Why Germany has no gilet jaunes protesters - Happy Helmuts
Germany should not consider itself immune to such problems, argues Marcel Fratzscher of the German Institute for Economic Research. Beneath its glowing jobs numbers lurk growing inequality and a vast low-pay sector, nurtured by a long period of wage suppression. Germany has gained more from globalisation than it has lost; you can see that in Big Dutchman’s logistics yard, full of packages destined for Senegal and Chile. But regions that specialised in low-end products like ceramics or textiles, such as upper Franconia or parts of the Palatinate, were walloped by cheap imports in the 1990s. Policy can hurt places, too: the government may have to spend €40bn to compensate regions affected by its recent decision to scrap lignite mining.
Yet there is no obvious parallel in Germany to the insecure, “peripheral” France of the gilets jaunes. Hidden champions create jobs and opportunities far from cities, limiting the brain drain. Local politicians are more responsive to voters’ demands than Jupiterian presidents in distant capitals. In troubled areas, Germany’s constitutionally mandated system of fiscal transfers across states can smooth globalisation’s rougher edges. Jens Südekum, an economist at Düsseldorf’s Heinrich Heine University, calculates that in 2010 such payments amounted to fully 12.4% of Germany’s aggregate tax revenue. Cities like Duisburg and Essen, in the post-industrial Ruhr valley, have been spared the ravages that deindustrialisation brought to parts of America’s Midwest or the Pas-de-Calais region in northern France, now a stronghold of Marine Le Pen’s National Rally. Comparable parts of Germany have not made a comparable populist turn. Indeed, researchers find no clear correlation between AfD support and economic hardship.
The big caveat is the former East Germany. Despite success in isolated areas like optics, only a fraction of Mr Simon’s hidden champions are found in the east. After reunification the mass sell-off of industry, largely to western investors, left easterners with what Mr Südekum calls a “deep perception that they were ripped off”, which lingers today. Extremist parties do best in the five eastern states. Dresden and Chemnitz have spawned thuggish protests.
Moreover, the trends that mark Germany out from its industrialised peers are not immutable. Automation will cut into manufacturing’s share of the workforce, and Germany’s mighty carmakers seem ill-prepared for the disruption of self-driving and electric vehicles. Despite the hidden champions’ success, urbanisation continues apace, as rocketing house prices in large cities indicate. Vechta is keeping its natives, but attracting new talent is hard when the competition is Berlin.