Karsten Wildberger’s Post

In a full-page article in Frankfurter Allgemeine Zeitung, ZF.2050 fellow Nils Hesse and I call for the return to a principle-guided Social Market Economy in Germany. We describe today's policymaking style in Germany as excessively interventionist and detail-driven. This leads to a centralized, top-down policies that tend to have a short-term focus, such as the recent attempt to ban fossil fuel heating systems. Public policy is obsessed with setting detailed targets, while the public administration is overwhelmed. This short-term centralized style of policymaking is neither efficient nor effective. We call for a decentralized, long-term policymaking style that thrives on setting policy principles that are implemented in a decentralized manner. This would mean establishing a principle like internalizing externalities, such as carbon pricing. Subsidiarity then means that companies, regions and people should be free to choose how to best to deal with these principles, e.g. higher fuel prices. This leads to a decentralized process of finding the most efficient solutions, rather than the prescribing the one and only way along a narrow corridor lined with bans and subsidies. The future is in our hands. Who is joining our call for principle-driven decentralized policymaking? #zukunftgestalten Zukunft-Fabrik.2050

Unfortunately, Germany is having the wrong discussions: The CDU and the FDP want to mobilize growth for the economy with more work and are therefore clashing with trade unions, the SPD and, above all, the zeitgeist: a fatal mistake. 1. the number of hours worked in 2023 was higher than ever before (61,660.6 million hours), 2. the German economy is far too strongly geared towards industrial production, which was created in times of low energy and labor costs and now needs to be adjusted to the current framework conditions, 3. the potential of #digitalization and #automation is far from being mobilized. If Germany's international performance is to be revived, it will hardly be in the industrial mass market with energy and labor intensity, but certainly in the technological market and in the area of digital business models, where Germany is lagging massively behind. This requires less the promotion of work and more the - unfortunately also outdated - infrastructure as well as the promotion of future investments by companies in adjusted production technologies, AI, digitalization, innovation and automation. These measures will massively increase labor efficiencies so that Germany will tend to need less labor. Other measures include cutting bureaucracy, simplifying and reducing taxes, improving education and mobilizing private capital to invest in the necessary change, including PPP projects, reducing subsidies for obsolete products and services. Let's discuss Christian Lindner Robert Habeck Monika Schnitzer Ulrike Malmendier Michael Hüther Thomas Sattelberger Sebastian Matthes Thomas Sigmund Verena Pausder Joerg Bienert Dr. Holger Schmidt

"Over the past three decades, German industry has turned Central Europe into its factory floor. Porsche makes its top-selling Cayenne SUV in Slovakia, Audi has been churning out engines in Hungary since the early 1990s, and premium appliance-maker Miele makes washing machines in Poland. Thousands of small- and medium-sized German firms, the so-called Mittelstand that forms the backbone of the country’s economy, are active in the region, producing mainly for the European market. While they won’t disappear overnight, a sustained decline in Germany would inevitably pull the rest of the region down with it. ... While EU officials have blamed the region’s looming deindustrialization on what they see as unfair policies in the U.S. and China that place European companies at a disadvantage, the problems in Germany run much deeper and are largely homemade. And they don’t have easy fixes. Put simply, the formula that made Germany Europe’s industrial powerhouse — a highly skilled workforce and innovative companies powered by cheap energy — has come undone. ... Germany is speeding toward a demographic cliff that will leave its companies without the engineers, scientists and other highly skilled workers they need to stay competitive in the global market. ... The graying population isn’t the only issue. Young Germans yearn for safe jobs, not the rough and tumble of entrepreneurship and invention that made the country one of the world’s leading economies. “Many young people would rather work for the state than start a business,” said DIW’s Fratzscher. Efforts to compensate for the growing worker shortfall through migration have so far failed. (Though Germany continues to take in hundreds of thousands of asylum seekers every year, most lack the skills companies need.) .... Compared with the U.K., Canada or the U.S., Germany is often a tough sell, due to high taxes, the difficulty of learning the language and a culture that is often less than welcoming to foreigners. ... Compounding those demographic challenges are skyrocketing energy costs in the wake of Russia’s war on Ukraine, and Germany’s own efforts to combat climate change. By halting deliveries of natural gas to Germany, the Kremlin effectively removed the linchpin of the country’s business model, which relied on easy access to cheap energy. ... That has left companies like BASF, whose main German operation alone consumed as much natural gas in 2021 as all of Switzerland, with no choice but to look for alternatives. The country’s Green transformation, the so-called Energiewende, has only made matters worse. Just as it was losing access to Russian gas, the country switched off all nuclear power. And even after nearly a quarter century of subsidizing the expansion of renewable energy, Germany still doesn’t have nearly enough wind turbines and solar panels to sate demand — leaving Germans paying three times the international average for electricity."

