Behind Germany's Crisis, A Past That Is Crippling

MOENCHENGLADBACH, Germany -- Printing firm B. Kuhlen KG survived the plunge in business during World War I, the hyperinflation of the 1920s and the Allied bombs in the Second World War that destroyed its roof and most of its machinery. It got past strikes in the 1950s and even a bomb threat in 1968.

If current trends continue, "we will have a dual citizenry of a very accomplished, wealthy elite and then those completely dependent on the welfare state," Mr. Streeck says. Income differences will create a society that will begin to look "a lot like America," he adds.

Forgot about that permanent underclass of six million Turks, did you, Herr Streeck?

Yes, and it looks like it's time for Germany.

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.

Given their current economic crisis, Germany could not have done worse than to re-elect Herr Schroeder. He will be about as helpful at coping with this crisis as Gray Davis.

The same principles that galvanized a devastated nation after World War II -- a broad social safety net, consensus-driven policies and restrained market forces -- have turned corrosive for the world's No. 3 economy.

The difference then was that people were suffering from bombed homes, destroyed industries, cratered roads and rail lines, hunger, homelessness, and all the destruction of a major war. When the shooting stopped, huge numbers of displaced people wandered aimlessly around a devastated landscape of flattened houses and factories.

Konrad Adenauer was a giant, a devout Catholic who pulled everyone together working cooperatively simply to survive. He presided over an economic miracle, with generous help from the Marshall Plan.

By contrast, Schroeder is a moral midget, with no known religious faith and no real compassion for his fellow countrymen. Instead of displaced people you have lazy people, and unions ever eager for higher wages and shorter hours. One thing gradually evolved into the other, but in the end there is small resemblance between Germany then and Germany now.

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