carried away. For
sure, the
DaimlerChrysler deal
marked a striking
international advance
for German business.
Daimler-Benz's boss,
Jürgen Schrempp, the
nearest thing to a
business hero in
Germany, seemed to
be working wonders.
But the business climate has got tougher, and a few
years on several of those other link-ups look less
triumphant.

In any event, many of Germany's firms remain small
by international standards. Of the world's biggest 500
companies in market capitalisation, 238 are
American, 50 Japanese, 36 British, 29 French and only
21 German.

One reason why Germany's biggest firms, such as
VW, stand up to world competition is that they
invariably have special deals to keep their workforces
flexible. For example, the number of hours worked at
Wolfsburg, VW's biggest plant, which employs over
50,000 workers, varies hugely according to the state
of the market. At VW and elsewhere, millions of
workers, in return for a shorter average working week,
have been moving to new systems of"task
fulfilment" rather than having to work a certain
number of hours.


Mittelstand mutterings

The country's Mittelstand of small and medium-sized
firms enjoys less flexibility. Many of these firms
would love wage bargaining to be done at company
level, not-as is usual-in nationwide bargaining with
one of the giant trade unions. But most of the
leeway, they feel, is on the other side. For instance,
it is easy for workers to report sick, and they often
do. The director of one chamber of commerce notes
wrily that illness strikes selectively: 70% of the time,
he says, on a Monday or a Friday. When workers are
sick, they get full pay for six weeks. Mittelstand
managers suggest that sick pay should start at 80%
of the full wage, and drop with a prolonged absence.

Another source of irritation is the right of any
employee to move from full- to part-time
employment, whether it suits the employer or not.
This discourages firms from hiring young women who
might suddenly demand time off to look after a baby.
Such provisions hit smaller companies much harder
than big ones.

Yet another Mittelstand gripe is that Germany's high
income-tax rates hurt the Mittelstand more than
bigger firms because, being almost all family- or
trust-owned, they tend to distribute profits in the
form of higher pay. Mr Schröder's cut in corporation
tax was more generous than that in income tax-yet
another reason why many Mittelstanders complain
that the chancellor is friendly to big business but
instinctively hostile to smaller capitalists like
themselves.

Another big Mittelstand headache is raising credit.
The big banks, they say, are unhelpful. The banks
deny this, but the sort of Mittelstand companies they
deal with tend to be at the top end of the scale. A
score of companies that arguably qualify for the
Mittelstand category (because they are unlisted, and
owned by families or foundations) have a turnover
that exceeds euro1 billion. These substantial
Mittelstand companies include such famous names as
Miele (white goods), Behr (air conditioners), Stihl
(chainsaws) and Trumpf (laser-cutters), which each
have a turnover of between euro1 billion and euro2
billion and employ between 5,000 and 15,000 people.
It is further down the ladder that Germany's banking
system is proving inadequate to satisfy the
Mittelstand's thirst for credit.

Germans who prefer to be self-employed so that they
can avoid paying salaried workers' full social-security
contributions also complain that the dice are loaded
against them. For example, lorry drivers who work on
contract for a single company have been told that
under new rules they count as part of the firm for
which they deliver, adding 41% to the cost of
employing them. As a result, a lot of freelance Polish
truckers are now distributing goods at a cheaper rate,
taking jobs from their German counterparts. In a
similar vein, the director of Hanover's chamber of
industry and commerce, Wilfried Prewo, points out
how much harder it is to become a taxi-driver in
Germany than, say, in the United States."Our logic is
that you must always, if possible, be an employee,"
he sighs.

Berthold Leibinger, the doyen of Trumpf, a classic
Mittelstand firm based in Stuttgart, is another critic
of restrictions that hamper entrepreneurship."The
Social Democrats don't understand the role and
importance of the Mittelstand," he says."They're not
pragmatic." They're particularly hostile, he says, to
people who inherited their firms."We've become a
safety-crazy nation," he says."We need to be more
risk-minded. It's unbelievable that in two generations
we've moved from a country that wanted to cover the
world [in business] to one that is afraid of itself."

According to an old joke among Mittelstanders, Bill
Gates could not have made his fortune in Germany
because it is illegal to turn a garage without a
window into an office. Ah well, the jest goes on, Mr
Gates would at least have ended up as a senior
manager in a big corporation. But no: large German
companies rarely give good jobs to university
drop-outs.


