Germany’s Political Collapse | Ones and Tooze Ep. 166 | An FP Podcast
What this covers
With the collapse of the ruling coalition in Germany, hosts Cameron Abadi and Adam Tooze take a deep dive into the future of the country from both a political and economic perspective.
The two delve into what doomed the government of current Chancellor Olaf Scholz and what lies ahead for likely future Chancellor Friedrich Merz. Merz is the head of the main opposition party in parliament, the center-right Christian Democrats.
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Germany faces a compounding economic crisis rooted in long-term structural failures—missed digital transformation, automotive industry disruption by EVs, and political dysfunction—that require decisive modernization but instead face conservative leadership oriented toward defending a declining manufacturing model.
- German automotive sector, symbol of postwar prosperity, failed to recognize cars would become digital platforms rather than refined combustion engines, leaving it vulnerable to Tesla and Chinese competitors
- Political paralysis under Merkel and the collapsed traffic-light coalition prevented necessary investments in energy independence, defense capability, and digital infrastructure despite known vulnerabilities
- Merz-led CDU government will likely prioritize business-led growth and supply-side conservatism over the qualitative modernization the economy actually needs
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German automobile manufacturers failed to understand that the future of the car was not refinement of internal combustion engines, suspension, and performance metrics, but rather transforming the car into a smartphone/social media/digital entertainment platform on wheels, which Tesla and Chinese manufacturers grasped but German firms did not.
“firms other than those to really make the digital leap and by far on the way the most significant sector to fail here is the automotive sector which is not just Germany's but Europe's leading sector of R&D if you look at the R&D rankings for Europe they're dominated by German Auto firms and they basically fail to understand that the future of the car was not ultimately refining the internal combustion engine and incredible suspension and so on but basically making the car into a cell phone and social media and digital entertainment system on Wheels and that's what that's what none of the German car manufacturers have really grasped this and so that's where they've kind of they're now struggling to catch up”
The German automotive sector is arguably the most dynamic industrial R&D core in Europe in terms of scale, with only Airbus as a potential rival in terms of sophistication but much smaller in scale, making it the technological center of European manufacturing innovation.
“there's all the spin-off and the spin-off is not just jobs and and value added but it's actually an entire technological Network and as I was saying the German automotive Hub is arguably the most dynamic industrial R&D core I don't think it's arguable actually I think it's just a fact in Europe in terms of and certainly in terms of scale maybe Airbus you could count as a rival in terms of sophistication but it's nowhere near as large as a tech Hub”
Germany failed to develop a substantial digital technology sector comparable to the United States; while Germany has strengths in Infineon (chips), SAP (enterprise software), and Siemens (industrial automation), the German automotive sector failed to recognize that future cars needed to become mobile platforms for digital services and entertainment, not just refined combustion engines.
“Germany has Champions I mean it has infon in chips it has sap in Enterprise software and it has semens in Industrial Automation and by any standard worldwide these are significant players in their particular niches of of tech”
Unlike the United States where the Biden administration could draw on substantial fiscal resources, the German government faced constitutional constraints on spending (the 'debt brake') that prevented it from fulfilling coalition contract commitments, creating structural dysfunction.
“one of the differences with the United States is that in the US the government had at least a lot more money to throw around and ultimately the sort of the German government had this constitutional ruling that basically prevented them from spending the amount of money that they envisioned in that Coalition contract”
Christian Democracy emerged as a political force partly from Catholic identity and partly as anti-communism and anti-nationalism in postwar Europe, in contrast to Protestantism which Tooze argues was historically the religion of nationalism in Europe since the Reformation.
“Christian democracy comes out of Catholicism first and foremost protestantism was always the religion of nationalism in Europe going all the way back to the Reformation Catholicism has this unitary kind of claim and you know not always realized in practice but that's an ideological resource and in the wake of fascism in Germany and Italy Catholicism emerged as a claim on you know to a wider European identity”
In proportional representation systems like Germany's, coalition partners negotiate detailed coalition contracts specifying legislation in advance, creating formal accountability for contradicting agreed positions—a structural difference from US government that makes bad-faith coalition behavior (like the FDP's) more visible and damaging.
