Moving into the 21st century

I look forward to speaking to you this evening at the Hotel Adlon. 90 years ago, the old Adlon was inaugurated by Kaiser Wilhelm II. For my part, I do not inaugurate today, but I am a kind of republican taster, which, however, is no less pleased that this traditional house is reborn in its old place.

In a way, the new Adlon also stands for the new Berlin: it is built on a site where the wounds of war gaped for decades: on Pariser Platz, where during the time of the GDR the ghostly empty field of vision of the unreachable Brandenburg Gate yawned. Today, the contours of the new German capital are becoming visible in Berlin’s Mitte, the largest construction site in Europe.

The future is being shaped in Berlin. Nowhere else in our country is so much new development taking place. Here you can feel: We can shape something, even change something. Creating a new departure, the kind that not only Berlin, but our entire country needs. I hope that this Berlin experience will provide impetus for the whole of Germany. Because what doesn’t succeed in the Berlin laboratory won’t succeed anywhere in Germany.

I just came back from Asia. There is incredible momentum in many countries there. Countries that were considered developing countries only a short time ago will catapult themselves into the circle of the leading industrialized nations of the 21st century within a single generation. Bold visions of the future are designed and implemented there, and they inspire people to ever new achievements.

What do I see in Germany in contrast? Here, despondency prevails for the most part, crisis scenarios are cultivated. A sense of paralysis hangs over our society.

At the same time, we are facing the greatest economic and social challenges in 50 years: 4.3 million unemployed, the erosion of social security due to an upside-down age pyramid, the economic, technical and political challenge of globalization.

Let’s not be deceived: Anyone who still believes that all this is none of his business because he himself is still relatively well off is burying his head in the sand.

I don’t want to mince words tonight, but call a spade a spade.

What is wrong with our country? In plain language: the loss of economic dynamism, the ossification of society, an incredible mental depression – these are the keywords of the crisis. They form a ubiquitous triad, but a triad in a minor key.

Indeed, compared with countries in Asia or – for some years now again – even the USA, growth in the German economy lacks momentum. And: In America and Asia, product cycles are becoming shorter and shorter, and the pace of change is increasing. Nor is it just about technical innovation and the ability to turn research findings into new products more quickly. What is at stake is nothing less than a new industrial revolution, the development into a new, global society of the information age. The comparison with America and its empty labor market shows: Germany is actually in danger of falling behind.

Those who show initiative, who above all want to break new ground, are in danger of being suffocated under a tangle of well-meaning regulations. To get to know German regulatory frenzy, it is enough to try to build a simple single-family house. No wonder that – despite similar wages – it is so much cheaper to build the same house in Holland.

And this bureaucracy does not only affect the small house builder. He also meets the big and small entrepreneurs, and he especially meets the one who comes up with the daring idea of starting a business in Germany. Bill Gates started in a garage and had a global company as a young man. Some say with bitter derision that his garage business would have already failed the trade inspection in our country.

And the loss of economic dynamism goes hand in hand with the solidification of our society.

The people here feel that the usual increases are not happening, and they understandably react to this with uncertainty. For the first time, even those who have never been threatened by unemployment before are plagued by existential angst for themselves and their families. The American news magazine Newsweek already spoke of the “German disease”. That is certainly an exaggeration. But this much is true: If you look at our media today, you get the impression that pessimism has become the general attitude to life among us.

This is extremely dangerous, because it is all too easy for fear to lead to the reflex of wanting to preserve everything that already exists, no matter what the cost. A society filled with fears becomes incapable of reform and thus of shaping the future. Fear paralyzes the spirit of invention, the courage to be independent, the hope to cope with problems. Our German word “Angst” has already entered the vocabulary of the Americans and the French as a symbol of our state of mind. “Courage” or “self-confidence,” on the other hand, seem to have gone out of fashion.

So our real problem is a mental one: It’s not as if we don’t know that we urgently need to modernize the economy and society. Nevertheless, things are progressing only with agonizing slowness. We lack the drive for renewal, the willingness to take risks, to leave well-trodden paths, to dare something new. I maintain: We do not have a problem of knowledge, but a problem of implementation. While the effects of technological change on the labor market and the consequences of demography for social networks are also afflicting other industrialized countries, such as Japan, there are no mitigating circumstances for the modernization backlog in Germany. It is homemade, and we have ourselves to blame for it.

