Merkel refugees STR:AFP:Getty Images

Angela Merkel’s New Germany

From welcoming refugees to improving gender equality, German Chancellor Angela Merkel’s talent at bridging social and political divides has made Germany’s transformation into an open society possible. This, not economic policy, has been the greatest achievement of her tenure.

BERLIN – German Chancellor Angela Merkel’s Christian Democratic Union (CDU) may have won a majority in September’s federal election, but that does not mean that the country’s future is clear. What emerges as Merkel seeks to form a new coalition with the Greens and the Free Democrats will not only shape Germany’s economic trajectory over the next four years; it will also determine the fate of the country’s transformation into a truly open society.

In less than a generation, Germany, once the sick man of Europe, has emerged as a global economic powerhouse. But the truth is that Germany’s current economic success is less the result of good policies than of favorable external conditions, especially in Europe, which ensured strong demand for German exports.

To be sure, important domestic economic reforms enabled Germany to take advantage of external demand. But they were undertaken long before Merkel came to power, and few meaningful economic reforms have been implemented during her 12-year tenure. For example, domestic private investment remains weak, partly owing to overregulated services and heavy bureaucratic burdens.

Moreover, as the German government has preached austerity to its neighbors, it has increased social spending on pensions and transfers, all while allowing net public investment to turn negative. The much-needed overhaul of the tax system once hyped by the CDU has failed to materialize. And, though employment has increased during Merkel’s tenure, job creation has not succeeded in reducing the low-income segment of the labor market.

The parties most likely to form the next government – the CDU (and its Bavarian sister party, the Christian Social Union), the Greens, and the Free Democrats – are now fighting over how best to use Germany’s large fiscal surpluses to serve their respective constituents. Whatever decision they make, Germany’s economic performance is likely to remain strong, at least in terms of trade and a balanced budget.

The real test of the so-called Jamaica coalition (named for the parties’ colors) lies elsewhere. What Merkel has lacked in economic-policy achievements, she has made up for in bringing about social change. Under her leadership, Germany has become the open society it is today. But it is also an increasingly divided society.

The World’s Opinion Page

Help support Project Syndicate’s mission

subscribe now

As it stands, some 20% of Germany’s population of 82 million has a migrant background, and close to five million are Muslim. This multiculturalism is reflected in changing perspectives on the part of all Germans. Four out of five Germans now consider Islam and homosexuality to be part of German society; three out of four say the same about migrants and refugees. And Germany has one of the most pro-European populations on the continent.

The last three governments, all led by Merkel, have contributed mightily to this transformation. Critics call Merkel the first social democratic chancellor from a conservative party, because she has embraced many progressive policies, while preaching stability and traditional values. Arguably her most important decision – which almost cost her the chancellorship, but might ultimately shape her legacy – was her 2015 decision to accept, despite fierce opposition from many in her own party, almost 1.5 million asylum-seekers and push for their integration into German society.

Germany’s Merkel-led governments have also supported early childhood education and children’s rights, while overseeing substantial progress on gender equality. Broader, more flexible access to the labor market, expansion of early childhood facilities, and financial incentives have driven an increase in female labor-force participation to more than 70%, one of the highest in the industrialized world. The current German government also implemented a 30% quota for women on supervisory boards of large companies, as well as a wage transparency law aimed at reducing the country’s gender pay gap, which is still a whopping 21%.

While Merkel did not spearhead these reforms – not least because she had to avoid alienating those in her party who viewed them negatively – she offered tacit support. Similarly, though Merkel herself voted earlier this year against legalizing gay marriage, which many in her party do not support, she accepted graciously the Bundestag’s decision, declaring that she hoped the vote would not only promote “respect between different opinions,” but also bring “more social cohesion and peace.”

Ultimately, it is Merkel’s talent at bridging social and political divides that has made Germany’s transformation into an open society possible. And this, not economic policy, might ultimately become the greatest achievement of her chancellorship. In some ways, Germany has already moved beyond the point of no return on its path toward openness, owing to Merkel’s 2015 refugee policy.

Yet there are enormous challenges ahead. Beyond the technical and social challenges associated with the successful integration of refugees, there is a need for greater tolerance toward Islam and diversity more generally on the part of all Germans. Further changes to family and gender policies and an overhaul of the education system will also be needed.

As Germany continues to debate what it means to be German, the outcome of the current coalition negotiations will determine whether Merkel’s next government confronts these challenges effectively. If it does, Merkel will be remembered as the architect of a new German society.

http://prosyn.org/gNc4erF;

Handpicked to read next

  1. Television sets showing a news report on Xi Jinping's speech Anthony Wallace/Getty Images

    Empowering China’s New Miracle Workers

    China’s success in the next five years will depend largely on how well the government manages the tensions underlying its complex agenda. In particular, China’s leaders will need to balance a muscular Communist Party, setting standards and protecting the public interest, with an empowered market, driving the economy into the future.

  2. United States Supreme Court Hisham Ibrahim/Getty Images

    The Sovereignty that Really Matters

    The preference of some countries to isolate themselves within their borders is anachronistic and self-defeating, but it would be a serious mistake for others, fearing contagion, to respond by imposing strict isolation. Even in states that have succumbed to reductionist discourses, much of the population has not.

  3.  The price of Euro and US dollars Daniel Leal Olivas/Getty Images

    Resurrecting Creditor Adjustment

    When the Bretton Woods Agreement was hashed out in 1944, it was agreed that countries with current-account deficits should be able to limit temporarily purchases of goods from countries running surpluses. In the ensuing 73 years, the so-called "scarce-currency clause" has been largely forgotten; but it may be time to bring it back.

  4. Leaders of the Russian Revolution in Red Square Keystone France/Getty Images

    Trump’s Republican Collaborators

    Republican leaders have a choice: they can either continue to collaborate with President Donald Trump, thereby courting disaster, or they can renounce him, finally putting their country’s democracy ahead of loyalty to their party tribe. They are hardly the first politicians to face such a decision.

  5. Angela Merkel, Theresa May and Emmanuel Macron John Thys/Getty Images

    How Money Could Unblock the Brexit Talks

    With talks on the UK's withdrawal from the EU stalled, negotiators should shift to the temporary “transition” Prime Minister Theresa May officially requested last month. Above all, the negotiators should focus immediately on the British budget contributions that will be required to make an orderly transition possible.

  6. Ksenia Sobchak Mladlen Antonov/Getty Images

    Is Vladimir Putin Losing His Grip?

    In recent decades, as President Vladimir Putin has entrenched his authority, Russia has seemed to be moving backward socially and economically. But while the Kremlin knows that it must reverse this trajectory, genuine reform would be incompatible with the kleptocratic character of Putin’s regime.

  7. Right-wing parties hold conference Thomas Lohnes/Getty Images

    Rage Against the Elites

    • With the advantage of hindsight, four recent books bring to bear diverse perspectives on the West’s current populist moment. 
    • Taken together, they help us to understand what that moment is and how it arrived, while reminding us that history is contingent, not inevitable


    Global Bookmark

    Distinguished thinkers review the world’s most important new books on politics, economics, and international affairs.

  8. Treasury Secretary Steven Mnuchin Bill Clark/Getty Images

    Don’t Bank on Bankruptcy for Banks

    As a part of their efforts to roll back the 2010 Dodd-Frank Act, congressional Republicans have approved a measure that would have courts, rather than regulators, oversee megabank bankruptcies. It is now up to the Trump administration to decide if it wants to set the stage for a repeat of the Lehman Brothers collapse in 2008.