Many in the world believe that Angela Merkel is one of the greatest leaders of the modern era. Unfortunately, this is not the case in her home country, Germany. We have recently gone through a national election in Germany which, according to many, is a final verdict on the 16 years of the Merkel government. The result?

Her CDU party suffered its biggest defeat ever. Although the coalition government being formed right now is not yet final, it will almost certainly push Merkel’s CDU into the opposition. The main reason for this massive defeat is the German people have woken up to a Germany in crisis. I have now been back in Germany for 10 years and have watched as Merkel took Germany down this path of destruction. I will try and cover just a few examples briefly.

Digitalization

Most experts agree that digitalization is now at the basis of almost everything we do. It impacts commerce, innovation, government, communication, finance, healthcare, pleasure, and a whole host of other things. I have watched two previous elections in Germany and each time Merkel had promised to invest heavily in digitalization and bring Germany to the forefront in this vital area. But nothing happened.

Germany now ranks 18th in the industrialized world in digital competitiveness and the trend in the past few years is downwards. It is beginning to impact many areas including business, infrastructure development, and even government. The over-concentration of digital access only in the cities has led to the concentration of businesses in the major urban areas and has left rural areas without any infrastructure. Companies in rural areas have been forced to move to the city taking the employee population with them, leaving the smaller towns without the necessary income to invest.

Another side-effect of this trend has meant rents and costs for housing have soared to the point where even the minimum wage isn’t enough to cover living costs. Merkel’s answer was to build more apartment buildings in the cities and treat the “symptom” and not the cause — digitalization. If she had carried through with her massive digital investment promises, some companies could have considered moving out of the cities and into less expensive rural areas, freeing up rental space in the city centers.

As a private citizen, one experiences these problems on a daily basis. If you take a train from Berlin to Munich (two major cities) it is not possible to conduct business during the whole journey. There are so many “dead spots” along the journey, you have to keep calling back or logging in again, and it becomes almost impossible to conduct business. I was recently on vacation in a very remote part of the Swedish West Coast (out on an island somewhere) and had full 4G coverage, something I don’t even have in some parts of Berlin!

Energy/Climate Change

Merkel decided she would be a frontrunner in the race against climate change. Germany gets most of its energy from coal-fired power stations, big polluters. She decided to change this source into renewable energy resources such as wind and solar. The plan to achieve this included paying huge subsidies to these new industries through higher taxes on consumers for the energy they currently use. This has now led to the highest cost of energy for consumers worldwide. However, the expansion of these renewable energy sources has stagnated due to the incredible bureaucracy Germany suffers from (see below). Permission to build and locate windmills and solar panels can take years.

After Fukushima, Merkel decided to exit from nuclear power, removing a major, more affordable energy source. The impact of this decision was to delay the closure of the coal-powered power stations, creating a big question about Merkel’s real intentions on climate change. This was part of the reason the CDU Party lost the election as the Green Party gained ground and will certainly be part of the new coalition. Most experts in Germany are now saying that a better decision would have been to keep nuclear power and close the coal power plants, the big polluters.

Infrastructure

In the ten years I have been here, Merkel and the CDU have always had a philosophy of “the black zero” when it came to the government’s finances. In other words, no more debt. So when it came to the government’s budget plans they were not prepared to overspend and always wanted to balance the books. This might have been a good policy when interest rates were high but in recent years, interest rates have dropped to zero or below. This chart clearly shows how the rest of the world has been investing while Germany has been paying down its debt. This is going to impact Germany’s competitiveness in the future.

This has resulted in Merkel not going into debt in order to invest in many vital things, including infrastructure. Examples include digitalization, the national electric grid, and transport systems such as rail. Digitalization I have already covered. The national electric grid is, and always will be, a huge problem when it comes to electrifying Germany. To make this simple, you might have a windmill in Northern Germany producing electricity and a potential consumer in Southern Germany but there is no way to connect the two! And yet the government is spending billions on subsidizing electric vehicles. Makes no sense.