“the way the Germans handle this unlike in the US is that when you form a government you actually sign a coalition contract it's literally called that or a coalition treaty in which you spend months if necessary hammering out your differences and pre agree the legislation you're going to pass”
German auto firms are now being out-competed by Tesla and Chinese car companies on electric vehicles, a shift that would be catastrophic if it represents a permanent loss of German auto competitiveness, but the macro impact on the German economy is more moderate than often portrayed because the automotive workforce (700,000 core workers) represents only about 2% of Germany's 35 million-person insured workforce.
“Germany's Workforce paying social insurance so people employed is 35 million people and the highest estimate that you get for the automotive sector is 2 million the core Workforce actually making vehicles and key components for them is more in the order of uh uh 700,000 people so we're talking we're talking a relatively modest fraction of a big complicated economy”
The traffic light coalition (SPD, Greens, FDP) was an experiment in progressive governance that departed from Angela Merkel's 16-year pattern of CDU-SPD coalitions, but it was fundamentally unstable due to irreconcilable differences between the market-liberal FDP and the interventionist Greens over government spending and climate policy.
“the traffic light Coalition was an important experiment Germany under Angela Merkel had had a series of of governments that basically always consisted of her Christian Democratic party”
The FDP (Liberals), polling below 10%, deliberately provoked the coalition's collapse through months of increasingly aggressive economic programs they knew their coalition partners would reject, with the strategic goal of repositioning themselves to potentially enter a future government with the Christian Democrats.
“the Liberals quite deliberately provoked collapse of the government and we know from research by Robert P at the tip um weekly newspaper that the fdp basically over a series of months actually prepared increasingly aggressive economic programs which they knew would be rejected by their Coalition Partners hoping to provoke Chancellor Schultz to finally step up because otherwise he's been basically a bit of a non-entity and fire chrisan lintner allowing them then to position themselves and hope to get across the 5% hurdle”
Germany is a highly sophisticated modern service-based economy that does not live primarily by manufacturing and exporting, but integrates goods into service-sector provision like most other advanced economies—the auto sector is one piece of a larger, diversified economy.
“it's just one piece of a very big aggregate which is a highly sophisticated modern economy which doesn't actually live by metal bashing and exporting but lives like most other economies largely by integrating Goods into service sector driven provision”
The German automotive industry sustains highly organized industrial working-class constituencies represented by IG Metall (the German metal working union), the most powerful trade union in the world, which has board-level co-determination representation in VW.
“the jobs and where they're concentrated and these are core constituencies of what's left of the German industrial working class which is still highly organized in um the biggest Trade union I think probably the most powerful Trade union I think in the world anyway which is IG metal the German metal working Union which is heavily represented in VW and we're talking co-determination here so they have board level representation”
The German government faced constitutional constraints on spending that prevented it from deploying fiscal resources at the scale it had envisioned in its coalition contract, a structural limitation the US government did not face.
“the German government had this constitutional ruling that basically prevented them from spending the amount of money that they envisioned in that Coalition contract”
Comparing national economies directly can be misleading—Germany cannot fairly be compared to the United States, which is vastly larger; instead Germany should be compared to regions like US states or within Europe's ecosystem.
“there's a fallacy in comparing National economies with each other I mean Germany's economy is large and important but it's you know it's bigger than that of New York but you know it's a bit like asking when did New York State miss the digital boat train”
Merkel continued the 'Ostpolitik' (Eastern Policy) of détente with the Soviet Union and Russia that began in the 1970s, shifting Germany from its 1950s-60s hawkish anti-communist stance toward engagement and negotiation—Merkel and Putin both spoke Russian fluently, giving their bilateral relationship a linguistic dimension unique among Western European leaders.
“Merkel was in no way exceptional in continuing this policy growing up in East Germany she spoke um very fluent Russian in the same way as Putin speaks extremely fluent German and so the two of them had a possibility of exchange which is very unlike that of any West European politician”
Christian democracy emerged as a response to fascism and was rooted in Catholicism's claim to a wider European identity (unlike Protestantism, which Tooze associates with nationalism), and Christian Democrats drove EU formation after WWII as an expression of anti-nationalism and anti-communism.
“Christian democracy comes out of Catholicism first and foremost protestantism was always the religion of nationalism in Europe going all the way back to the Reformation Catholicism has this unitary kind of claim and you know not always realized in practice but that's an ideological resource and in the wake of fascism in Germany and Italy Catholicism emerged as a claim on you know to a wider European identity”
Volkswagen is planning to close three factories in Germany and cut 30,000 jobs while implementing a 10% pay cut across the board, marking the first factory closures in the company's history and signaling deep structural crisis in German manufacturing.