At the same time, we afford ourselves the luxury of pretending that we have any amount of time for renewal: whether it’s taxes, pensions, health, education, even the euro – the voices heard are mainly those of the interest groups and worriers. But those who want to postpone or prevent major reforms must know that our people as a whole will pay a high price for them. I caution all concerned to delay or even allow any of these reforms to fail for electoral reasons. The price for this is paid primarily by the unemployed.

All political parties and all social forces are unanimous in lamenting the major problem of high unemployment. If they really mean what they say, I expect them to act quickly and decisively now! I call for more determination! We cannot afford a self-blockade of political institutions.

The ability to innovate starts in the mind, with our attitude to new technologies, to new forms of work and training, with our attitude to change per se. I even think that the mental and intellectual condition of Germany as a business location is already more important today than the rank of the financial location or the level of non-wage labor costs. The ability to innovate decides our fate. It took us 20 years to reform the store closing time. We will certainly not master the central challenges of our time at this pace. If you run up 100 meters and then jump two meters, you don’t need to compete at all.

All too often, people try to avoid the compulsion to change by simply calling for the state; this call has almost become a common reflex. However, the higher the expectations of the state grow, the easier it is for them to be disappointed, and not only because of tight budgets. The state and its organs are often simply not up to the complexity of modern life – with all its borderline and special cases – and they cannot be.

The state today suffers particularly from the myth of the inexhaustibility of its resources. You could also put it this way: The citizens overtax the state, and the state in turn overtaxes the citizens. The higher the tax burden, the higher the expectations of the state. They will then have no choice but to take on more debt or raise taxes again. In the event of excessive debt, the only option left is a drastic budget restructuring with painful economic consequences. A vicious circle!

The ritual call for the state is accompanied by what I consider a dangerous loss of public spirit. It is all too easy for people who pay high taxes to think that they have fulfilled their obligations to the community. The search for individual advantage at the expense of the community has become a popular sport. How far have we come when the one who knows how to best exploit the social safety net for himself, the one who evades taxes most cleverly, or the one who rips off subsidies most intelligently is considered clever? And everyone justifies their behavior by pointing to others who – allegedly – do the same.

In light of these problems, are we even having the right debates anymore? I want to start at the bottom: The world around us has become highly complicated, and the need for differentiated answers is growing as a result. But it is precisely on the issues that are most hotly debated that the citizen’s level of information is shockingly low. Surveys show that only a minority knows what the major reforms are actually about at the moment. This is an indictment of all involved: the politicians, who all too easily get hung up on details and fail to point out the broad strokes; the media, for whom cheap headlines are often more important than clean information; the experts, who are often too good for saying “what’s what” in clear sentences.

Instead, we indulge in fear scenarios. There is hardly a new discovery that does not first raise questions about the risks and dangers, but by no means about the opportunities. There is hardly an effort at reform that does not immediately come under suspicion as an “attack on the welfare state.” Whether nuclear power, genetic engineering or digitization: we suffer from the fact that discussions in our country are distorted beyond recognition – partly ideologized, partly simply “idiotized”. Such debates no longer lead to decisions, but instead result in rituals that follow the same pattern over and over again, according to a kind of seven-step program:

At the beginning, there is a proposal that would require sacrifices from some interest group.

The media report a wave of “collective outrage.”

Now, at the latest, the political parties are jumping on the issue, some in favor, others against.

The next phase produces a jumble of alternative proposals and actionisms of all kinds, up to and including mass demonstrations, signature collections, and dubious snap polls.

This is followed by general confusion, and citizens become unsettled.

Now appeals for “prudence” are resounding from all sides.

The end result is usually the adjournment of the problem. The status quo prevails. Everyone is waiting for the next topic.

These rituals might seem amusing if they did not dangerously cripple the ability to come to decisions. We fight over the unimportant things in order not to have to face the important ones. Do people today remember the census controversy that swept the nation a few years ago? Bogus experts with doctoral degrees comment on any topic, the main thing is to paint a black picture and scare people. Scientific and political sham battles are fought until the citizen is completely confused; in any case, the quality of the arguments is often replaced by verbal harshness, by fighting terms and “repartee”. And this at a time when people are already unsettled by the great upheavals, at a time when the loss of their own experiential knowledge would have to be replaced by external orientation. I urge more restraint: words can hurt and destroy community. We cannot afford this in the long term, especially not at a time when we are more dependent than ever on community.

Can our elites even make decisions across the dogmatic trenches? Who still determines the course of society at all: those who have the democratic legitimacy to do so, or those who succeed best in mobilizing the public for their issue? Advocacy is certainly legitimate. But don’t we see time and again that individual groups can block long overdue decisions by uncompromisingly defending their special interests? I urge more responsibility!