Old-fashioned virtues

With so much to complain about, how do so many
German firms still manage to do so well? The answer
lies in good old-fashioned hard work, efficiency,
attention to detail and precision, pride and high
standards, particularly in engineering. In that
respect, another part of the corporate tradition of
German business, the apprentice system, still works
well: newcomers join firms at token pay, usually for
three-and-a-half years, and spend a day or more a
week undergoing formal training elsewhere at the
expense of the state-and then, if the firm likes
them, join as full-fledged and often very loyal staff
members.

Many leading businessmen-including Josef
Ackermann, the (Swiss) new Deutsche Bank boss,
Paul Achleitner, Allianz's (Austrian) chief financial
officer, and Gerhard Cromme, head of ThyssenKrupp's
supervisory board-are known to be frustrated by the
German economy's over-regulation. Their calls for a
less restrictive regime may gradually be heard. Many
of the new wave of Germany's top businessmen have
had experience in the United States, and feel that
degrees in business management (such as those now
offered by the Stuttgart Institute of Management and
Technology, and by the European School of
Management and Technology founded in Berlin in
October) should be much more widely available in
Germany.

"For the past ten years we haven't been moving,"
says Hans-Olaf Henkel, a former head of IBM in
Germany and for a time a notably outspoken head of
the Federation of German Industry (BDI). Like other
go-ahead businessmen, he recites a litany of
measures that would help to free the economy but
concludes gloomily:"The political will just isn't
there."
Quelle: Economist vom 6.12.02 (nur Abo)

-->Loosen up or lose out
Dec 5th 2002
From The Economist print edition


Germany has far too many rules and regulations

MOST analysts readily agree on what is wrong with
the German economy. First and foremost, the labour
market is far too sticky. Second, taxes and
social-security contributions are too high and profits
too low. Third, and not unconnected, social-security
payments, pensions and health-care arrangements
are too generous. And fourth, there is far too much
red tape. Frustrated businessmen often say that in
English-speaking countries everything is allowed
unless specifically forbidden; in Germany, it is the
other way round.

There had been hopes
that Mr Schröder would
continue with the
liberalisation of
Germany's restrictive
shopping hours
embarked on in 1996,
but opposition from
trade unions, as well
as churches, proved
too strong. Since the
reform six years ago
shops have been able
to stay open until 8pm
on weekdays and 4pm
on Saturdays, but still
not on Sundays, with
only a few exceptions.
If the rules were
relaxed further, the sector could offer many more job
opportunities (although small shopkeepers are
strongly opposed to more liberal opening hours).

The main hope for at least starting to reform
Germany's labour-cum-welfare system rests with the
proposals to improve the labour market made by
Peter Hartz, a top VW manager. When these were
published in August, Mr Schröder instantly promised
to implement them in full. If so, Mr Hartz claimed, his
measures would create 2m jobs within three years.
That may be too sanguine, but they would certainly
make a difference.


Take Hartz

Mr Hartz's aim was not to change the labour market
from the ground up-that, he said, was not his
brief-but to make job placement more efficient, as
well as to encourage temporary and short-term work,
which Germany's highly regulated system currently
discourages. The trade unions, which in the past have
been fierce defenders of the status quo, have broadly
endorsed the Hartz proposals"in principle".

The most controversial proposal is the creation of
"personnel service agencies", to be run mostly by
private temp agencies, which will take on people who
have previously been unemployed and hire them out
as temporary workers. Those who reject an offer of
employment from such an agency will risk having
their benefits docked.

Mr Hartz also tries to tackle the bottom end of the
labour market to counter widespread tax evasion and
create more legal jobs. One of his suggestions is for
"mini-jobs" with private households, where people
earning up to euro500 a month will pay no tax or
social-security contributions and the employers will
make a flat-rate contribution of only 10%, an
improvement on the old"DM630 jobs". Another is to
give self-employed people tax incentives to set up
companies (with a minimum of paperwork) known as
"Me plc", which allow them to earn up to euro25,000
taxed at a nominal rate of 10%, at the same time as
collecting a state allowance that will gradually taper
off over three years. Mr Hartz also wants to trim
benefits for single people who refuse to accept a job
simply because it would mean moving house.

