I’ll be surprised if this breeze retains its force between Davos and Berlin, but it is encouraging to read OpinionJournal Political Dairy’s account of German Chancellor Angela Merkel’s speech to the World Economic Forum:
[D]espite a Teutonic speaking style, Mrs. Merkel delivered the most American of speeches. I lost count of the number of times she used the word “freedom” sometime after the 10th reference. And that’s to say nothing of her statement that “Christian values” were the foundation stone of her politics. No wonder George W. Bush likes this lady.
“Increasing freedom has always led to improvements in Germany,” she said, citing the great free-market guru (and architect of West Germany’s postwar economic boom) Ludwig Erhard. She railed against the heavy hand of German bureaucracy on German innovation and entreprenuership. Computers were a German invention [Karl von Babbage, eh? – ed.] yet where, she asked, was the German equivalent to a Microsoft or a Google? She described German unemployment, which has hovered around 10% for more than a decade, as “terrifying.” She was equally scathing of the political environment she’s inherited. “We are paralysed by events and situations and don’t seem to be able to overcome this,” said Mrs. Merkel. “Each rule and regulation has a political lobby associated with it,” she said, calling Germany’s problems “self-inflicted.”
On the solution side, Mrs. Merkel was clear in direction, if not in details. “We have to open the windows, breathe deeply the fresh air and see the opportunities rather than the risks and hazards,” she said. Germany “must become more flexible, develop better benchmarking, become less rigid in its laws and above all tackle bureaucracy.” She called for a “viable” tax system and reduced labor costs. She also urged free trade, lamenting the failure of the WTO talks in Hong Kong (thanks to French obstruction). The chancellor referred to Britain as a role model for economic reform, reminding her audience why she’s known as “Maggie” Merkel.
Some Europeans, it seems, are starting to notice that entrepreneurs are deserting their continent. The Daily Telegraph carried a pertinent report last week:
Europe’s most successful companies are turning their backs on EU markets because of red tape, a high-level report said yesterday.
The companies that Europe needed to survive were instead investing more money than ever in the United States and Asia, concluded the report, presented to the European Commission in Brussels.
The lack of investment was so dire that it threatened Europe’s “comfortable” way of life. “Europe has to act before it’s too late,” said the report’s author, Esko Aho, the former prime minister ofFinland. . . .
Not only were US, Chinese and Japanese firms outspending Europe on research and development, the gap with Europe was growing.
Perhaps most damagingly, Europe’s most important countries were pouring more and more of their technology investment overseas, as they despaired of the European Union becoming “innovation friendly”.
Unless EU governments took bold action to increase spending on research, freed labour markets so skilled workers could move more easily, and stopped pouring taxpayers’ money into dying industries, Europe’s post-war way of life was doomed.
The report said: “Europe must break out of structures and expectations established in the post-Second World War era that leave it today living a moderately comfortable life on slowly declining capital.
“This society, averse to risk and reluctant to change, is in itself alarming but it is also unsustainable in the face of rising competition from other parts of the world. For many citizens without work, or in less-favoured regions, even the claim to comfort is untrue.”
Meanwhile, the leader of Britain’s Conservative Party worries about excessive consumption of chocolate. Talk about missing the moment!
Comments