Cutting the Gordian Knot
NEED TO KNOW
Cutting the Gordian Knot
GERMANY
Twenty-five years ago, Germany was famously called the “sick man of Europe.” In the ensuing decades, though, it did an about-face, turning itself into an “economic superstar,” a manufacturing and exporting powerhouse that led the continent to new heights.
Today, however, it seems again like a broken nation that can’t get out of its own way.
The country is just a little tired and in need of a “cup of coffee,” German Finance Minister Christian Lindner told CNN earlier this year.
But that old moniker is being trotted out again to describe the country. That’s because last year, the economy was the worst performer of the major economies in the eurozone, and the only G7 economy to shrink, according to the International Monetary Fund. This year, it is set to be the latter group’s slowest-growing economy again.
Meanwhile, Germany’s income per capita shrank 1 percent between 2019 and 2023 – the 34th-worst outcome out of 41 high-income economies. Of the G7 economies, only Canada performed worse. The US rise of 6 percent was in another league.
“Germany is struggling,” the IMF concluded.
Certainly, Germany suffered more than its European counterparts when Western sanctions hit oil and gas exports from Russia – traditionally its main supplier, as well as a major trading partner. Still, citing slow growth forecasts even when energy prices are in decline, the German finance minister recently called for “structural reforms,” Reuters reported.
German officials say the dismal picture is due to multiple crises, including historically elevated levels of inflation, high interest rates and weak domestic and foreign demand for German goods.
Others counter that the problems also stem from a huge surplus of private savings with little public investment at home, the country’s miniscule role in the digital economy and an aging workforce with a persistent shortage of skilled labor, wrote the Financial Times.
“Germany has become sick,” said Peter Bofinger, professor of economics at Würzburg University, adding that the German economy is facing a fundamental challenge to its business model, namely its dependence on exports.
“But it could be cured if it were willing to change its lifestyle and take the medicine needed to regain its health,” he added. “The medicine is public debt deployed as an engine of growth … by increasing public investment to stimulate domestic demand and the emergence and deployment of new technologies.”
That said, leftists at Jacobin magazine took a different angle. They argued that Germany has depended too much on low-wage growth which has alienated working folks.
Meanwhile, big government and excessive red tape loom large in the sluggishness, according to the IMF and also the former head of the European Central Bank, Mario Draghi, added the Associated Press. For example, incorporating a new business can take up to six months, often involving snail mail and faxes. In the US, it takes about an hour.
Regardless of the reasons, the results are that real wages and services in the country have declined, as has its vaunted efficiency – its famously punctual trains are regularly late now, for example. Meanwhile, broadband coverage remains poor and the country’s infrastructure is crumbling. Strikes by rail workers and farmers freeze major cities too often. And legacy German companies such as Deutsche Bank are cutting thousands of jobs – now, Volkswagen is threatening to close entire factories in the country, a shocking move for Europe’s car-manufacturing giant.
Meanwhile, violent crime reached a 15-year high, with some high-profile cases involving migrants, wrote Deutsche Welle, adding to widespread anti-immigrant sentiment.
Such issues are often cited as why the far-right, populist, Alternative for Germany (or AfD) has been making great strides in local and European Parliament elections this year. The problem is, with their wins comes more fractious politics, even paralysis, because many parties refuse to work with them in coalitions. That makes it difficult for officials to get things done, World Politics Review noted.
German officials are moving on some issues, however. Recently, Germany’s Constitutional Court gave the green light to a plan to cut more than 100 lawmakers from parliament, reducing the total from 733 to 630, according to Politico. The idea is that smaller government is better.
Cutting red tape and government isn’t enough, says Bofinger.
Recently, the Guardian wondered if “the ‘sick man of Europe’ label would stick to Germany this time around. After all, “its growth model seems kaput,” it wrote.
Still, it concluded that it’s too soon to write off such a resilient country: “The economy (has) confounded critics before.”
THE WORLD, BRIEFLY
The Costs of Liberty
AUSTRALIA
New South Wales (NSW) Premier Chris Minns faced backlash from his Labor Party and civil rights groups this week, after suggesting that police should ban protests if they are deemed too expensive, underscoring tensions between public safety and civil liberties amid ongoing demonstrations over the Israel-Gaza conflict, the Guardian reported.
On Tuesday, Minns said during a radio interview that authorities should have the power to reject a “public assembly” application – approval of such an application is required to stage a protected protest in NSW – based on the cost of patrolling those rallies.
The state leader said that police at the weekly pro-Palestine rallies have cost taxpayers more than $3 million so far in 2024 and that the money should be used to fight crime.
Minns has also ordered a review of police resources used at pro-Palestine protests, which have been held in the state’s capital of Sydney every weekend since Hamas’ attacks on Israel on Oct. 7, 2023, and Israel’s subsequent military offensive in Gaza.
His comments quickly sparked widespread criticism, with civil liberties groups warning that financial restrictions on protests could erode democratic freedoms.
The Human Rights Law Center expressed concern that empowering police to deny permits on such grounds could lead to selective enforcement, especially as protests often spotlight controversial issues.
Union leaders, such as Unions NSW secretary Mark Morey also condemned the suggestion, saying that “democracy should not be monetized,” while cautioning that financial barriers would set a dangerous precedent.
The comments stirred division within the Labor Party, with lawmakers warning they posed a “profound threat to civil liberties.”
Meanwhile, Kevin Morton, president of the NSW Police Association, downplayed Minns’ suggestion that the presence of police at protests hindered their response to crime, the Guardian reported separately.