In general, his proposals put more of an onus on the
job-seeker to explain why a job is unsuitable before
the state will provide him with welfare. All this will
require a big change in expectations. The Hartz
proposals would be an excellent first step towards
labour-market reform, but some powerful trade
unionists are beginning to grumble about the bolder
of them. Depressingly, in recent weeks Mr Schröder
has started to back away from his promise to adopt
the lot, and started to water some of them down.
Quelle: Economist vom 6.12.02 (nur Abo)

-->

-->>

-->@Economist-Leser:

Dorthin war gekommen von der SPD: Oscar Lafontaine

Wie paßt der, als extrem umverteilungsfreudiger Sozialist und antiamerikanischer Tobin-Steuer-Propageur zu den neo-liberalen britischen Wirtschaftsjournalisten des Economist?

Was ist überhaupt mit dem Economist los? Seit Monaten steigt dort die Anzahl der Artikel, die leicht bis mittelschwer tendenziös die politische Position der anglo-amerikanischen Falken unterstützen.

Gab es einen Wechsel bei den Herausgebern, der dieses Phänomen erklären kann?

Was sind Eure, @Economist-Leser, Eindrücke?

Gruß El Sheik

-->Is the sun rising in the
east at last?
Dec 5th 2002
From The Economist print edition


The mood in the"new states" is beginning to
brighten

THE figures still look dismal. More than a fifth of the
east German labour force is out of work, if you
include those on the government's short-term
job-creation schemes. Average wages are still only
77% of west German levels. Life in much of the"new
Länder", as the former communist east is known,
remains glum. The brightest and best of eastern
youngsters still tend to head west. The downturn in
the world economy has battered many new eastern
companies. More recently, even nature has been
hostile: the floods along the Elbe river in August
wrought damage now put at euro9.2 billion, most of
it in Saxony.
[img][/img]
Even so, prospects in
the east are, on
balance, distinctly
more hopeful than
they were. Some parts
of the region have
started to exude a
new sense of purpose,
confidence and
creativity.
Manufacturing output
has shot up. Clusters
of automotive,
electronic and
high-tech industry are
beginning to form,
especially in Thuringia
and Saxony, which
were hubs of German
industry before the
second world war.

Bernhard Vogel, the
Christian Democratic
premier of Thuringia,
says that it no longer
makes sense to talk
about eastern as
opposed to western
states. He points out that his capital, Erfurt, is
actually further west than Munich, its Bavarian
counterpart. Saxons and Thuringians are beginning to
promote themselves as"Middle Germans"-as distinct
from their poorer compatriots from Mecklenburg-West
Pomerania and Brandenburg, the Land that surrounds
Berlin.

Yet despite the vast dollops of cash and subsidies
that have flown east, progress is slow. Since the end
in 1995 of the construction-driven boom that followed
unification, the area's economy has grown at about
half the (already snail-like) pace of Germany's
western states. Last year the eastern economy
shrank, and this year it probably stood still.

Yet huge amounts of money continue to flow east. By
the end of this year the tally of net transfers since
unification will have reached about euro800 billion,
nearly twice this year's budget for the whole of
Germany. Last year the east received net transfers of
euro75 billion. And Mr Schröder has agreed to a final
"solidarity package", mainly to boost infrastructure
investment, that will be dispensed from 2005 until
2019, worth a total of euro156 billion. All this is
courtesy of German taxpayers, eastern as well as
western, though the westerners, being richer and
much more numerous, are stumping up the vast
majority of it.


Buds of hope

It would be an exaggeration to say that the east now
presents the"blooming landscapes" which Helmut
Kohl, the chancellor at the time of unification,
unwisely predicted in the first rush of euphoria; but
progress has been immense. By virtually every
material yardstick, life has improved. Rivers and air
are incomparably cleaner. More than 800,000 new
houses have been built since 1993, and the old
central squares of just about every eastern town
have been fastidiously restored. The new telephone
system is as good as any in Europe. New motorways
link up every corner of the region. Even the poorest
and most isolated little towns have shops stocked
with a range of foods that would have been
unimaginable in communist times. Car ownership has
nearly trebled since 1989, and the wheezing old
Trabant, old East Germany's family car for which
eager buyers had to wait an average of nine years, is
now a museum-piece.