In America, interest groups that champion their special interests by mobilizing public opinion have been called “veto groups,” truly an apt term. They lead to a situation where problems are only talked about, but not acted upon. The watchword then is: muddle through in a strenuous search for the lowest common denominator. The consequence is the loss of the big perspective.

What I miss among our elites in politics, business, the media and social groups is the ability and the will to see through what has been recognized as the right thing to do. It can happen that the wind of public opinion blows in your face. However, our country is in a situation in which we can no longer afford to always take the path of least resistance.

I even believe that in times of existential challenge, only those who are truly prepared to lead, who are concerned with conviction and not with political, economic or media power – its preservation or even its gain – will win. We should not underestimate the ability of citizens to reason and understand. When it comes to the big issues, they honor a clear course. Our elites must not run behind the necessary reforms, they must be at the forefront of them!

Elites must justify themselves through performance, decision-making and their role as role models. I also expect clear language! Anyone who leads – wherever he or she may be – must come clean to the people entrusted to his or her care, even if it is unpleasant. I don’t blame the 35-year-old coal miners who demonstrated in Bonn to save their jobs. I know that a lot is being asked of the miners now, and I feel for them. My reproach, however, goes to those who twenty years ago encouraged the then 15-year-olds to take up this profession by telling them, against their better judgment, that it had an unrestricted future.

The simple truth today is that no one should expect to have only one job in life. I call for more flexibility! In the knowledge society of the 21st century, we will all have to learn throughout our lives, acquire new techniques and skills, and get used to the idea of working in two, three, or even four different professions at some point in the future.

The problem panorama could be completed at will. But I said earlier that we don’t lack analysis, we lack action. That is why I now want to turn to the question: What must happen?

I think we need a new social contract for the benefit of the future. All, really all, vested rights must be put to the test. Everyone needs to move. Those who only demand something from others – depending on their location, from the employers, the unions, the state, the parties, the government, the opposition – don’t move anything.

First, we need to be clear about what kind of society we want to live in in the 21st century. We need a vision again. Visions are nothing more than strategies of action. That is what distinguishes them from utopias.

Visions can mobilize undreamt-of forces: I only recall the vitality of the “American Dream,” the vision of perestroika, the power of the idea of freedom in the fall of 1989 in Germany.

The West Germans, too, once had a vision that led them up from the ruins of World War II: the vision of the social market economy, which promised prosperity for all and has kept that promise. The vision of returning Germany, defeated in the war and morally discredited, to the community of democratic states and to Europe. And finally, the vision of the unification of the divided Germany.

No one should expect patent remedies from me. But when I try to imagine Germany in 2020, I think of a country that is very different from today.

First, would it not be a goal to strive for a society of independence, in which individuals bear more responsibility for themselves and others, and in which they see this not as a burden but as an opportunity? A society in which not everything is predetermined, which opens up room for maneuver, in which even those who make mistakes are given a second chance. A society in which freedom is the central value and in which freedom is not only based on the opportunity for material gains.

Second, wouldn’t it be a goal to strive for a society that is no longer strictly divided into job holders and people without jobs, as it is today? Work will be different in the future than it is today: New, knowledge-based professions will displace unskilled jobs and there will be more services than industrial work. Instead of lifetime jobs, there will be more mobility and more flexibility, also to better reconcile work and family life. Work not only serves to earn a living, work can and should also bring joy and instill pride. No one who is fully committed should be made to feel guilty about it.

Third, would it not be a goal to strive for a society of solidarity – not in the sense of maximizing social transfers, but relying on the responsible actions of each individual for himself and the community? Solidarity is help for those who lack the strength to stand up for themselves. But solidarity also means consideration for future generations.

Fourth: I expect an information and knowledge society. This is the vision of a society that gives everyone the chance to participate in the knowledge revolution of our time. This means being prepared for lifelong learning and having the will to play in the top league in the global competition for knowledge. Above all, this includes an enlightened approach to technology.

Fifth: I would like to see a society that does not see European unification as a technique for living together, but that perceives Europe as part of its political and cultural identity and is prepared to preserve and prove it in an increasingly colorful world.

Sixth: I therefore wish for a society that accepts Germany’s international responsibility and works for a world order in which the diversity of cultures does not create new lines of conflict and struggle. An open society must also emerge internally, a society of tolerance that makes it possible for people of different cultures to live together.

However, we not only need the courage for such visions, we also need the strength and the willingness to realize them. I call for inner renewal! We have a long road of reforms ahead of us. We need to start today with the first step.

