Germany's Silent Shift: From Entrepreneurs To State Dependence

Submitted by Thomas Kolbe

Germany affords itself a state bureaucracy that functions like an artificial labor market placed upstream of the private sector. The flight of hundreds of thousands into the arms of the state corresponds with the shrinking number of self-employed in the country. And policymakers are actively promoting this trend.

Let us begin with a piece of good news: according to a Bertelsmann survey, around 40 percent of Germans aged 15 to 25 can imagine starting a business as their personal life path. That is a surprisingly high figure in a country where young people not infrequently cite, half-jokingly and half-seriously, Hartz IV or the public sector as career goals.

Let us note: the embers of entrepreneurship in Germany are still glowing; economic autonomy and sovereignty still rank highly among the younger generation. However, it is questionable whether this will suffice to ignite, one day, a true founding boom in a country of climate transformation, deeply rooted faith in the state, and an expansive public sector—a boom that could force a turnaround and help erase the long-accumulated sins of climate socialists.

But we digress. Romantic youthful ideals carry little weight in the leadership circles of the Berlin Republic. There, the ideal of free enterprise collides with the cultural-political malaise of statism—one of many politically induced fault lines of our time. Entrepreneurial action, the free decision over the allocation of capital, inevitably carries conflict potential in a climate of manically enforced eco-transformation.

In attempting to transform the existing economic order into a system of state-directed energy production and centrally steered industrial output, policymakers are pushing a growing number of mid-sized enterprises either into insolvency or straight abroad. No one should be surprised by the country’s economic depression: there is a price to be paid for handing over the economic crown jewels—such as nuclear power or automobile manufacturing—to ideological zealots.

It is hardly surprising that the fury of the socialist “firewall cartel” is also directed at entrepreneurs, who serve as one of the silent barriers against the barbarism of socialism. In Germany, it is all too easy for politicians to distract from their own failures with envy debates, resentment, and instruments such as inheritance or wealth taxes. If you want to understand how this script works, recall the embarrassing entrepreneur-bashing by the labor minister and her finance minister just a few weeks ago. This is not an entrepreneur-friendly climate—neither fiscally nor socially.

One should therefore not be surprised: economic decline is inevitable, and it is increasingly visible in the compressed real incomes of citizens. They are grappling with a distorted labor market, rising inflation, and ongoing poverty migration—a toxic brew for a society that has, in large part, lapsed into an apathetic and strangely muted “degrowth mode.”

As mentioned: why still have entrepreneurs if, in the end, the state—with unlimited credit and the iron hand of the supreme regulator—directs economic activity? Economist Lars Feld estimated total subsidies last year at €321 billion, corresponding to seven percent of the country’s entire economic output. Put more bluntly: a Mount Everest of corruption money, actively tracked down by dubious subsidy entrepreneurs who, in doing so, help construct the redistribution machinery of the green transformation. A devilish system that casts anyone enriching themselves from taxpayers’ money in an extremely unfavorable ethical light.

Unsurprisingly, the number of self-employed in Germany has been declining since the onset of green transformation policies. While there were still 4.1 million self-employed in 2000, last year only 3.6 million freelancers, merchants, traders, and other independent workers earned their living at their own risk in the free market.

With the retreat of entrepreneurship, the country’s innovative power is also waning. Disruptive ideas now find venture capital elsewhere. At the same time, the public sector absorbs a significant share of those exiting the private economy amid the economic downturn.

Since the turn of the millennium, the number of public-sector employees has risen from 4.5 to 5.5 million—an increase of over 20 percent, despite the digital revolution, which should have made it possible to automate repetitive administrative tasks. Let us be perfectly clear: the state alone created 205,000 new public-sector jobs just last year. This is not meant as blanket criticism, but bureaucracy generates no economic value—nothing conceived by regulators and documentation clerks has ever survived in the market.

Bureaucratic obstacles, new levies, grotesque regulations—spewed out mechanically by an over-bureaucratized state apparatus—the overlapping layers of national and European administration drain scarce resources from the productive sectors of society, thereby fragmenting overall economic productivity. A vicious cycle that can only be broken by radical state reform, including cutting back bureaucracy by at least half of its disastrous output.

As if to prove that Germany has gone off the rails politically and culturally, employment in the NGO sector has grown from 2 million at the turn of the millennium to 3.5 million today. A particularly tragic development, as the productive middle class is often forced, through fiscal mechanisms, to finance its own parasitic antagonists. The peak was surely the ongoing spectacle of climate activists gluing themselves to roads, along with the hysterical Fridays for Future movement, whose manic-neurotic convulsions have left citizens—sometimes amused, sometimes annoyed, but always hoping for a return of conservative reason—speechless.

3.5 million people, most of whom are likely parked in unproductive extractive activities, sustain their economic existence by channeling the hard-earned money of employees and entrepreneurs into their own useless organizations. It is the very opposite—the absolute opposite—of a market-based society, at whose center should stand the innovative entrepreneur as the engine of progress and social stability, guided by a thymotic ethic.