“30,000 that is the number of jobs with folks swagon that are now set to be lost in Germany as the company contemplates Factory closures in the country for the first time ever in the history of Volkswagen now then Volkswagen is reportedly planning major job Cuts as it struggles to turn around its business tens of thousands of job Cuts Mark a 10 % pay cut across the board and three factories all set to be closed in Germany”
The FDP (Liberals) deliberately provoked the collapse of the coalition by preparing increasingly aggressive economic programs they knew would be rejected by coalition partners, in hopes of positioning themselves to cross the 5% threshold needed for Bundestag presence in future elections.
“the Liberals quite deliberately provoked collapse of the government and we know from research by Robert P at the tip um weekly newspaper that the fdp basically over a series of months actually prepared increasingly aggressive economic programs which they knew would be rejected by their Coalition Partners hoping to provoke Chancellor Schultz to finally step up”
The Obama administration was content to allow Europe (through Merkel and French leadership) to handle the Ukrainian crisis after 2013-2014 without direct US engagement, focusing instead on the failed Minsk process, suggesting US disengagement rather than aggressive Merkel appeasement.
“the Americans were only too happy to hand off to Berlin and Paris to sort out with the Minsk process right Obama's administration was not interested in getting its hands dirty with that European problem”
Germany's industrial production has been declining for several years, predating both the Ukraine war and the COVID-19 pandemic, indicating long-running structural economic problems.
“industrial production is down in the country for several years now this is predates the Ukraine war in fact and predates the pandemic so kind of long running economic problems”
German auto brands (VW, Mercedes, BMW, Audi/Porsche) are among the most famous brands globally, and their financial crisis would represent a major symbolic blow to a modest European economy, particularly affecting organized industrial working-class constituencies and concentrated in specific regions.
“there are very few brands in the entire world more famous than you know the big four VW Mercedes uh BMW and and bch like these are these are iconic Brands the world over”
Germany's GDP per capita has grown in real terms by approximately 50% over the last 30 years, while Japan's stagnated after the early 1990s, making Germany's trajectory fundamentally different from Japan's 'lost decades' despite recent slowdown.
“Japan and Germany's economic trajectories since the early 90s are very very different because whereas Japan's GDP per capita really crested early in the late 80s and early 90s and has largely stagnated since that's just not true for Germany so Germany is 50% better off in real terms as best we can estimate that over the last 30 years”
Ursula von der Leyen (German CDU, most consequential European Commission president since Jacques Delors in 1980s) represents continuation of Christian Democratic European integration tradition despite being somewhat shadowed by Merkel's chancellorship.
“the most consequential European commission president since delore in the 80s is German and of his party so she's a CDU figure another one of the people that was kind of caught in the windshadow the great shadow of Angela Merkel and ended up exiting to Brussels”
Germany is an incredibly prosperous society with high living standards, much higher life expectancy than the United States on average, and exceptional wealth distribution compared to most advanced economies, though inequality issues and governance problems around education and migration remain.
“Germany is an incredibly prosperous place now not uniformly of course like most other advanced economies Germany's main problems are inequality and good governance around issues like education migration and so on but this is this is a very rich affluent society which offers its citizens much higher life expectancy on average than virtually anywhere in the United States”
Europe as a whole failed to track the United States in platform businesses and failed to compete with Korea and Taiwan in hardware production, not just Germany.
“Europe as a whole failed to track the United States when it came to platform businesses and failed to track Korea Taiwan when it came to Hardware production”
Germany's industrial production has been declining for several years, predating both the COVID-19 pandemic and the Ukraine war, indicating long-standing structural economic problems rather than temporary shocks.
“industrial production is down in the country for several years now this is predates the Ukraine war in fact and predates the pandemic so kind of long running economic problems that have come to a head”
Germany's main economic problems are inequality and governance failures around education, migration, and infrastructure rather than overall poverty, making it one of the most prosperous societies in the world offering higher life expectancy than most US regions.
