Germany's current economic upswing, reflected in booming exports and better living standards for those in work, is failing to dispel the gloom. Everyone can see that faster growth is not reducing unemployment. German firms have increased their employment abroad by 50 per cent since 1985, but inside Germany they are reluctant to hire new workers because it costs them so much. Job protection laws cosset workers, minimum wages and unemployment benefits are too high, and social security charges should be brought down. But in Germany the analysis goes deeper.
Some commentators blame the paralysis in policymaking on the nation's federal political system.
They point to the way that the SPD used its control of the Bundesrat, the second chamber of parliament representing Germany's 16 states, to block Kohl's tax reforms. One can understand the frustration. But the Bundesrat's political complexion is a fair reflection of individual election results in the 16 states. Moreover, to have one legislative chamber controlled by one party and the second chamber by a different party is not in itself a recipe for deadlock. It often makes the task of government more complicated, as President Bill Clinton can testify, but it need not mean that nothing gets done.