Grey Dictatorship

In With the Old, Out With the New

Berliner Love Parade 2006
Love, peace, social equality and environmental protection? Germany's youth want their politicians to discuss what matters to them, not just older voters. Source: DPA

Just as Germany’s chancellor, Angela Merkel, was about to wrap up her only televised debate before Germany’s federal election on September 24, she said something strange. “We need to set a course for the future,” she noted.

It was strange because after an hour and a half of a lukewarm debate that many pundits described as dull, the chancellor was finally talking about what many viewers had missed: Any mention of the nation’s future.

During that debate Ms. Merkel and the Social Democrat’s candidate Martin Schulz went back and forth on many issues – refugees, terrorism, tolls, whether they had attended church on the weekend – but said little about Germany’s role in the digital era, the future of education or the fight against climate change.

“It was very much about the past and present,” said Michael Spreng, a political adviser who analyzed the debate. “This wasn’t a TV debate for young people.”

Germany's baby boomers are comfortable, but they will leave behind a country that isn’t.

This year’s election campaign in Germany has been a contest to see who can promise voters the least amount of change. Ms. Merkel and Mr. Schulz have been at pains to convince the country that theirs is the best plan to leave everything just the way it is.

“People close to retirement age are eager to keep things the way they are. They tend to be against new airports, new technologies, windmills in their backyards and new highways,” said Hubertus Porschen, the president of Die Jungen Unternehmer, an interest group for young entrepreneurs.

And the people close to retirement age are in charge of Germany right now. They’ve been fortunate: Back when Germany’s first baby boomers were getting their driver’s licenses in the 1960s, the country was still expanding its road network. When that generation got their first jobs in the 1970s, Germany pushed through an unprecedented expansion of the public sector. When they became unemployed in the 1980s, they were caught by the most generous social welfare safety net Germany has ever had. And now that the baby boomers have begun to enter retirement, many enjoy a very comfortable pension system.

Germany’s baby boomers might be comfortable, but they will leave behind a country that isn’t. Right now baby boomers are still productive and paying ample taxes. From 2020 onwards, however, when most will have retired, the opposite will likely be true and the result will be “dramatic,” said Clemens Fuest, the president of the Munich-based Ifo Institute.

In the coming decades, Germany’s younger generations will have to deal with a depleted social welfare system, decrepit infrastructure, a damaged environment and the problem presented by ever-growing immigration.

08 p48 German Problems-01

Since 1972, the number of deaths in Germany has exceeded the number of births, a fact that could have a dramatic impact on the country’s future. Shortly after the turn of the millennium, there were 20 million people in Germany between the ages of 30 and 44. Today, there are only 15 million.

Such a demographic imbalance has substantial political consequences. The temptation for parties and parliamentarians to adjust their positions to the needs of the elderly is great. So is the incentive to lure older voters with promises of favorable pension reforms or generous social welfare programs, the bill for which will be passed onto younger taxpayers.

Older people tend to become more conservative. This doesn’t mean they are drifting further to the right, only that they prefer to preserve the status quo rather than change it. There are countless theories as to why this may be, but what matters most is that in an aging society, progressive reform is increasingly difficult to achieve.

But are Germany’s young – alongside the country’s older and progressive – truly powerless? Are they helpless against the numbers or have they simply failed to tap what power they have?

08 p48 German Problems 2-01

Today Germany is the second-oldest economy in the world after Japan. Its electorate is older than ever before. According to calculations by the Federal Institute for Population Research, half of the 61.5 million eligible voters in Germany are now older than 52. Compare that to the early 1990s when the average age was still around 46.

According to Germany’s Market Economy Foundation, 2017 could mark the first year that people over 55 make up for more than half of voter turnout. Statistically speaking, younger people are still less likely to get off the couch on election day.

Like it or not, if a German wasn’t born in the year 1964, their voice is outweighed by those who were. This was Germany’s most fertile year, and this year’s cohort still has the most powerful voice today.