The Economist publishes an aptly analysis of the current state of Germany in its weekly edition and proposes remedies for a better future: Time for us as a society to embrace change instead of fear and to shape the future together. #labourshortage #bureaucracy #digitalization #innovation #germany DEU: Treffende Analyse inkl. Lösungsvorschlägen für ein auch künftig wettbewerbsfähiges Deutschland in der aktuellen Economist Ausgabe. Höchste Zeit für uns als Gesamtgesellschaft, die Zukunft gemeinsam zu gestalten und nicht aus Angst den nötigen Wandeln zu verpassen. #fachkräftemangel #bürokratie #digialisierung #deutschland

With the BDA | Confederation of German Employers' Associations discussing the future of the German economy at the #DAT23 today, the Handelsblatt asked several German companies about what they expect from the current German government. 🇩🇪 Our CEO and co-founder Leif-Nissen Lundb��k, PhD, has a clear vision of what is needed from the government to support more innovation in the German economy: 1. Reverse the prevarication of German academia: Researchers need more long-term perspectives, security, and much better working conditions. 🤳 2. Reduce unneeded bureaucracy so that start-ups have a real chance to compete with larger corporations: Keep what’s good, add what makes sense, and toss the rest. 📜 3. Support start-ups by using their services rather than always buying from the same large companies. 🏢 https://lnkd.in/e-6UpkWb What are your thoughts on this? What is your “wish list” for the government to further support innovation and startups in Germany? 🌎 #AI #ArtificialIntelligence #Startup Nadine Schimroszik, Anja Müller, Frank Specht, Kathrin Witsch Ruth Rothmaler, Beatrice Kahl, Daniel von Heyl, Dr. Clara Herdeanu, Holger Loclair, ORAFOL | Alicia Lindner, BÖRLIND | Markus Meyer, Enpal | Christina Diem-Puello, Deutsche Dienstrad 👨💻 👩💻

#ThoughtsofaCEO - A call for modernization! – Words by our CEO Carlo Lazzarini on the recently published book “Zukunft Mittelstand” (in English: “The Future of German Mittelstand”) to which he contributed. In a time of change, we must move forward boldly to strengthen our industrial location and put Germany back on the road to success. In recent years, we have experienced a decline in industrial production that has alarmed us. But instead of falling into resignation, we must take action. We cannot afford to fall behind. It is time to solve the issues and set the course for a successful future. Investment in #infrastructure: We need to modernize our infrastructure in order to remain competitive. From #digitalization to transport infrastructure - investment is the key to success. Tackling the shortage of skilled workers: The lack of qualified workers is threatening our competitiveness. It is time to actively counter this trend, be it through targeted training programs, flexible working models or an open attitude towards international skilled workers. Tidying up tax law: Our tax system must be simplified and modernized in order to reduce the burden on companies and promote innovation. It is time to abolish outdated regulations and create an environment that encourages entrepreneurship. The challenges are complex, but they are also #opportunities for us to evolve and grow. Businesses and politicians must work together to drive the necessary changes. We cannot afford to remain inactive. The world is changing, and we must keep pace with it. It is time to be courageous and actively shape the future. Together with many other entrepreneurs, I have set out my thoughts on this in the BVMW - Bundesverband mittelständische Wirtschaft e.V.'s recently published book "Zukunft Mittelstand". #PeoplePlanetProgress #shapingthefuture #skillsshortage #ZukunftMittelstand Bundeswirtschaftssenat #ChristophAhlhaus