“Germany's main problems are inequality and good governance around issues like education migration and so on but this is this is a very rich affluent society which offers its citizens much higher life expectancy on average than virtually anywhere in the United States let alone national average you know that has very very high stand standard of living by any measure”
Volkswagen and other major German automakers represent the most dynamic industrial R&D core in Europe, and their potential technological eclipse represents an unprecedented historical loss for the continent's technical capacity.
“the German automotive Hub is arguably the most dynamic industrial R&D core I don't think it's arguable actually I think it's just a fact in Europe in terms of and certainly in terms of scale maybe Airbus you could count as a rival in terms of sophistication but it's nowhere near as large as a tech Hub”
Modern advanced economies no longer live primarily by 'metal bashing and exporting' but by 'integrating goods into service sector driven provision'—this is true for Germany as much as any other advanced economy, though Germans struggle to recognize this reality.
“lives like most other economies largely by integrating Goods into service sector driven provision this is true for Germany as it is for every other Advanced economy even though the Germans have a hard time really realizing this”
The automotive sector accounts for approximately 700,000 core workforce jobs directly in vehicle and component manufacturing, with estimates of up to 2 million indirect employees in supply chains and related services, but represents only a modest fraction (under 10%) of Germany's total 35 million employed workforce.
“Germany's Workforce paying social insurance so people employed is 35 million people and the highest estimate that you get for the automotive sector is 2 million the core Workforce actually making vehicles and key components for them is more in the order of uh uh 700,000 people so we're talking we're talking a relatively modest fraction of a big complicated economy”
Christian Democracy offers a distinctive approach to economic issues centered on subsidiarity (decisions made at the most local possible level) rooted in Catholic teaching, combined with internationalism and commitment to European integration.
“there's this kind of idea of subsidiarity it I mean that's sort of rooted in Catholic teaching I think where sort of concentric circles of policym where things happen at the most local possible level but at the same time as that there's a kind of you know internationalism at the heart of of Christian democracy as well”
The FDP Finance Minister Christian Lindner became the focal point of coalition conflict by increasingly adopting fiscal-conservative positions, making the Greens' need for government investment and regulation increasingly impossible to accommodate.
“the Liberals the fdp have dug in on an increasingly hard fiscal conservative position they watered that down because of the aftermath of covid and because of the shock of the war in Ukraine but increasingly as the coalition's come under pressure they've dug in on this Finance Minister Christian lintner was at the core of this and this has made the position of the greens who need government investment various types of other regulatory intervention increasingly impossible”
Helmut Kohl, Chancellor from the early 1980s through the 1990s, was a passionate European exemplifying post-war Christian Democratic commitment to supranational European identity as anti-nationalist and anti-communist, which shaped the generation of Frederick Merz.
“it's surprising that it's only one generation before Frederick MKS and Angela Merkel that is helmet Cole this was incredibly pronounced so this was the chancellor of Germany that brought about unification from the early 80s through to the 1990s and if he he was a he was a passionate European like he was a European that was really of the postwar generation exemplified exactly that kind of logic that you're invoking cam”
The difficulty Germany faces is psychological and political adjustment to no longer dominating European headlines as a success story, having moved from being the 'sick man of Europe' in the late 1990s to a success story for two decades, and now facing slower growth requiring fundamental adjustment.
“The the difficulty in a sense is adjusting precisely to the fact that it's no longer dominating their headlines as Europe's success story which for really since the early 2000s it's been able to do there was a phase when it was the sick man of Europe in the late 90s and that's stuck quite deeply in the German memory bank but for a couple of decades now it's been a success story really until as you said but even before covid growth began to to slow down quite sharply”
Helmet Kohl, German Chancellor from early 1980s through 1990s, was a passionate European figure of the postwar generation who exemplified the Christian Democratic commitment to European integration as a response to WWII and fascism.
“it's surprising that it's only one generation before Frederick MKS and Angela Merkel that is helmet Cole this was incredibly pronounced so this was the chancellor of Germany that brought about unification from the early 80s through to the 1990s and if he he was a he was a passionate European like he was a European that was really of the postwar generation exemplified exactly that kind of logic”
In 2008, the Bush administration unexpectedly proposed NATO membership for Ukraine and Georgia, which Merkel and France resisted, resulting in a compromise that neither granted membership nor provided effective support—Georgia subsequently suffered a war with Russia while Ukraine was left in a precarious state, which retrospectively appears as failed appeasement.
