What Kind of Economy Will Germany’s New Leader Inherit?

Stephan Richter spoke to Marketplace’s David Brancaccio about the issues Germany’s new chancellor Olaf Scholz will face in office.

German Chancellor Angela Merkel’s term will come to an end this week. Social Democrat Olaf Scholz will take office once the country’s Congress affirms his government with a vote, likely Wednesday. The transition comes as the country faces myriad economic challenges, along with a lagging COVID vaccination rate and rising virus cases.

Stephan Richter, publisher and editor in chief of the Globalist, spoke to Marketplace’s David Brancaccio about the issues Scholz will face in office. The following is an edited transcript of their conversation.

David Brancaccio: When you read into the history of Merkel’s time in office you see a mixed record, according to many commentators. What kind of economy [does] her successor, Mr. Scholz, what does he face?

Stephan Richter: He faces an economy with many challenges. There’s tremendous stuff to be done on the energy issue, never mind on the mess that we have with coronavirus, the apparent complete lack of digitalization of the economy. [It’s] a Germany that, over the past decade, has really slipped in most of the performance indicators on competitiveness.

Brancaccio: You mention the energy issue — you’re talking about the conversion to renewable energy sources in the face of climate change.

Richter: Correct. Now, imagine a country that is a leading industrial producer around the world and that decides — basically at the same time as they go full stock and barrel into renewable energy — to abolish coal energy and nuclear energy. That is an experiment that nobody has tried in the, in world history before, and Germans may be hard put to do the proper change and transformation. And it’s going to be a very open race for Mr. Scholz as to whether he can get done what he had promised — namely, to become a good climate chancellor.

Brancaccio: Now, you said “complete lack” of progress in digitization. Surely Germany has internet connections, so what are you talking about?

Richter: 5G [cellular networks], the level of quality of video signals, the quality of non-digitalization at the administration level — I mean, small European countries, everybody pretty much beats us. And we’re really paying the price with the horrible administration during these COVID times for it. All the public health offices are completely undigitized. Notices are sent around by fax. And we can’t get the old people vaccinated because we don’t know how to reach them where they are because in Germany, the eternal excuse is “data privacy.” Privacy rights above everything, so we can’t do anything that’s effective, unlike Israel and any other country. Even the U.K. is much better organized on that front.

Brancaccio: On vaccination rates, Germany is doing OK. But it has a goal of vaccinating 75% of the population — I was looking at the latest statistics. The country is not there yet.

Richter: In fact, it’s not just Germany. All the German-speaking countries, so also Austria and Switzerland, and including the northern part of Italy, which is German-speaking, are the total laggards in Europe. These Germans, all of a sudden, are risk takers bar none because they don’t want to get vaccinated. And that’s the opposite of what we always thought and have talked about Germans being cautious and circumspect. It’s not the case anymore.

Brancaccio: And if you look at some of the other [European Union] countries, vaccination rates are higher in some of those countries, places like Spain, but also — I think you’ve noticed this — Italy.

Richter: Portugal, Spain and Italy are all doing better. Italy, in fact, is acting like the Germany of old. It’s very organized. They really check whether people have the permission to be out there. They fine people appropriately. Whereas Germany today is acting like the Italy of folklore, following up on nothing, total laissez faire and so on. So this is the wrong kind of European integration. The Italians have lived up to the German model, and the Germans have slid down to the Italy of old that apparently doesn’t exist anymore in these COVID times.

Brancaccio: In the United States, sometimes it’s hard to fully account for people not getting vaccinated in this country. But what accounts for it, from your point of view, in Germany?

Richter: Oppositional defiance, to a large degree. And the paradoxical thing is any American who’s ever moved to Germany knows, you basically have to register with the authorities on the, like, third day when you get here. And that speaks for a very well-organized administrative state. Alas, when it matters the most — vaccination, it’s just not there anymore.

Brancaccio: Stephan Richter, Publisher and Editor-in-Chief of The Globalist. He is also the Director of The Global Ideas Centre (GIC) in Berlin. Stephan, always good to talk to you.