The German Miracle, Riding on Bad Roads
This article first appeared on Bloomberg.com.
Chancellor Angela Merkel won re-election in Germany with an impressive share of the vote, but talks to form a coalition remain jammed over whether to establish a minimum wage. This focus is myopic.
The next government -- probably a grand coalition between Merkel’s Christian Democratic Union and the Social Democratic Party -- will need to concentrate on fundamental issues affecting the next generation that have been neglected under Merkel as she concentrated on balancing the budget.
Germany may be the export success story that other countries want to emulate, but that powerful narrative hides weaknesses -- aging highways and rail networks, subpar technology investment, poor demographics -- which need to be addressed now, if the country is to avoid stumbling later on. After all, it was only in the 1990s that Germany was being called “the sick man of Europe,” and it can happen again.
Almost 25 years after East and West Germany reunified, the country remains divided when it comes to infrastructure, though not in the way you’d think. Cities in the former communist East Germany boast sparkling new train stations and smooth highways, while the transport systems in many other German regions have been neglected. The government in North Rhine-Westphalia, the most populous state and home to blue-chip companies such as the appliance maker Miele AG and pharmaceuticals company Bayer AG (BAYN), says 300 bridges have to be repaired in the short term and 700 more later.
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Sudha David-Wilp is a senior program officer at GMF's Berlin office. She previously oversaw the Congressional Study Group on Germany, a program for lawmakers on Capitol Hill and in the Bundestag, in Washington DC.