Clearly, pandering to old people is a worthwhile endeavor for politicians. As long as electoral handouts, such as the German pension reform of May 2014 or recently, the so-called maternity pension, directly translate into votes, politicians will keep dishing them out.

One look at the election manifesto of the Christian Social Union, or CSU, the Bavarian sister party to Angela Merkel’s Christian Democrats, confirms that the party intends to keep bribing its older supporters.

According to the CSU, pensions for mothers are “an important building block to combat old age poverty,” that comes about because German mothers don’t go back to work and start paying into a pension fund as often as German fathers, which translates to less money after retirement.

German Chancellor Angela Merkel opens the world’s largest computer games fair Gamescom in Cologne
German Chancellor Angela Merkel's nod to the youth vote at a gaming convention. Source: Reuters

However, according to Jochen Pimpertz of the Cologne Institute for Economic Research, those payments mostly flow to women who are already well off. They’re simply not an effective tool to combat old age poverty. And the cost of this measure is largely borne by taxpayers between the ages of 20 and 50. In fact, they will pay an average of €2,000 ($2,405) more into the national pension fund in their lifetimes than they would have without extended maternity benefits.

Germany’s Social Democrats have made their own lofty promises. They want to keep pension levels at 48 percent and freeze contribution levels at 22 percent.

Not pandering to an aging electorate can be problematic for German lawmakers.

“Politicians must be very careful when they try to represent the interests of younger generations,” said Jörg Tremmel, an expert on intergenerational justice at the University of Tübingen. “Anything else is political suicide.”

“If a parliamentarian says something that goes against the interests of old people, he gets baskets full of angry letters,” said Michael Eilfort, a political scientist and one of two board members at the Market Economy Foundation. But, he said, if politicians quietly doubled pension payments that younger people have to make, hardly anyone would complain.

Wolfgang Gründinger, the 33-year-old author of the book, “Alte Säcke Politik,” which roughly translates to the “Politics of Old Farts,” takes that analysis of the age gap a little further.

“The young own the future. The old own everything else: Votes, money, companies, political parties, houses, time. They make the laws. They are the biggest consumers. They decide the fate of our country,” Mr. Gründinger wrote.

Yet, for Mr. Gründinger. who travels the country trying to figure out why younger voters are so unmotivated, that injustice doesn’t seem to make any difference.

At a meeting of politically-interested youth he is chairing in Berlin, the question of pensions comes up. Nobody seems very interested. “It’s just too far away,” notes one young political studies student. And it’s too complex. “We are not non-political,” the student adds. “We just see politics differently.” The young attendees say they’d rather take part in civil society actions, or in pro-European demonstrations.

Political parties are for the old folks: In 2015, the average age of a member of Ms. Merkel’s Christian Democrats and the CSU was 60 years. The average age of a member of the Left Party, which has the oldest mean age, was 68.

“And if you’re under 30, you are not taken seriously,” Mr. Gründinger argues. “We need a new culture of youth participation. That doesn’t mean giving all the power to the young but they should have an equal voice.”

08 p48 German Problems 3-01

Four fields deserve more attention:

Immigration

The solution to Germany’s demographic woes should be obvious: In order to mitigate the decline in able-bodied taxpayers and uphold Germany’s potential for growth, the country needs immigrants. And the more qualified, the better.

A functional immigration system could provide just the boost Germany so desperately needs in order to meet the financial demands of the baby boomer generation. As countries with high immigrant populations like the United States have shown, qualified immigrants are a force to be reckoned with.

To find the best talents, and because there is a lack of skilled workers in our sector, we often look for candidates further afield, says Sara Spiller, founder and head of Manetch, a global business information platform. “When we want to bring colleagues to Germany though, the waiting times to get the work done are too long and the hurdles too high. Alongside better immigration laws, we need a cultural change in the civil service,” Ms. Spiller argues.