First, there are the reforms we’ve been talking about for far too long:

• Example of non-wage labor costs: Everyone now knows that non-wage labor costs are too high. When will labor costs finally be freed from noninsurance benefits?
• Example labor market:When will employers and unions finally find the strength to reach agreements that make new hiring possible?
• Example subsidies:Instead of boldly cutting subsidies, we keep coming up with new proposals for government benefits. In the process, many a funding program has long since lost its good sense.
• Example of public administration:I sometimes wonder whether in some places there is a race between expansion and deconstruction when it comes to public construction measures. And everywhere, the many small cases of public waste add up to billions. Where is modern budgetary law that rewards savings and punishes waste?
• Example of deregulation:Is it really a law of nature that you have to ask up to 19 authorities in Germany if you want to set up a production plant, even though it will create new jobs?
• Example of unemployment in the low-wage groups:Everyone knows today that wages and social welfare benefits must be far enough apart so that it is also worthwhile for the individual to work. I am not talking about the much-quoted mother with four or five children. But why is it so difficult to enforce the wage gap requirement for those who could really work? Even at the price of public wage subsidies, which would still be cheaper than full welfare benefits?
• Take health insurance, for example: Why do health insurers continue to finance convalescent cures while, on the other hand, money for life-sustaining operations is running out? Constantly rising contributions are certainly no way out here, because they endanger jobs.
• And finally, the example of tax reform: after the developments of the last few days, I can’t think of anything at all.

The path to the society I have outlined begins with catching up on all the reforms that have been left undone. We must finally do the reform homework we have been talking about for so long.

But we must also look beyond this today. The reforms addressed will not in themselves be enough to win the future.

I would like to be a little more fundamental about this.

Today, we are seeing that an increase in security through state provision is often more important to people than the associated loss of freedom. We demand freedom – but what if citizens find their freedom cold and instead rely on the security of state care and provision?

This question cannot be answered with the stroke of a pen of a legal text. So we have to start deeper: with our youth, with what we teach with our upbringing and education system. We must prepare our youth for freedom, make them capable of dealing with it. I encourage personal responsibility so that our young people see freedom as an asset and not a burden. Freedom is the flywheel for dynamics and change. If we succeed in communicating this, we hold the key to the future. I am convinced that the idea of freedom is the source of strength we are looking for and will help us to overcome the modernization backlog and to dynamize our economy and society.

That’s why I give such high priority to reforming our education system:

Education must become the megatopic of our society. We need a new departure in education policy in order to survive in the coming knowledge society.

This is not primarily a question of money. First, we need less complacency: how is it that the best-performing nations in the world manage to have their children graduate from schools at 17 and from colleges at 24? It is – mind you – precisely these countries that are the most attractive in the global market of education. Why shouldn’t it also be possible to complete a high school diploma in twelve years in Germany? For me personally, the years that have been lost to our young people so far are stolen lifetime.

Training content also needs to be put to the test. In the future, it will be even less about imparting knowledge than it has been in the past. Individuals can no longer keep up with the pace of the information explosion anyway. So we have to teach people how to deal with this knowledge. Knowledge is multiplying faster and faster, and at the same time it is becoming obsolete at an unprecedented rate. We cannot avoid lifelong learning. It cannot be the goal of university education to have a doctorate at the age of thirty, but no prospects on the labor market. Our universities therefore need more self-governance. I encourage more competition and more excellence. I know that such proposals have been on the table for a long time. Again, the speed of implementation is the problem. We must not pretend that we can leave school and university reform to the specialists. It is about a central task. It concerns the future of our society as a whole.

When I talk about the future of our society, I am – as I have already said – inevitably talking about young people. Our youth are the greatest asset we have. We just need to give it prospects. This includes not only not pursuing a debt policy at its expense, with which we block all room for maneuver.

I ask further: Why are there so few offers for young people to do voluntary social work? They do exist again, the young people who are willing to do this. I experience it in personal encounters, and I see it confirmed by the surveys, that we have long since had a turnaround in this country: Obligatory values are once again gaining in importance over what sociologists so beautifully call the “self-actualization values”. One could probably also simply say: egoism alone is no longer “in”; our youth in particular is once again willing to work for the community. But we must then also let it have its way, give it scope to gain experience beyond material values.

We need to encourage our youth to be more independent, more able to commit, more entrepreneurial and more responsible. We should tell her: you must accomplish something, otherwise you will fall behind. But: You can also achieve something. There are enough tasks in our society where young people can prove their responsibility for themselves and the whole.

