ANALYSIS / OPINION:
Angela Merkel has accomplished a lot but leaves a disappointing legacy.
With partners in France and America, she kept Europe together during the global financial crisis, the collapse of sovereign debt in southern Europe and Ireland, the Russian invasion of Ukraine and the crisis. refugees in the Middle East.
Whether by circumstances or personal dispositions, she has most often chosen gradual and non-systemic changes, or measures that resonate with German culture or its scientific roots. These do not always serve the long-term interests of Germany or Europe in the best possible way.
She is a great champion of the Paris Agreement on the climate but leaves Germany badly placed to go green. After the Fukushima nuclear accident in 2011, it impulsively decided to go nuclear. This reflected the deep German ambivalence about dividing atoms for electricity. Yet Germany has not built an adequate grid to transfer or store enough wind and solar power from the north for the industrial south. The country still uses too much Russian coal and natural gas.
Germany spends far less than 2% of its GDP on defense, and its military is ill-prepared to make NATO a credible deterrent for Russian adventurism.
Nord Stream 2 reinforces Germany’s dependence on Russian fossil fuels and improves President Putin’s resources to stir up trouble. Merkel’s decision to complete the pipeline despite US and European opposition leaves a deep scar on the Western alliance and Germany vulnerable to Russian extortion.
Led by Germany, the wealthiest states in the EU imposed terrible austerity on Portugal, Spain, Greece and others during the sovereign debt crises that followed the Great Financial Crisis .
It reflected his physicist’s mechanistic view of the universe. These countries are spending too much, are inefficient, and have borrowed to cover themselves, so they should embrace German methods, starting with strength jacket budgets.
In doing so, she ignored the fundamental inconsistencies of monetary union and how Germany exploits them. In 2003, Chancellor Schroder launched aggressive reforms of the labor market and social programs. After Merkel took office in 2005, these increased productivity and reduced labor costs, and if Germany had kept the German mark, that would have appreciated.
A stronger German economy has left the euro undervalued for its exporters and overvalued for industries in Portugal, Italy, Greece and Spain. Germany’s current account surplus has skyrocketed.
Instead of spending the windfall on public investment that could have spurred modernization, more imports from the south, and productivity-enhancing growth across the continent, Merkel built up trade and budget surpluses. She left the struggling PIGS to finance their public sectors and modernize.
The restructuring that Germany imposed on the PIGS when they could no longer borrow has not corrected these systemic dysfunctions. Now the pandemic has once again put these countries in terrible debt and potentially back in the soup once the eurozone’s limits on national budget deficits are restored.
The euro area still lacks unified fiscal and labor market policies, deposit insurance or banking regulations similar to that of the United States. This makes the EU a free trade paradise for Germany and a currency cap for southern Europe.
Germany does not have a Tesla. Its major automakers are catching up on electric vehicles and likely will. But many midsize companies that make pistons, exhaust pipes, and other components for internal combustion engines lack expertise in batteries, software, and microelectronics and will downsize, shut down and remove hundreds of thousands of jobs with even greater ripple effects.
Germany lags behind in access to high-speed internet, and its public sector and businesses are lagging behind in digitizing their operations. Many health care agencies have reported new COVID-19 infections by fax, beating the postal mail, but not enough.
Germany has been more successful than its peers in exporting to China. However, as the technological sophistication of the Middle Empire grows, especially in software, artificial intelligence and chips, it will need less European technology and the German export-driven growth machine will slow down. .
Yet China’s role in the country’s current prosperity makes Germany and the rest of Europe reluctant to join the United States, India, Japan, Australia and the United Kingdom in mobilize to meet China’s military challenge. Without more European aid in the Pacific, America must devote less defense resources to Europe.
Germany and the rest of the continent fail to recognize that while Russia poses a regional challenge, Americans see China as a global threat to democracy. We will redirect our military to the Pacific with willing partners, and as the submarine agreement with Australia shows, economic and technological cooperation will follow, leaving Europe marginalized.
Under the new Chancellor, Germany will have to modernize its economy, pursue a less selfish role in the EU and ensure greater security.
• Peter Morici is an economist and professor emeritus of commerce at the University of Maryland and a national columnist.