The Puzzle of Germany

One of the puzzles of my private study has been the rise and rise of Germany.  Germany was the sick man of Europe with mounting War debts after the First World War. Part of its area known as Rhineland was annexed to France until the War Debts were fully paid. It signed an agreement to be of “good behavior” known as Versailles’ Treaty.  As economic conditions tightened after the War with massive hyperinflation and more than half of the population out of work, Germany found a hero in Hitler who started another World War. After the World Wars were the shining moments of US as it smiled on European powers who were stricken with debts and devastating losses. US was long in depression until the World War II provided them opportunity to spend and grow the economy.   As it became a creditor to Britain and rest of Europe, America consolidated its power with the final straw being the Britain-France Suez war with Egypt.

Let’s fast forward to our own days. Germany has taken deep pain of reforms profiting especially from the rise of capitalism in West Germany. It finally paid it World War debts in 2010 and now runs on a surplus like China. Every Euro country in distress looks unto Germany for help.  It is competing with China having built the strong Mittlestand- a coalition of family businesses that powers the country and represents a large pie in its surging export to the World.

To likes of America, it has been convoluted cycles of boom and bust. Rather than save in times of booms for the days when capitalism drives off the edge and slows the economy, it cuts taxes for rich and poor, expands entitlement spending and runs a consumerist society powered by debt.  It finally nailed it by running to Iraq; mainly using borrowed money to fund wars.  Greece is another country of immense lessons. It had an economy surviving on tourism but cooked books to join the Euro when underlying competitiveness does not qualify it.

It’s a lesson we should hold in a prism that life runs in circles. That today we could be  swimming  in cash does not make life a straight line; a bend may be looming ahead.  Let’s not be the America who sits on the fortress of world power and as holder of global reserve currency, spends at will with no sight of the future.  Let’s be careful of follow-follow that wrecked likes of Greece when they had no ability to compete in the Euro-Area. Germany, Europe largest economy is a glittering example. Even in the last global recession, it didn’t cut jobs. It merely cut working hours and it has found a way to evolve a mild variant of capitalism known as stakeholder capitalism. Germay is not crying that China is taking the jobs but matching them with superior products at competitive prices. After tearing down Berlin Wall, Germany rewrote its page of history by deferring gratification on a platform of sound leadership.


One thought on “The Puzzle of Germany

  1. Great piece…lovely insight. I have also been fascinated by Germany and how it stands strong even with the wind of depression sweeping all over Europe and the world as a whole. Learnt a couple of things i didn’t know. Nice one.!

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