Can Germany as a business location look to the future with confidence? I firmly believe so. Although, there’s no doubt about it: Germany’s #economy is currently facing some major challenges.  The leading German economic research institutes expect growth of only 0.1 percent for the current year. News outlets such as The Economist were already asking, “Is Germany once again the sick man of Europe?”  The latest issue of the German Capital Magazin took a different and much more optimistic approach, asking for an opinion on why #Germany will be able to tackle its current challenges and emerge even stronger. This optimistic view of things is a lot closer to my heart and mindset than the usual pessimism. Yes, I believe that we can overcome the economy’s current weakness, as long as we make a joint effort. Here are five reasons why I’m confident and optimistic about Germany’s economic future: 1. Our small and medium-sized enterprises, and family businesses in particular, are an important backbone of the German economy. They tackle challenges such as digitalization and climate change pragmatically and with long-term concepts.    2. We excel at building global networks for connecting people, transporting goods, and sharing the associated data. In terms of efficiency and quality in groupage logistics, Germany is a top logistics location.    3. The greatest strength of the German economy is its people. Our workforce is exceptionally well educated and trained. Our dual education system has become a benchmark for many countries, as has our dual work-study scheme. And we have a long tradition of applied research: at DACHSER, we partner with Fraunhofer IML in order to jointly develop innovations for logistics.     4. German companies have a great openness and ability to integrate new people. It makes me proud to see how well employees from over 120 nations work together at DACHSER in Germany.    5. The recent protests against political extremism show that we don’t take democratic institutions for granted – and that we will do what is necessary to defend them. Germany’s political stability, the trust in our institutions and processes is highly attractive for foreign investors. Nevertheless, what German companies need is an appropriate and balanced level of bureaucracy to stay competitive and maintain the high level of trust in political institutions. As valuable and well-intentioned as they are, there are regulations such as the #SupplyChainAct, the EU Taxonomy or the #ESG reporting obligation which will further increase the bureaucratic burden. Mastering this additional bureaucracy will be a tough challenge, especially for small and medium-sized companies.  All in all, however, growth can only come from optimism. So let’s focus on our strengths as a global business partner. I think we’d all benefit from putting any German angst aside, rolling up our sleeves, and getting to work. It’s a joint mission – for business, politics, and society as a whole. 

Sending out some confidence 💪 and positivity 👍 from our CEO, Burkhard Eling especially to the #chemicalindustry 👩🔬👨🔬 during these challenging times. I agree with him and would like to summarize once again why #Germany can overcome the current challenges: 1. Small and medium-sized companies with a strong entrepreneurial spirit 2. Strong global network of #people and #supplychains 3. #Workforce and #education system 4. #openness and #respect 5. strong #democratie Let us all be optimistic 😃, focus on our strength 💪 and encourage #collaboration 🤝 across all industries!

There is a shift in German politics 🙌 . For the second time, the chancellery holds a conference where economists and government officials interact. Wolfgang Schmidt stresses that for the first time in recent history, Germany has a three-party coalition government, which does not make governing easy (but at least we get a lot of discussions along the way). A couple of take-aways from the conference: On labour markets. We all know what should be done (retire later if desired, increase female participation) but the German federal & welfare set-up is so complex that incremental change is doomed. On industrial policy: Here it is much less known what is happening and what should be done. Does the state know better? Should Europe emulate the US IRA? Is the German Mittelstand actually quite good at managing change? On AI: Europe has missed the boat on developing that technology (e.g., much fewer supercomputers) but maybe that is ok, we only need to use it well (Europe is not a leader in chip production either). On de-risking the economy: More questions than answers... Which markets, what products, what can be bought elsewhere and what needs to be produced at home, is there a need to regulate (and possibly to retaliate)? Isabel Schnabel with a keynote on technological change. Europe led the US until 1995, lagging since then. Main cause: slow to adapt and manage IT technology, but also fragmented markets etc. As usual, with great evidence: https://lnkd.in/eBvEB-Ki

"Rules are rules", bureaucracy not only frustrates but kills our productivity. The costs of #bureaucracy are estimated to be 420 billion euros per year in Germany, around 50 billion euros per year in Austria. This corresponds to more than twelve percent of the country's annual value creation that is lost due to bureaucracy. "We have a #productivity problem that doesn't show up in good economic times, but now comes back like a boomerang. How #ArtificialIntelligence may reduce bureaucracy, more about this in this article. https://lnkd.in/diUvmN-N