However, Morton acknowledged that protests added strain upon an already understaffed force.
In response, Minns has dismissed accusations that his comments are divisive toward Middle Eastern communities and that he aims to impose fees on pro-Palestinian protesters to cover police costs, the Australian Associated Press added.
Aiming to Punish
LITHUANIA
Lithuanians will head to the polls this weekend in a closely-watched parliamentary election that could see the ruling center-right Homeland Union party lose power, amid rising discontent over inflation and widening income inequality, Reuters reported.
Recent polls show the Social Democrats leading with support at 18 percent, while Prime Minister Ingrida Šimonytė’s Homeland Union is trailing in third with nine percent, behind the anti-establishment, populist Nemunas Dawn party at 12 percent.
If the Social Democrats prevail, they will likely form a coalition with smaller center-left parties, as both major parties have ruled out an alliance with the Nemunas Dawn, led by former lawmaker Remigijus Žemaitaitis, who resigned from parliament after making anti-Semitic comments that led to a prosecution, wrote public broadcaster Lithuanian Radio and Television.
The Baltic country’s 2.4 million eligible voters will elect 141 members of parliament on Oct. 13, with a potential runoff vote on Oct. 27.
Although Lithuania’s economy has grown steadily, analysts said Šimonytė’s popularity has been marred by rising inflation, which topped 20 percent two years ago, as well as public frustration over income inequality and stretched healthcare services.
Voters have also criticized her administration’s strict pandemic measures and a surge of migrants from Belarus, which the government alleges was orchestrated by that neighboring country and Russia to destabilize the region, the Associated Press added.
Despite these challenges, defense remains a high priority, with both the Social Democrats and the Homeland Union supporting increased military spending.
The Social Democrats are proposing a budget boost to five percent from three percent of gross domestic product.
A recent poll found that three-quarters of Lithuanians fear a Russian attack.
The Customer, Dethroned
JAPAN
A Japanese word for customer, kyakusama, translates as “honored guest.” But these days, bad behavior by these “guests” has gotten so out of hand that Tokyo is putting them on notice, the Japan Times reported.
Earlier this month, the city passed the country’s first ordinance to help protect workers from harassment, a move aimed at addressing the rising incidence of abuse of service industry staff by customers, also seen as gods or kings in the country.
Tokyo officials said the directive will go into effect in April. While it does not carry penalties, the government hopes it will send a message to customers to stop taking their frustrations out on employees, the Guardian reported.
Officials plan to develop more detailed guidelines before April, but Governor Yuriko Koike said the main philosophy of the order is “mutual respect between workers and customers.”
Japanese society is known for its attention to manners, as well as its exceptional customer service. But recently, customer behavior has gotten so extreme that it has threatened the safety of service workers, officials said. There has been an increase by customers in verbal abuse, violence, and doxing on social media of service sector employees.
A June survey by UA Zense, a federation of labor unions in the Japanese retail and service industries, discovered that almost one in two respondents experienced some form of customer harassment in the past two years.
The harassment has also crept into local government offices: One official complained to a local newspaper that some people “feel they can say whatever they want when dealing with public servants because they are paying tax.”
Meanwhile, three other prefectures are considering similar laws. Some municipalities and companies in Japan have also been giving employees the option of displaying only their first names on ID badges to increase employee anonymity.
Hiromi Ikeuchi, a sociology professor at Kansai University, said the rise of kasuhara (customer harassment) is influenced by various factors, including the tendency to treat customers as “gods” in the fight to remain profitable in an increasingly challenging business climate – an approach that has shifted the balance of power from companies to their customers.
DISCOVERIES
New Heights
Adventurers seeking to scale Mount Everest, the world’s tallest mountain, will find the task more challenging in the future.
The mountain, currently standing 29,032 feet high, has been growing, according to a new study.
Recent analysis showed that the iconic peak has gotten 50 to 164 feet bigger over the past 89,000 years – and it’s still rising.
The unexpected culprit? A nearby river that has been eroding the landscape and triggering the mountain’s uplift.
Researchers from University College London (UCL) and China’s University of Geosciences discovered that the Arun River, located about 46 miles east of Everest, has been steadily carving out a deep gorge.
As the river erodes the land, it reduces the weight pressing down on the Earth’s crust, allowing the ground beneath the mountain to rebound upward in a process called “isostatic rebound.”
As a result, the titanic peak is growing by about 0.08 inches a year, a rate higher than previously expected. This extra height boost helps explain why Everest towers roughly 820 feet above its neighboring Himalayan peaks, such as Lhotse and Makalu – even as they grow, too.
“It’s a new additional component of uplift for Mount Everest,” co-author Matthew Fox told the Washington Post. “The biggest impact is probably on the climbers that have to climb another 65 feet or so to the top.”
However, not everyone is sold on the idea. Geologist Mike Searle of Oxford University, who was not involved in the study, remains skeptical, noting that river incision may have limited influence on mountain growth.
“The main process causing the height of Everest and Makalu is tectonics: The thrusting of plates causes topography,” he told the newspaper.
Still, the study offers new insights into how the world’s tallest mountain is shaped by forces above and below the Earth’s surface, according to lead author Xu Han.
“The changing height of Mount Everest really highlights the dynamic nature of the Earth’s surface,” he explained in a statement. “The interaction between the erosion of the Arun River and the upward pressure of the Earth’s mantle gives Mount Everest a boost, pushing it up higher than it would otherwise be.”