What Ails Germany?
What reforms does Germany need to accomplish? We compiled the most telling insights from a leading chief executive.
September 23, 2003
Mired in a prolonged economic slump, Germany is seeking ways to energize its struggling economy — and to galvanize its place as the leader of Europe. In this Read My Lips, Josef Ackermann, the Swiss-born chief executive of Deutsche Bank, Germany's largest bank, advocates serious reforms for the country's economic system.
What really accounts for Germany's low growth rate?
"It seems Germany has a mental block — or is trapped in its existing structures."
Can you give an example of this?
"Bank lending is regarded across all party boundaries as a kind of basic right — rather than a commercial product."
How much of this is due to Germany's historical experiences in the 20th century?
"German history in the 20th century seems to have instilled people and institutions with a strong preference for stability. The turmoils of the 20th century have created an instinctive aversion to sweeping social and economic change. Other nations also have difficulty changing,
Does that justify the near standstill in Germany?
But be that as it may, Germany seems to be more resistant to reform than many countries around us."
How has this affected the view of Germany in the world?
"We are no longer seen as a political and economic locomotive, but as the third-generation Buddenbrooks — as the next Japan.”
What does Germany need to achieve to alter this perception?
"A state needs an expanding economy if it wants to maintain a social agenda. The goal therefore must be to give value creation priority over redistribution."
What is it going to take for real reforms to be pushed through?
"You often hear reformers conclude with resignation that this country and its people have not yet suffered sufficiently to trigger a will to reform. This is not correct: The situation is already critical today for millions of jobless."
How dynamic is German business?
"German corporatism brings change down to the lowest common denominator."
Why is it amazing that German corporations play along?
"Due to falling market capitalizations rob German companies of their chance to play an active role in shaping global economic structures. Their role is reduced, at best, to that of junior partner. This means Germany is missing out on the creation of new entrepreneurial structures in the world economy."
What does that all mean for Deutsche Bank?
"We must look for ways to reduce our tax burden. If that means moving more businesses to countries where taxes are lower, we are obliged to examine that."
Finally, why is a strong German economy a vital concern?
"Germany must get fit if Europe is to remain a strong partner to the United States — and if European companies want to look U.S. companies squarely and confidently in the eye."
Would you want a leading role for Germany?
"Europe needs a dynamic Germany. Who, if not Germany — in concert with France — should play the leadership role?"
(Excerpted from a speech to the German Stock Exchange )