“the key moment in retrospect for Defenders of the Ukrainian national cause is the fact that in '08 when the Bush Administration very abruptly and to the surprise even of people like coni rice suddenly jumped the gun and said right we're going to bring Ukraine and Georgia into NATO Germany and France resisted this and resisted this quite doggedly”
Under Angela Merkel (2005–present), the German government consistently consisted of her Christian Democratic Union paired most often with the Social Democrats, forming a centrist coalition structure that dominated German politics for 20 years.
“Germany under Angela Merkel had had a series of of governments that basically always consisted of her Christian Democratic party this is going back to 2005 so a center right-wing um Christian Democratic party more often than not in Coalition with the social Democrats”
Germany's GDP per capita has increased by 50% in real terms over the past 30 years, far outperforming Japan's stagnant GDP per capita since the early 1990s, making Germany's situation fundamentally different from a Japan-scenario despite superficial similarities.
“Japan and Germany's economic trajectories since the early 90s are very very different because whereas Japan's GDP per capita really crested early in the late 80s and early 90s and has largely stagnated since that's just not true for Germany so Germany is 50% better off in real terms as best we can estimate that over the last 30 years”
The Ukrainian crisis did not begin in 2022 but in 2013-2014, and the Obama administration was uninterested in getting involved, preferring to hand off the problem to Berlin and Paris for the Minsk process, so American responsibility for Ukraine policy failures was limited.
“because the Ukrainian crisis didn't start in 22 as as everyone now likes to remind themselves it started in 2013 2014 and it was a mess and it was a mess from both the European and the American side but it was a mess the Americans were only too happy to hand off to Berlin and Paris to sort out with the Minsk process right Obama's administration was not interested in getting its hands dirty with that European problem”
Merz is notably polemical, not afraid of personal attacks, and is a prominent opponent of the Greens, positioning both the Liberals and Christian Democrats against the same coalition partner.
“he's a noted palmist he's really I mean he comes across as like I always say he comes across as a really mean School Master but apparently that's popular with at least about a third of the German electorate and he really is not afraid of polemics he goes after people really quite hard and is anti- green”
Volkswagen is planning to cut 30,000 jobs and close three factories in Germany for the first time in the company's history, alongside a 10% pay cut across the board.
“30,000 that is the number of jobs with folks swagon that are now set to be lost in Germany as the company contemplates Factory closures in the country for the first time ever in the history of Volkswagen”
The German government collapsed last week (government refers to the 'traffic light coalition'), and new elections are scheduled for early 2025, amid recession and slow growth with questions about whether Germany's economic model can survive.
“the government collapsed this is the government referred to as the traffic light Coalition three parties that had been governing together for the past three years yeah that that just collapsed”
In quantum computing, Europe's relative disadvantage versus the United States and Asia is less severe than in platform economics or hardware production, and Munich University, Cologne University, and IBM's German research center represent significant quantum research concentration.
“in Quantum where Europe's disadvantage relative to the United States and Asia is relatively less severe this is one of the conclusions of the dragy report Munich University clone University are significant centers and IBM has a research center in Germany for Quantum Computing”
Angela Merkel's memoir 'Freedom' addresses her childhood in East Germany, her encounters with Trump (described as vivid and showing Merkel has an acute sense of humor), and her handling of Ukraine/Georgia NATO membership in 2008—the Ukraine issue is pre-emptively published to be controversial.
“there's a very long excerpt from the Memoirs that was published in the dette the weekly so that's as much as I've seen of the text I have to say it it's just about what you'd expect in Angela Merkel Memoir to be it's not exactly you know a page turning exciting Pros but it's interesting that the the passages which have been published so far a telling there about her childhood um in East Germany and the complexities of growing up as a kind of non-aligned if not dissident person and then the encounters with Trump which are vividly described”
The Social Democrats represent an older, more blue-collar constituency deeply invested in the social welfare state that Germany built since the 19th century, while the Greens and Liberals compete for younger, more educated voters who represent the future of German politics.
“the social Democrats represent a constituency that is older um that is more bluecollar but not very blue collar most bluecar votes now tend to the rightwing in Germany like in the United States um it tends to be pensioners basically who are very committed and bought in on the social welfare apparatus that Germany built since the 19th century”
The German government collapsed after three years under the 'traffic light coalition' of Social Democrats, Greens, and Liberals, with early elections scheduled for late February, driven by fundamental incompatibilities between the Liberals' fiscal conservatism and the other parties' spending priorities.
