BOILING FROGS:

Behind Germany's Crisis, A Past That Is Crippling: Postwar 'Miracle' Was Built on System
That Now Saps State, Stifles Business (CHRISTOPHER RHOADS, 12/06/02, THE WALL STREET JOURNAL) (subscription required)

Germany expects to record more than 37,000 corporate bankruptcies this year, the most since the war and the ninth increase in the past 10 years. One in 10 working-age Germans is out of work, depressing consumption and prices and prompting fears of deflation. Economic growth, which has lagged behind all other major industrial countries except enfeebled Japan, is expected to be just 0.2% this year. Europe's economic motor a decade ago, Germany has steadily declined to the point where it has become a drag on Europe and a growing concern for the global economy.

What lies ahead for Germany looks even grimmer. A declining birth rate and rising numbers of jobless and pensioners not only hurt the nation's economic dynamism but swell the burden on an already-stretched social welfare state. Workers and employers each pay some 20% of gross wages -- nearly twice as much as 30 years ago -- to finance pensions, unemployment insurance, health care and myriad other state benefits. The worker then gets taxed on what's left, as much as 48% on a salary of $75,000. [...]

For many Germans, however, the slide has been almost too gradual to notice, which may be one reason why there has been no loud cry for reform. German gross domestic product per capita, a common measure of standard of living, is $22,500, slightly above the European Union average. German cities are clean, office buildings are modern, and BMWs and Mercedes are everywhere. The problem is much of this wealth comes from the prosperity of the previous decades.

One might wish that this were a uniquely German problem, but it would seem to be--as conservatives have been warning for seventeen some odd decades--a generalized threat to liberal capitalist democracy. The initial transition from feudalism, communism, fascism, etc., can give your economy such a boost that it will coast for years even as you are killing it--in the same way you put a frog in a pot of water and then turn the heat up under it, so that it will eventually boil with nary a protest. But eventually, the economy, like the frog, does die. Posted by Orrin Judd at December 7, 2002 1:26 PM