The German national rail company, the Bundesbahn, is owned 50% by the government. Germany used to have a reputation for fast trains but lack of investment in infrastructure has meant the current rail network cannot support the fastest trains. Therefore, some Germans are still flying between Berlin and Stuttgart (as an example) just 600 km instead of taking the train which should take only three hours instead of more than six. Not only that, they are also polluting the atmosphere!

Education

One might think that the future of a nation lies in the hands of its youth. In Germany, this might be a problem. The education system here is regulated by the individual states and not the Federal Government. This means there are no uniform educational standards nationwide. This also applies to infrastructure investment, such as the digitalization of the schools. Therefore, the investment in the schools is in the hands of small local governments and not with larger, better-equipped national education departments. This creates all sorts of problems.

In fact, the German Constitution clearly states that the Federal Government is not allowed to get involved in decisions relating to education. As an example of how this works, the Federal Government made funds available for the digitalization of the schools but almost none of these funds were utilized by the individual States. The reason was they were afraid that the Federal Government might get involved in how these monies would be used. So digitalization didn’t happen, creating a huge problem during the current Corona crisis.

Many of the schools are also housed in very old buildings in need of huge improvements including energy and ventilation. This has meant that in many cases the students couldn’t come to school during the Corona pandemic and then didn’t have the digital infrastructure to continue at home, causing gaps in their education which will become a major problem down the road. Merkel has been fully aware of these problems but has done nothing about them.

Bureaucracy

Many here regard bureaucracy to be the biggest “social disease” ever. Some think you might even need a permit to sneeze (a joke)! Even if and when the government were to decide on any investment, it will take years to get the necessary approvals from dozens of government agencies. Some jokingly say (really), if you buy a piece of land to build a house, it will take you five years. Four years of approvals and one year to build.

There are so many examples of this currently. First, the new airport for Berlin will have taken 10 years to partially open. Next, the new railway station in Stuttgart may take even longer! Elon Musk decided to build a new Tesla car factory in Brandenburg bringing thousands of new jobs in an expanding industry. Less than two years later the factory is ready for production and yet Musk still doesn’t have the final construction permit. Go figure.

Then the government itself suffers from its own bureaucracy. When it wants to make a decision on anything it must run it by all the “necessary” agencies. By the time it has undergone all this scrutiny and commenting from lots of consultants (lobbyists), the original plan has changed and the original intent is lost. The new government has promised to take on bureaucracy as a major project, but cutting down the permit processes will not bode well with all the government employees involved in granting them!

Leadership

This could be one of Angela Merkel’s biggest mistakes. She has always been elected as the “Mummy” (Mutti) to the nation even though her influence has created many of these problems. When looking for ministers to run her government she has always (openly) chosen individuals who would and could not challenge her leadership position. This not only created poor leadership in the different ministry departments, but it also created a vacuum in the question of her successor. Currently, the CDU is in complete disarray after the election defeat with no clear candidates to pull things together and plan for the future.

When a problem occurs, Merkel is notably absent. She has a reputation for not taking decisive action when needed but will “wait it out” to see if a solution or compromise “appears” on its own. When she actually did take a decision it was often the wrong one. Letting all the refugees from Syria enter Germany without registering first in Austria (an EU requirement) broke the Schengen Agreement with serious consequences throughout Europe. Closing down the nuclear power stations instead of the coal-powered plants will have a lasting negative impact long after she has retired.

Every time Merkel gave her New Year’s speech to the nation on television, I would turn to my wife and ask, “what did Angela just say?”. She has the gift, as do many politicians, of talking for fifteen minutes without actually saying anything. No conclusions from the past year, no new decisions for the coming year. And yet she was admired around the world. My conclusion is she has always profited from the positive reputation of Germany, the country, well known around the world for its automobiles and other great products. Germany is also the biggest contributor to the European Union’s budget and therefore Merkel has also enjoyed massive influence. The world never saw her faults at home and the problems she has created for Germany.

But now Angela Merkel leaves the stage and the new government in Germany is left to “clean up the mess”. For many non-Germans reading this, it might sound very strange but Germany has so many problems and loose ends to clear up that could endanger its competitive position in the world. Let’s hope the bureaucrats don’t get in the way!