GERMANY: Comparisons between Germany now and the Germany of Weimar are exaggerated, writes Derek Scally
Ludwig Erhard, the father of Germany's post-war economic miracle, was a straight-talker. Economics, he once said, is 50 per cent logical and 50 per cent psychological. He got Germany back on its feet with the promise of "prosperity for all", something today's Germans would welcome.
A winter of discontent has settled over the land with zero growth and unemployment stuck at nearly 10 per cent. To believe the media, Germans are subsisting on a thin gruel of economic misery and bitterness.
Last week Mr Oskar Lafontaine, the finance minister unceremoniously fired by the Chancellor, Mr Gerhard Schröder, compared today's economic problems to the worst of the Weimar republic.
Mr Schröder, he said, was like the last chancellor of the Weimar Republic who presided over the economic collapse which paved the way for Hitler.
The media took up the Weimar theme, juxtaposing photos of unemployed Germans in the early 1930s with their modern-day equivalents. But the Weimar comparison is silly: today's political system is not crumbling, there is no demagogue waiting in the wings and no hyperinflation.
Things may be bad but Germans aren't pushing around wheelbarrows of worthless bank notes to buy a loaf of bread.
Germany has been in the economic doldrums for over a year but the current crisis began when the finance minister revealed that there was a €15 billion hole in the public finances, just days after the government was re-elected in September. Similar to Irish voters, Germans felt hoodwinked and the opposition parties called foul.
Things got worse when it emerged that the spiralling public deficit would force Berlin to breach the terms of the Growth and Stability Pact which Germany itself devised to keep the euro stable. The economy, the largest in the euro zone, will stagnate this year and probably grow by only 1 per cent next year.
The problems facing Germany today are not new, but ones which recur regularly because of underlying structures.
At the heart of the problem, say the economists, is an employment market which is inflexible in comparison to other countries. High taxes and social contributions as well as layers of bureaucracy make Germany an unattractive place to do business. Employers are unwilling to hire workers because it is too expensive to fire them.
There are two ways for political leaders to tackle the problems: difficult and unpopular structural reform or a politically expedient quick-fix.
Since returning to office, Mr Schröder's popularity has vanished and apparently taken his appetite for tackling problems with it. He is faced with a riddle: how do you inject dynamism and flexibility into the German economy without jeopardising the security and quality of life which Germans prize?
It's no wonder Germans are so anxious to retain the status quo. Despite the current difficulties, Germany remains a wealthy country with one of the highest standards of living in Europe. Britain, often held up here as an example of how Germany could be, is beginning to lose its lustre.
Few envy Britain's hire-and-fire culture, toothless unions and disastrous health system. Germany has a culture of worker rights, strong unions and a health system that is creaky and expensive, but one that works with comforting Teutonic efficiency.
In Germany, social inclusion isn't a pipe dream, thanks to a generous social welfare system.
Whether or not it misled voters before the election, the government deserves credit for pushing through important legislation in its first term. It reformed the tax and pensions systems and allowed same-sex couples to register their partnerships.
Its most far-sighted move however was to change the citizenship laws to allow millions of non-Germans living here to apply for a German passport to stabilise the demographic profile.
The government deserves credit for playing a clever diplomatic game in the European Union. The Franco-German relationship may be a shadow of its former self, but Berlin has cultivated close relationships with Poland and other accession states which will pay off in the future.
Like in Erhard's economics, Germany's current gloom is half logical and half psychological. So, too, are the solutions. Mr Schröder's first decision after winning the election was to appoint a so-called "super minister" to tackle the twin problem of the economy and unemployment. If the Chancellor can motivate his government to get to work, he will soon realise that there has never been a better time to push through necessary but unpopular reform, when his popularity cannot fall any further.
Despite their financial hardship, half a million Germans have been able to afford to buy The Tax Song, a novelty record sung by a Gerhard Schröder mimic which has spent two weeks at number one.
If the real chancellor needs any encouragement to make the tough decisions that would solve Germany's current problems for good, he should pay heed to his singing alter-ego: "Elected is elected, you can't fire me, that's the great thing about democracy."