On average, immigrants found more businesses than natives because they’re eager to succeed and to make a good life to their children. Half of Silicon Valley is run by immigrants. The CEOs of Microsoft and Google are from India. Google co-founder Sergey Brin was born in Moscow. The father of Apple co-founder and visionary Steve Jobs was Syrian.

Gamescom
Virtually ahead: Visitors to the 2017 Gameson convention in Cologne test gaming equipment in Cologne. Source: DPA

Digitalization

Germany is in no danger of becoming the next Silicon Valley. The sad truth is that, despite being Europe’s paymaster and its largest economic powerhouse, Germany is lagging when it comes to internet connectivity and digitalization.

According to economist Mr. Fuest, part of the problem is the aging population. Research suggests that people aged between 30 and 45 are usually the most innovative and set up the most businesses. Just before 2000, there were 20 million 30- to 44-year-olds in the country. Now there are only 15 million. And Mr. Fuest believes this demographic decrease is already impacting on high tech start-ups. Since 2005, the numbers of these have halved and that should be discussed more, he noted.

This may be at least part of the reason why such a disproportionate number of Germans distrust the internet. According to a study by the IT association Bitkom one in three Germans is afraid of digitalization. Unsurprisingly, the gap in attitudes is widest between the young and the old. While three-quarters of 14 to 29-year-olds view digitalization as an opportunity, the same is true for only half of people older than 65. Furthermore, 57 percent of senior citizens are afraid that strangers may get access to their private lives, and 36 percent of elderly respondents said they would prefer to live in a world free of digital technologies.

By next year, Germany plans to have built a country-wide network that can provide connectivity speeds of up to 50 megabits a second. This may be a success for Germany, but fiber-optic cables in other parts of the world are already allowing long-term data transfer rates in the gigabit range.

And fiber-optic cables won’t solve this problem, Mr Fuest says. “In order to support digitalization, the government should focus on getting rid of legislation that actually handicaps meaningful business models in this area.”

More meaningful tax models in this area could also help.

Unterricht in Freiburg
Germany's children and youth have a point to make and they have a right to an equal voice, advocates say. Source: DPA

Education

One way to help young people would be to invest more heavily in education. And not just any kind of education – the kind of teaching that German youngsters are going to need in an increasingly digital world.

“Our education system no longer lives up to the demands of the economy like it did 50 years ago,” said Mr. Porschen from the interest group Die Jungen Unternehmer.

He argued that German schools should make IT classes compulsory and focus more strongly on issues like data security and the digital economy.

Mr. Porschen added: “It’s not enough to distribute a few iPads at school. Children don’t need help figuring out how to use them. They need to know how to build them.”

Schools need better access to the internet, a data cloud that holds learning materials and lessons and students should be able to use their own computers or laptops; families without the means to buy their children these should have the opportunity to borrow them, suggests Gesche Joost, a professor of design at the University of the Arts in Berlin.

“Opportunities to learn about programing or about online security are too rarely offered at German schools and universities,” adds Tarek Mueller, who runs the online fashion business, AboutYou.de, from Hamburg. Policies about things like digitalization and e-mobility have stayed in the background this election, while campaign promises serving the wishes of older voters are the focus. “Personally I feel there is a lack of genuine political attention on these topics,” Mr. Mueller argues.

08 p48 German Problems 4-01

Climate Change

The German government has spoken a lot about doing its part to protect the environment. One of the main tenets of this policy is to change over to green energy sources and to reduce emissions. But a study recently suggested that Germany was not on track to reach its goal of a 40 percent reduction in greenhouse gas emissions by 2020; it would only be able to make a 30 percent cut.

Local experts say that if this goal is to be achieved, then more drastic measures are needed. However, they also add, the political will to do this does not seem to be there. It is yet another example of the older German generation pushing the consequences of their actions upon the younger.

By Handelsblatt correspondents in Berlin and Dusseldorf: Anna Gauto, Dana Heide, Christian Rickens, Klaus Stratmann. To contact the authors: rickens@handelsblatt.com This story was adapted in English for Handelsblatt Global.

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