But we older people must ask ourselves the question: What do we model for young people? What guiding principles do we give them? The model of the eternally irritated, eternally desperate supply citizen cannot be it nevertheless truly! The young watch us old people very closely. We will only really convince them if we give them a credible example of our own responsibility.

And finally: We have to get off the high horse that solutions to our problems can only be found in Germany. Looking at your own belly button reveals little that is new. Everyone knows that we need to be a learning society. So we have to become part of a learning world society, a society that looks around the globe for the best ideas, the best solutions.

Globalization has created not only a world market for goods and capital, but also a world market of ideas, and this market is also open to us.

Most traditional industrialized countries have faced or are facing problems similar to ours. However, quite a number of them have proven that these problems are solvable.

In New Zealand, a modern local government has been built up from old, inefficient structures.

Sweden has successfully modernized its excessive welfare state.

In Holland, labor relations have been made more flexible by consensus with the collective bargaining partners. As a result, unemployment in Holland has fallen dramatically.

In the U.S., a targeted strategy has triggered novel growth that has created millions of new jobs. I know that this is where the argument comes in that not everything that happens in America can be transferred to us, and that we don’t want American conditions in our country.

That is certainly true, but it should not prevent us from taking a closer look. I urge you to learn from others, not copy them! The fact is that the majority of these jobs have been created in future industries and future services such as telecommunications, computers, software and financial services. These are not cheap jobs. Americans have not tried to stop change, they have been at the forefront of change: by promoting research and technology, by deregulating, by building an infrastructure for the information age. They have harnessed the potential of breakthroughs in microelectronics and biotechnology to create new products that have given rise to entirely new industries. New, knowledge-based growth became the source of millions of new jobs.

We also need to get into the technologies of the future, into biotechnology and information technology. A great global race has begun: World markets are being redistributed, as are opportunities for prosperity in the 21st century. We must now start a race to catch up, where we simply cannot afford to be hostile to technology and performance.

The tasks we face are daunting. People feel overburdened by the abundance of changes needed at the same time. That’s understandable, because the backlog of reforms has been piling up in our country. It will take strength and effort to move forward with renewal, and much time has already been lost. But no one should forget: In highly technological societies, permanent innovation is an ongoing task! The world is on the move, it is not waiting for Germany.

But it’s not too late either. A jolt must go through Germany. We have to say goodbye to cherished possessions. Everyone is addressed, everyone must make sacrifices, everyone must participate:

• employers by cutting costs not only through layoffs,
• employees by bringing working hours and wages into line with the situation in their companies,
• the unions by enabling company-based collective bargaining agreements and more flexible labor relations,
• Bundestag and Bundesrat by moving the major reform projects forward quickly now,
• the interest groups in our country by not working to the detriment of the common interest.

Citizens expect action to be taken now. If everyone sees the tasks ahead of us as a major, joint challenge, we will succeed. In the end, we all benefit.

Certainly, we have some difficult years ahead of us. But we also have tremendous opportunities: We have one of the best infrastructures in the world, we have well-educated people. We have know-how, we have capital, we have a large market. In a global comparison, we still have an almost unique level of social security, freedom and justice. Our legal system, our social market economy, has been taken as a model by other countries as “Model Germany”. And above all: Everywhere in the world – except in our own country – people are convinced that “the Germans” will make it.

John F. Kennedy once said: Our problems are man-made, therefore they can be solved by man. I say: This also applies to us Germans. And I believe that the Germans will be able to solve their problems. I believe in their drive, their community spirit, their ability to realize visions. We have seen it time and again in our history: Germans have the strength and the will to perform to pull themselves out of the crisis by their own bootstraps – if only they dare to do so.

And again, I believe in the young people. Of course, I too am aware of the surveys that tell us that parts of our youth are beginning to doubt our “system’s” ability to live and reform. But I say to them: If you don’t trust “the system” anymore, then at least trust yourselves!

I am convinced:

We can become a leader again, in science and technology, in opening up new markets. We can unleash a wave of new growth that creates new jobs.

The result of this effort will be a society on the move, full of confidence and joie de vivre, a society of tolerance and commitment. If we throw off all the shackles, if we make full use of our potential, then in the end we can not only halve unemployment, then we can even regain full employment. Why should it not be possible here to do what has long been done in America and elsewhere?

We need to get to work now. I call for more personal responsibility. I am betting on renewed courage. And I trust in our creative power. Let us believe in ourselves again. The best years are still ahead of us.