Wages have nearly doubled in real terms since
unification, GDP per head is up by 62% and pensions
have soared-but there has been little or no growth
in any of these since 1997. Labour productivity, by
some calculations, has risen from 57% of western
Germany's figure to 78% today, and in some
manufacturing sectors it is as high or higher. Since
1990, more than three-quarters of industrial plant
has been replaced. Even the retired and jobless,
distressing as their plight remains, are financially
better off than in communist times.

For sure, many Ossis (easterners), especially older
ones, have yet to recover from the trauma of
unification; some never will. After all, in its
immediate aftermath, 7.5m of the east's 10m workers
lost their jobs as whole industries were shut down.
The number of industrial workers has plummeted from
7m to 700,000. The size of the labour force has
shrunk by a third. And the 16.4m people who were
living in the east in 1989 have come down by 1.8m,
many of whom are reckoned to have moved over to
the western side.

All this still haunts many easterners. They do not
enjoy being told that 8,000 people now produce the
same amount of steel in the east as 86,000 did a
decade ago, or that the 40,000 Saxons still working
on the land now grow more farm produce than
200,000 did in 1990. Nearly all public-sector workers
in the east, doing exactly the same work as their
western compatriots, still get, on average, only 90%
of the western rate-and have to work 90 minutes
longer per week for it.

Even in firms such as VW, where thousands of Ossis
would be delighted to get a job, rates of pay and
conditions in east German plants differ sharply from
those in the west. At VW's biggest German plant, in
Wolfsburg, not far from the western city of Hanover,
the average working week is now 31.5 hours. Many of
the workers have a four-day week. In Dresden, in
Saxony, the average is 38 hours, and a six-day week
is quite common. Yet pay rates in the east are
considerably lower. Five-sixths of eastern industrial
firms, covering one-third of industrial workers there,
have opted out of collective wage-bargaining. The
Saxon minister for the economy, Martin Gillo, says
that, because average productivity in the east is still
well below western levels, even with its lower labour
costs the east is still not fully competitive.


Saxon angles

It is bad luck on the northern half of the old German
Democratic Republic that the best economic
prospects are concentrated further south, on a
220km-long corridor running more or less along the
A4 motorway from Erfurt to Leipzig and on via
Zwickau and Chemnitz through to Dresden. This is
where, under the so-called Leuchtturmpolitik
(lighthouse policy), business and government
promote investment in beacons of industry and
research that might bolster the local Mittelstand.

It seems to be working, thanks partly to large federal
subsidies for investment. The Saxons boast that
theirs is the only state in Germany where three car
makers have chosen to invest in new plants: BMW
and Porsche near Leipzig, VW in Mosel, near Zwickau,
and in Dresden. All three firms say they are happy
with the results. All insist that the quality of their
workers is as good as in their western plants.

In Dresden, it is hoped that a high-tech cluster will
form around two firms that specialise in
semiconductors: Infineon, a spin-off from Siemens,
and AMD, an American outfit headquartered in
California's Silicon Valley. The pair have recently set
up a high-tech joint venture with another American
firm, Du Pont. Mr Gillo used to run AMD in Dresden
until he became Saxony's economics minister earlier
this year. He was born in Leipzig but has spent a
good chunk of his working life in Silicon Valley, and
he is bubbling with eagerness to see Dresden take
off as a high-tech centre. Some 500 small software
companies, he says, have sprung up in the area in
the past few years.

Dresden is a marvellous mixture of old and new. The
old city centre is an architectural jewel. According to
its liberal mayor, the city is already Germany's sixth
most popular tourist destination. In 2005 the
exquisite Frauenkirche, flattened by Allied bombers in
February 1945 in a raid that killed 25,000, will reopen
after a meticulous resurrection, virtually stone by
stone: a fitting symbol of Dresden's rebirth after six
decades of totalitarian blight.


Serene again, the Elbe at Dresden


A notable change over the past few years has been
the growth of a fierce new sense of local pride. Kurt
Biedenkopf, the Christian Democrat who was Saxony's
premier for the first decade after unification, says
regaining that pride is the Saxon people's greatest
achievement. But elsewhere in the east, too, the
sense of having been taken over and done down by
the west is fading.

