Panelists disagree sharply about Germany’s progress

Germany’s leadership will be greatly needed during the current world economic crisis and during the continuing integration of Europe.

Germany’s economy has been underperforming for close to 50 years.

These were some of the views presented last week (Feb. 19-20) as a group from the worlds of politics, business, and the academy gathered at the Harvard Faculty Club for a look at “Germany in the Modern World: Division and Unity,” a student-organized conference.

This is a year of two important anniversaries for Germans — the 60th of the founding of the Federal Republic of Germany and the 20th of the fall of the Berlin Wall.

But for keynote speaker Florian Langenscheidt, the turning point was 2006. That was the year Germany hosted international soccer’s monthlong World Cup competition. The German national team took third place, in fact. But the competition marked a critical juncture. Germans, so used to having to “confront their past,” Langenscheidt said, in reference to the dark days of Nazi rule, finally were “no longer afraid to hoist their own flag.

Langenscheidt is an author, publisher, and venture capitalist, whose family has been producing dictionaries with its name on them for a century and a half. Curly-haired and weltoffen — open to the world — he is the contradiction of whatever stereotypes of war-movie Germans still linger in American consciousness. But speaking of German efforts to develop a more positive self-image, he said, “All this is not about bolstering a sense of crude national pride. Rather it’s about nurturing a sense of gratitude, a healthy degree of self-confidence, a constructive self-image, and a positive outlook on the world.” And in soccer as in flirting, he said, “it’s better to be playful than pushy.”

As he spoke, a series of images from his collection of “250 Reasons to Love Germany Today” flashed on a screen behind him. Part of one of his ongoing publishing projects, the “reasons” are a catalog of German excellence, a list of star performers, ranging from tennis celebrities (Boris Becker, Steffi Graf) to brand-name products (Nivea creme, Leibniz butter cookies) to buildings (the Reichstag, home of the German parliament) to institutions (the Frankfurt Book Fair).

Notably absent from the catalog of German excellence, as a questioner from the floor pointed out, was representation of the field of education. Nor was there much presence of the “new” or multicultural Germany, as Langenscheidt acknowledged in response to another question.

Later in the conference, Adam Posen ’88, Ph.D. ’97, deputy director of the Peterson Institute for International Economics in Washington, D.C., gave a still-respectful but much sterner critique of Germany.

“Germany is what China wants to grow up to be — the export Weltmeister,” said Posen. But this is a two-edged sword, he added. Germany is “a country that has a lot of good brands, but an economy much dependent on the world’s good graces.” That’s one of the reasons it’s suffering in the current economic downturn — and unfairly so, he acknowledged, because the crisis started in the United States.

Germany does a number of things right: It has high savings rates, stability, rule of law, willingness to trade. “Go down the checklist,” Posen said. “Germany underperforms.” And this can’t be explained away, he insisted, on the grounds that the country has a more generous social safety net than the United States. A dozen other countries do, he added, and they have outperformed Germany.

“Germany cannot survive indefinitely on export-driven growth,” Posen continued. He said that dependence on such growth “deceives the German public and political class about where the strengths of the economy lie.”

The German economy consists largely of so-called Mittelstand firms — midsize companies, often family owned or privately held, generally financed with bank loans rather than equity. Such companies tend to have just a few hundred employees and no great plans to take over the world. Posen suggested after his panel session ended that too many German firms are stuck in a sort of “comfort zone” that keeps them from stronger growth.

But the panel on which he spoke also included a representative of just such a Mittelstand firm, Grohe AG, Europe’s leading maker of sanitary plumbing and water technology products. The company has been transformed over the past several years, building production facilities in Portugal, Canada, and Thailand; restructuring; and professionalizing its sales force. “We’ve become the world’s first lean, demand-driven company in our industry,” said Detlev Spigiel, a senior executive at Grohe.

The conference was organized by a committee of six Harvard students: Eva Gerlemann and Malte Janzarik, conference co-chairs, both of Harvard Business School; plus Alexander Kirn, also of the Business School; Lukas Streiff and Clara Zverina of the Harvard Kennedy School; and Leonardo de Nevi of the Harvard Extension School. The conference was sponsored by the Bertelsmann Foundation as well as the German Embassy in Washington and the German Consulate General in Boston.