What Germans Really Think. (A Closing View)

The people are ready for change and for the tough decisions needed to push the economy. Their leaders now have a chance to engage them in a serious dialogue about economic reform and revival. Germany, once the home of the Wirtschaftswunder (miracle economy), has had the slowest or second-slowest economy in the European Union for six years running--unemployment often tops 10 percent, while heavy government spending has pushed the budget deficit close to the limits for members of the eurozone. Despite the debilitating effects of unification more than a decade ago, the sluggish economy is often blamed on the Germans themselves: they are a people opposed to economic risk, so the thinking goes, too firmly attached to generous government social programs and protective labor laws. But an extensive on-line survey gives the lie to this stereotype, thus suggesting that policy makers have room to embark on bold reform measures that could unleash the hidden economic energy of the German people. The on-line Perspektive-Deutschland survey, (1) which was commissioned by McKinsey, T-Online (an Internet service provider), and the Stern publishing group, attracted responses from 170,000 Germans, making it Europe's largest in-depth an-line survey. Same of the results were expected--for instance, the large gap in the quality of life between the farmer East and West Germany--but the survey also uncovered same important new insights; it suggests that Germans may be mare ready than their politicians far economic reforms that could salve same of the country's problems. Indeed, in the same spirit that imbued the Wirtschafts-wunder years (the 1950s and early 1960s), the people seem keen to take the initiative and to work hard if they aren't hindered by the political system, its regulations, and its inflexibility. To begin with, Germans are mare willing than is commonly realized to exchange jab security far independence. About 9 percent are already self-employed, and fully 33 percent mare could either definitely see themselves as self-employed or imagine being so under certain circumstances (Exhibit 1). For these people, federal and state regulations were the greatest obstacles. One recent study ranked 85 countries by the degree of regulation they impose an new businesses, with the least regulated among them tapping the list. Germany ranked 40th, far behind leaders such as Canada, Australia, New Zealand, and Denmark. (2) If Germany's entrepreneurial spirit could be tapped, it would clearly be a strong jab creator in bath east and west. Yet a study carried out in 2000 showed that even in Germany's entrepreneurial centers--Dusseldorf, Munich, and Stuttgart-less than a quarter of the companies with annual sales of mare than $50 million had been founded from 1985 to 2000, as compared with about 73 percent in Silicon Vall ey and 58 percent in Austin, Texas. (3) The time could also be right far reforming the country's inflexible labor market regulations, a key barrier to greater productivity and growth. Germany's employment laws and traditions emphasize jab and income security and make it hard far employers to fire people or to match their pay to performance. Nevertheless, 45 percent of those responding to cur survey would welcome pay based an results; 61 percent would like to have mare influence aver the development of their careers and greater responsibility in their jabs. Furthermore, Germans seem willing to contemplate lower levels of government support than politicians generally acknowledge. The pay-as-you-go state pension system is starting to creak, for example, and 88 percent of the respondents are convinced that private plans will be needed to supplement the state program. In a country accustomed to free university education, only about a third of the respondents said that they would not under any circumstances pay part of the cost of improving the system. …

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