After unification, almost the entire old establishment
of the German Democratic Republic was swept away.
Nearly all managers in industry and most university
professors were chucked out, as were any
public-sector workers with links to the Stasi, East
Germany's secret police. Easterners, it was felt, were
on the scrapheap.


Ossis rule OK

No longer. Five years after Mr Biedenkopf, once the
Christian Democrats' general secretary, took over the
running of Saxony (a post to which he was twice
handsomely re-elected), his entire government was
still made up of westerners, bar one Ossi. Now the
only Wessis in the Saxon government are his
successor as premier, Georg Milbradt, and his
economics minister, Mr Gillo-who left the east as a
child.

Eastern politics are beginning to reflect that new
confidence. In the early 1990s Christian Democrats
had swept the board in the east, thanks largely to Mr
Kohl's status as Germany's great unifier. They still
run Saxony and Thuringia and now also, in coalition,
Saxony-Anhalt. However, within a few years many
easterners were voting for the comforting certainties
promised by the Democratic Socialists, a repackaged
version of the old communists. Strikingly, in
September's general election the ex-communist vote
dived, because easterners now feel less need for a
home-based party to bolster their identity.

In turn, Wessis, especially younger ones, are finding
it easier to get along with Ossis. The cultural and
social gap that was so apparent ten years ago is
narrowing. The most striking sign of this is the surge
of young Wessis at eastern universities, where more
than a quarter of students now hail from the west. To
be sure, there are practical reasons: the cost of living
is lower, eastern universities are easier to get into,
the staff-to-student ratio is more favourable, and
academic standards remain fairly high. But social
reasons play a part too."My son used to think Ossis
were really weird," says a western editor whose son
has gone to university in Saxony."But now he says
they're more interesting." Not that social divisions
have suddenly gone. A writer in Hamburg says most
middle-class Wessi parents would still sigh if their
son introduced his bride-to-be as"Nina from
[eastern] Magdeburg".

The other remarkable thing about the east is the way
nearly all the region's businessmen and politicians
complain about the burden of regulation, inflexible
labour laws, high wages and social costs-just like
their colleagues in the west."The new states just
aren't strong enough to bear the financial and
regulatory burdens of the west," says Mr Biedenkopf,
who can take much credit for luring western and
especially high-tech business to Saxony.

Eastern leaders argue for more exemptions from
onerous rules. But many Ossi workers, still
egalitarian by instinct, fear that looser rules for
business in the east might cause workers to be
exploited."We are all Germans now," is a common
cry. That was why it was agreed in principle that
wages and social benefits, although slightly lower in
the east to begin with, should gradually converge. Mr
Schröder has recently confirmed that within a few
years public-sector wages must catch up. Alas, the
sooner they do, the worse for Ossi job-seekers.

Anhang für @Wal:
Sources
Dec 5th 2002
From The Economist print edition


The author would like to thank many people across
Germany for their advice and kindness in taking the
trouble to discuss their country so frankly. None of
them bears responsibility for any mistakes or
misjudgments in this survey.

Among the many people, organisations and
companies that helped the author are:

