My latest summary is for Kaput: The End of the German Miracle by Wolfgang Münchau. The book argues that Germany’s decades-long model of neo-mercantilism has failed, and that the country now faces structural decline. This is a topic I know very little about, so I fact-checked this one more heavily than usual, and wrote up a separate post with the errors I found.

As usual, the key takeaways are below, and you can find the full summary by clicking the link above.

KEY TAKEAWAYS

• ​Germany’s economic model is fundamentally flawed:
  • It is neo-mercantilist, in that it prioritises large trade surpluses in physical goods, and protects domestic industries to do so.
  • The financial system is part of the model. Germany’s state-owned banks channel savings to favoured old industries, while its capital markets are underdeveloped.
  • Germany is also fiscally conservative. Its constitutional debt brake starved public investment for over a decade.
  • Between 2005 and 2015, Germany enjoyed a second “economic miracle”, thanks mostly to luck. Those tailwinds have now died out, leaving Germany in structural decline.
• The country is captured by industry, particularly the car industry:
  • All sides were complicit: the left wanted the manufacturing jobs, the right wanted the profits, and the Greens wanted a green industry.
  • The German economy has too much risk concentrated in the car industry, which is now being threatened by the shift to electric vehicles.
  • German industry has long supported trade with Russia. Some argued that trade would help liberalise Russia. But the industry also depended on cheap Russian gas.
  • China has grown into a systemic competitor, and Germany is split on how to deal with it.
• Germany’s culture is holding the country back:
  • Technophobia. A wariness of all things digital, compounded by poor policy decisions, has left Germany with poor digital infrastructure.
  • Failure to attract high-skilled migrants. A culture of discrimination and bureaucratic hurdles keep Germany from attracting the skilled immigrants it needs to diversify away from industry.

You can find the full detailed summary on the website. If you found this summary useful, consider forwarding to a friend you think might enjoy it.

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​To Summarise​