Review: Why the Germans Do it Better

It’s an unexpectedly interesting book.

Many pages are spent explaining how pervasive the effects of Nazi and the Wall eras are on current day Germany. There’s still somewhat of a, mostly mended, split between Ossis and Wessis and the right wing party Alternative für Deutschland stirs some troubling memories.

Still, what I liked the most are the aspects that – like the title says – make Germany better.

Always trying for consensus is one of those aspects. The German government usually rules in coalition. It tries to develop policy all parties can buy-in to. If something’s contentious, a special commission is established and asked to come back when recommendations are acceptable to all. This reminds me of the Swiss Political System, where all parties must also reach an agreement or risk having policy overturned in popular initiatives.

The fact that consensus is a key point in two of the most successful European democracies speaks ill of majority governments.

The economic landscape of Germany is also enviable. 80% of German GDP is derived from family businesses – the Mittelstand. They focus on a single product and corner the global market, “focusing relentlessly on acquiring and expanding their customer base, and making sure they stay ahead of the competition”.

These Mittelstand are based in places with less than fifty thousand inhabitants. Multinationals are spread around the country. This contrasts with most western countries where businesses are usually centralized in a few major cities. We speak a lot of desertification in Portugal. Germany’s a great role model here.

The relations between employees, employers and the government are also different. “Policymakers guide the market to produce maximum wealth, which is then redistributed.” Workers go on the board of the companies they serve. Having workers on the board “proved neutral to strongly positive on all the measures of corporate success.”

Germans are savers and consider credit an embarrassment. All savings go to low-risk pensions and life-insurance. “Value creation is not derived through high-risk investments.” This contrasts with the VC investment model common in the US and the UK everyone else tries to copy.

Another interesting point is that Germans bet on employee education and it’s OK if skills acquired are disconnected from the immediate requirements of the employee – “People who work in bakeries are invited to take advanced maths in the evening”. This is incredible but I don’t really get why it happens. It seems to be that the most productive path for both employee and employer would be for the employee to become more and more specialized. The employee’s value increases, demanding higher wages, and the employer gets a more proficient worker.

John Kampfner sums up all of the above points in a dense sentence: “Manufacturing and engineering; exporting; solid public finances; a high skills base; social solidarity. The German way.”

The authors ends with a prediction: that reducing carbon emissions would be the main theme in German politics in the following years after publication (2020). That, indeed, seemed to be the case but then Russia invaded Ukraine.