“the government collapsed this is the government referred to as the traffic light Coalition three parties that had been governing together for the past three years”
Merkel was fundamentally shaped by growing up in East Germany and spoke fluent Russian, which created a unique possibility for direct exchange with Putin (who also speaks fluent German), unlike any other West European politician of her generation.
“growing up in East Germany she spoke um very fluent Russian in the same way as Putin speaks extremely fluent German and so the two of them had a possibility of exchange which is very unlike that of any West European politician”
In 2008, the Bush Administration 'very abruptly and to the surprise even of Condi Rice' proposed bringing Ukraine and Georgia into NATO, but Germany and France resisted, resulting in a 'terrible compromise' that promised eventual membership without a clear path, provoking Russia without giving Ukraine/Georgia effective security guarantees.
“the key moment in retrospect for Defenders of the Ukrainian national cause is the fact that in '08 when the Bush Administration very abruptly and to the surprise even of people like coni rice suddenly jumped the gun and said right we're going to bring Ukraine and Georgia into NATO Germany and France resisted this and resisted this quite doggedly and in the end they ended up with this terrible compromise whereby on the one hand they weren't given a track to membership and Ukraine then was not in the state that it is in now in terms of its domestic politics and on the other hand there was a paper promise that they would in due course find their place within NATO so they managed not really to give Ukraine and Georgia any effective support and Georgia paid the price later in the year with a nasty short war with Russia but on the other hand to provoke you know so they provoked Russia and gave no effective support”
Merz joined Black Rock in 2009, at a time when Black Rock was emerging as one of the great beneficiaries of the 2008 financial crisis, leveraging his already substantial track record in corporate law.
“then making it very smart one has to say move to Black Rock which in 2009 was not yet the world bestriding monster that it is today but but was literally just coming out of the 2008 crisis as one of its great winners”
Electric vehicles are preferable to combustion engines by objective performance measures independent of environmental concerns, and this technological superiority is undeniable.
“and objectively speaking by any measure the electric vehicles once you can get the charging sorted out are preferable in many ways to even the most sophisticated products of of the internal combustion engine area and that's setting aside any environmental concerns they're just higher performing vehicles”
Merz made a strategically smart move by joining Black Rock in 2009, just as it was emerging as one of the major winners from the 2008 financial crisis, leveraging his corporate law expertise into a position that would have been unimaginable for him in domestic German politics.
“making it very smart one has to say move to Black Rock which in 2009 was not yet the world bestriding monster that it is today but but was literally just coming out of the 2008 crisis as one of its great winners and Merz leverages his very considerable track record already by that point in corporate law into a position at Black Rock”
Ursula von der Leyen, the current European Commission President and most consequential European Commission president since Jacques Delors in the 1980s, is a CDU figure who, like Merz, was caught in Merkel's 'windshadow' and exited to Brussels.
“the most consequential European commission president since delore in the 80s is German and of his party so she's a CDU figure another one of the people that was kind of caught in the windshadow the great shadow of Angela Merkel and ended up exiting to Brussels”
John McCain's strident voice calling for Western support of Ukraine was not the dominant position in Washington during the 2013-2014 crisis period, undermining claims that the US had a clear pro-Ukraine policy that Germany and France blocked.
“John McCain's strident voice in favor of you know Western backing for Ukraine was actually the dominant position in Washington it absolutely wasn't”
German automotive production has declined dramatically from 5.8 million vehicles per year before COVID-19 to just over 4 million vehicles currently, representing a very significant and prolonged contraction in output volume.
“they used to be turning out 5.8 million Vehicles a year before covid they're now down to just over 4 million so there's been a very dramatic decrease in their total volume of production”
German automotive production has dropped from 5.8 million vehicles per year before COVID to just over 4 million vehicles currently, representing a dramatic structural decline in the sector's scale and capacity.
“the OB Auto industry the they used to be turning out 5.8 million Vehicles a year before covid they're now down to just over 4 million so there's been a very dramatic decrease in their total volume of production”
Angela Merkel's forthcoming memoir, titled 'Freedom,' is expected to address controversial issues around Ukraine/NATO membership and Nordstream, with published excerpts focusing on her East German childhood, Trump encounters, and defensive explanations of her Russia policy.