Dr Andreas Busch of the Centre for European Politics,
Economics and Society, University of Oxford;
Ambassador Leopold Bill von Bredow, Dr Martin
Koopmann and Dr Angelika Volle at the German
Council on Foreign Relations, Berlin; Professor Lord
Dahrendorf; The Konrad Adenauer Stiftung; Katrin
Bether and Dr Katharina Schöps of the RKW Sachsen
management consultancy; Gabor Steingart and
Joachim Preuss at Der Spiegel; Peter Senft at IG
Metall in Berlin; Hanns-Eberhard Schleyer of the
Zentralverband des Deutschen Handwerks in Berlin
and his press officer, Alexander Legowski; Manfred
Güllner of the Forsa polling agency; Ashley Carmody
at the Allensbach Institute; Prof Dr Klaus
Zimmermann of the Deutsche Institut für
Wirtschaftsforschung; Lutz Raetig of Morgan Stanley;
The Bundesverband der Deutschen Industrie; The
Dachorganisation der Gewerkschaften in Deutschland;
Claus Strunz, editor-in-chief, Bild am Sonntag;
Professor Barbara John of the Beauftrage für
Migration und Integration des Senats von Berlin; Dr
Günter Rexrodt of the Federal Democratic Party;
Christoph Keese, Wolfgang Münchau and Thomas
Hanke of FT Deutschland; Cem Ã-zdemir of the Green
Party; Dr Alfred Tacke, state secretary, Ministry of
Economics; Daniel John Nicolai of the English
Theatre, Frankfurt; Stefan Schulte of VW in Dresden
and Dr Christoph Bertram of the Stiftung
Wissenschaft und Politik in Berlin; Dr Josef Joffe,
editor of Die Zeit; Walter Allwicher of the Deutsche
Börse in Frankfurt; Dr Ralph Solveen of Commerzbank
in Frankfurt; Dr Hans Tümmers and Dr Keith Goffin of
the Stuttgart Institute of Management and
Technology; Andreas Richter of Stuttgart's chamber of
commerce and industry; Professor Dr Lothar Späth,
chairman of Jenoptik; Dr Wilfried Prewo of the
chamber of commerce and industry in Hanover; and
Prince and Princess Michael and Philippa Salm-Salm of
Wallhausen.
Quelle: Economist vom 6.12.02 (nur Abo)

-->Hallo silvereagle,
früher war der Silvereagle ein Vogel, der sich - auch im Marx-Forum - als unabhängiger Kopf jenseits aller ideologischer Fronten präsentierte.
In letzter Zeit, so scheint mir, äußert sich der Silberadler zu meinen Postings nur mit mehr oder minder deutlicher persönlicher Anmache.
Habe ich dich je persönlich angemacht oder herabgesetzt?
Natürlich weiß der Silveradler genau, wo die Grenzen des Anstands sind und er ist nie darüber hinaus gegangen.

Aber auch ein kleiner Stein, den ein Silveradler wirft, kann eine unsachliche Lawine von persönlichen Angriffen auslösen. Beispiele dafür gab es in diesem Forum in der Vergangenheit genug.

Gruß Wal

-->Hallo Wal,

ich denke, dass Du wohl einsehen wirst, dass jemand, der sich mit solch unorthodoxen Positionen gerne aus dem Fenster lehnt wie Du, sich auch mal eine etwas sarkastische Form der Kritik gefallen lassen muss. Das geht auch mir nicht anders. Und der hiesige Stein des Anstosses - sorry, aber das lag nun wirklich auf der Hand. ;-) Oder willst Du das näher besprechen?

> früher war der Silvereagle ein Vogel, der sich - auch im Marx-Forum - als unabhängiger Kopf jenseits aller ideologischer Fronten präsentierte.

Hat sich daran was geändert? Dass ich nicht mehr in Deinem Forum schreibe, ist wohl auch kaum das Problem.

> In letzter Zeit, so scheint mir, äußert sich der Silberadler zu meinen Postings nur mit mehr oder minder deutlicher persönlicher Anmache.

Wenn Du Ironie und (gelegentlichen) Sarkasmus als persönliche Anmache empfindest...

> Habe ich dich je persönlich angemacht oder herabgesetzt?

Nein.

> Natürlich weiß der Silveradler genau, wo die Grenzen des Anstands sind und er ist nie darüber hinaus gegangen.

Richtig, und ich betone nochmals - schon aus eigener Erfahrung - dass man mit"extremen" Positionen auch mal was einstecken können muss.

> Aber auch ein kleiner Stein, den ein Silveradler wirft, kann eine unsachliche Lawine von persönlichen Angriffen auslösen. Beispiele dafür gab es in diesem Forum in der Vergangenheit genug.

Ich gebe zu, meine Statements sind offen und deutlich. Dementsprechend sind dann auch gelegentlich die Antworten darauf. Wenn ich deshalb innerlich zu kochen beginne, ist dies aber in erster Linie mein Problem. Was kann der Erzeuger des Funkens dafür, dass im Adressaten ein Pulverfass schlummert? ;-)

Außerdem sei Dein Ego daran erinnert, dass Dir der Silberadler ausnahmslos immer dann zustimmte, wenn er dies für geboten erachtete. Und daran wird sich auch in Zukunft nichts ändern.

Also: Take it easy, man. ;-)

Gruß, silvereagle