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Is the German response to the economic crisis slower because of German culture, New York Times correspondent in Berlin Nicholas Kuhlisch asked last week. His idea is that the German love for rules and Ordnung, embodied in the strict adherence to each and every sign in a German swimming pool („Nicht vom Beckenrand springen!“, „Nicht auf den Kacheln rennen!“, „Keine Schuhe im Barfussbereich!“), can also explain the transatlantic furor over economic stimulus packages.

German swimming pool: Too many rules?

„President Obama’s approach to the financial crisis has been typically American — bold, improvisatory and on the fly. The Germans have been studied and measured, evincing a far greater trust than the Americans in their social-security system to patch the cracks in the foundation of their economy.“

„Of course that is due in part to the famed German aversion to excessive deficit spending, stemming from gut-level fear of a repeat of the hyperinflation of the 1920s. But there is also the German adherence to rules, love of a good plan and cautious, thoughtful approach when it slowly becomes apparent that a return trip to the drawing board may be necessary.“

It‘s true, we love rules. They make daily life more efficient. They enable us to drive our cars at top speed on the Autobahn, which means doing at least 200 kph (124 mph). This of course only works, if you can be sure that everyone will play according to the playbook, in this case the holy StVO. Slow drivers and trucks use the right lane, middle class cars drive in the middle lane, and the finest examples of German engineering are always to be found in the left – or express — lane. Tractors can use the shoulder, but no one else.

But do we actually think our economy can be handled like Autobahn traffic?

There are some points that speak to it. Economists like to say that when Americans drive a car against a wall, they try to figure out how to get around it as quickly as possible. Germans study the texture of the wall to find out how to dematerialize it. The idea that what was right just moments ago now is wrong, clearly causes discomfort to the German soul.

But does the love for analysis and discussion accurately predict the response of the Merkels and Steinbrücks to the economci downturn? No, perfectly epitomized in the latest addition to the German dictionary, „Abwrackprämie“. The measure gives buyers of new cars a € 2,500 subsidy if they scrap their old car in return.

The procedure is highly unfair. Other Industries have no chance to lay their hands on the stimulus money. Upmarket carmakers do not see their sales spur, because it is mainly buyers of compact cars who fall for the bait. Everyone who always wanted to buy a new car but has no old one at hand, will remain without a ride. Even used car dealers and repair shops complain, because their markets are shrinking due to less old cars on the streets and fewer demand for used cars.

However, the government has just decided to extend the budget and timeline for the program. This despite concerns from the opposition that the measure merely shifts demand from later years to today — demand that will be missing during a possible economic upswing in the future. It’s efficiency is contested as well, as many of the newly bought cars are manufactured in Eastern Europe and Asia. This attempt to get the economy going again clearly speaks against the careful deliberation Germans are supposed to like so much.

Then there is the fact the German economic system is better prepared to take a hit in bust years. The vast provision of welfare and unemployment pay (compared to the U.S.) is a sort of automatic stimulus package in its own right. These automatic stabilizers start to work as soon as the first wave of lay-offs hits the Federal Employment Offices. Then, the government budget increases even without the need to pass stimulus packages, simply because more people access these funds.

On the other side of the Atlantic, the U.S. Congress has to pass more spending bills to reach a higher level of spending. Plus, the U.S. state governments are subject to stricter spending rules which prevent excessive deficit spending on state level, thus exacerbating the problem. The bottom line is: Germany has to do less to match U.S. spending levels during a recession simply because we have a more developed welfare system.

Berlin-based journalist Ben Perry points out some more arguments against the idea that the German love of rules is behind the slow response to the crisis:

„The fact is, though, this is caricature and a tired caricature at that. For every German who wouldn’t dare cheat on his taxes, I can show you one who has made tax evasion an art form (let alone running off to Switzerland, as Kulish mentions). If there is such a strong desire for order, could someone please tell me why Germans are completly incapable of forming a simple single file line, ever? What’s so orderly about all the sidewalk dog crap?—something I don’t complain about but plenty of folks do. And on the government level, America’s essentially two-party system looks practically monolithic compared to the chaotic jumble of Germany’s multi-party coalition makers.“

In the end, as Ben Perry also notes, if the Germans are reluctant, risk-averse spenders, who prefer government bonds to the stock market, what does this tell us about Americans in the light of their trillion dollar stimulus packages? That they are imprudent spenders, who delay their financial problems until their credit card bill hits them over the hat and they have to go into foreclosure? Maybe there is a kernel of truth hidden in every beaten cliché.

By Kolja Langnese