“I managed to get like there's a very long excerpt from the Memoirs that was published in the dette the weekly so that's as much as I've seen of the text I have to say it it's just about what you'd expect in Angela Merkel Memoir to be it's not exactly you know a page turning exciting Pros but it's interesting that the the passages which have been published so far a telling there about her childhood um in East Germany and the complexities of growing up as a kind of non-aligned if not dissident person and then the encounters with Trump which are vividly described”
Germany's internet infrastructure challenges in Berlin go back to decisions made in the 1980s when Chancellor Helmut Kohl favored private television business interests who preferred copper cables for TV and telephone service over fiber optics.
“the fact that Wi-Fi connection just can't be accounted on in Berlin apparently goes back to decisions made in the 1980s in a kind of crony capitalist way whether then Chancellor Helmont Cole had some buddies in the budding German private television business business who liked copper cables as a way of of of you know running the running the TV and and telephone service”
Merkel continued the policy of Ostpolitik (détente with the Soviet Union and Eastern Europe beginning in the 1970s) throughout her chancellorship, but retrospectively this policy appears as appeasement of a tyrant in light of Russia's 2022 aggression against Ukraine.
“she continued the the policy of the taunt essentially which began in the 1970s between what was formerly Germany in the 50s and 60s as you'd expect was a West Germany was a hawkish anti-communist um EMB battled rump State and in the 70s the mood changed and Germany became a key player in the era of dant with the Soviet Union not with China that came later with economics but with the Soviet Union and with Eastern Europe with Poland and with and with East Germany and Merkel was in no way exceptional in continuing this policy”
Friedrich Merz, likely next Chancellor of Germany, was born in 1955, making him just one year younger than Angela Merkel, and his entire political formation was shaped by West German Christian Democratic machine politics during the Cold War anti-communist establishment era.
“I mean he was born in 55 he's only one year younger than Angela Merkel and in fact that's really decisive for his entire career because whereas Merkel was on the other side of the Iron Curtain making a you know a young life in as a researcher in stem researcher in in East Germany um good old Merz was coming up through the real like exactly as you say like the absolutely classic machine politics of Christian democracy”
Merz's political trajectory was interrupted by Angela Merkel in the early 2000s when he was seen as the dominant West German CDU star; Merkel's rise forced him out of frontline leadership by 2004, after which he left politics for Black Rock.
“you could write the history of German politics in the last 30 years as pivoting on the fact that in the early 2000s Angela Merkel um made him her victim I mean he he basically you know is out of the party leadership by 2004 whereas he was I think widely seen as the young West German star”
Germany's core difficulty is adjusting to the reality that it is no longer dominating European headlines as a success story, having been framed as the 'sick man of Europe' in the late 1990s but the clear success story for the past two decades until recent slowdown.
“The the difficulty in a sense is adjusting precisely to the fact that it's no longer dominating their headlines as Europe's success story which for really since the early 2000s it's been able to do there was a phase when it was the sick man of Europe in the late 90s and that's stuck quite deeply in the German memory bank but for a couple of decades now it's been a success story”
Merz represents a conservative alternative to the Merkel era—specifically the conservative choice Germany did not make in the early 2000s when it opted for Merkel instead, embodying 'traditional' rather than innovative conservatism.
“it's it's a notable it's a notable profile and it's really the alternative of the conservatism that Germans didn't take in the early 2000s when they opted for Merkel instead”
Merkel's real failure was not her Russia policy per se but her refusal to make 'the decisive decisions that would have been necessary to prepare Germany for the future on the energy front or on the defense National Defense front,' despite understanding (from Trump encounters in spring 2017) that Europe needed to stand on its own feet.
“it is maybe where you can really fault Merkel and this is to me a more General point about her chancellorship is that she just you know she was a she is an incredibly sophisticated brilliantly intelligent person with a V wide view of history but she did not make the decisive decisions that would have been necessary to prepare Germany for the future on the energy front or on the defense National Defense front and I think a lot would be forgivable if there'd actually been serious moves to establish German autonomy and she knew it and she understood because she had these very high stakes very unpleasant encounters with Trump and came back from those in the spring of 2017 saying now Europe needs to stand on its own two feet and precious little happened”
Comparing national economies (like Germany to the US) is methodologically flawed; Germany with 83 million people and a 4-trillion-Euro economy should be compared to US regions of similar scale, and when so compared Germany has significant tech champions (Infineon, SAP, Siemens, Munich/Cologne universities, IBM Quantum research).
“there's a fallacy in comparing National economies with each other I mean Germany's economy is large and important but it's you know it's bigger than that of New York but you know it's a bit like asking when did New York State miss the digital boat train I mean Europe as a whole failed to track the United States when it came to platform businesses and failed to track Korea Taiwan when it came to Hardware production um but Germany you know viewed as a region within Europe has Champions I mean it has infon in chips it has sap in Enterprise software and it has semens in Industrial Automation”
Merkel was East German and anglophone/America-oriented, creating ambiguity about her European commitment despite her role brokering EU constitutional arrangements and managing the eurozone crisis; Merz began his career as a European parliamentarian and may position himself differently as a European figure.
“I'm not sure whether MZ fits quite in that mold with Angela Merkel there was always this question of whether she was a European because she was East German and she was very actually very anglophone and America and Britain orientated”
France and Germany resist Ukraine and Georgia NATO membership in 2008 was not exceptional deviation but represented the dominant position in Europe, with pro-Ukraine support being marginal and not strategically dominant in Washington.
“Merkel and and uh the the French government at the time under Fr aland had to do their best to to hold the line with as we know very limited resources”
The automotive crisis affects at least three major German political parties: the SPD through worker constituencies and trade unions (IG Metall); the FDP and CDU through business interests; and the FDP's cultural identity is bound up with the 'autoban liberal' fantasy of unlimited speed in Porsches, which is threatened by the shift to electric vehicles.
“it affects it affects at least three of the major parties like it affects the SPD because of the workers and it affects the fdp and the CDU because of business concerns and almost like a kind of cultural Style way of describing the fdp Liberals is as autobar liberals their idea of freedom is going as fast as they D well like on the autoban in their Porsche like that's their fantasy of Freedom it's like the American road trip that it's all about speed and ultimate performance so it's a kind exclusive it's quite a class exclusive idea but that aristocratic idea of being able to just you know get in your port at 11: at night and go to 250 km an hour and like not look back that's their idea of of of the future”
The internal combustion engine, while facing obsolescence in the global market, is objectively superior to electric vehicles in many ways once charging infrastructure is solved, setting aside environmental concerns.
“and objectively speaking by any measure the electric vehicles once you can get the charging sorted out are preferable in many ways to even the most sophisticated products of of the internal combustion engine area and that's setting aside any environmental concerns they're just higher performing vehicles”
IG Metall, the German metal workers union, is the most powerful trade union in the world and has board-level representation (co-determination) in Volkswagen, giving workers significant influence over company strategy.
“these are core constituencies of what's left of the German industrial working class which is still highly organized in um the biggest Trade union I think probably the most powerful Trade union I think in the world anyway which is IG metal the German metal working Union which is heavily represented in VW and we're talking co-determination here so they have board level representation”
Tooze has written extensively and critically about Merkel's eurozone crisis handling, arguing her leadership was 'anything but liberal anything but Progressive but really halting and in the end totally inadequate to the crisis,' and she effectively delegated decision-making to the ECB and Mario Draghi.
“I wrote extensively and very critically about her governments in the Eurozone crisis where again her leadership was was um anything but liberal anything but Progressive but really halting and in the end totally inadequate to the crisis and again you know in that case she hands off decision- making to the ECB and Mario dragi who have to have to pull as the Germans would say have to pull the chestnuts from the fire”
German auto manufacturers have come to recognize that electric vehicles are objectively superior to combustion engines in performance (e.g., acceleration metrics), and the humiliation of discovering that their entire technological paradigm is now irrelevant is a psychological shock independent of market competition.
“these are performance orientated firms like German car companies like sweated blood to get their acceleration figures to you know sub five seconds for 100 km an hour acceleration and now you know some jumped up electric car manufacturer comes along and you just whoop a few more engines and a bit more battery in and these things accelerate like no one's ever accelerated before it's humiliating to discover that the entire game that you were playing technologically is just irrelevant”
The Greens in Germany were proposing policy of qualitative modernization addressing climate crisis and structural adjustment, making them the party advocating creative and constructive politics responsive to Germany's future challenges, in contrast to Merz's focus on business-led growth.
“the greens are for ating a policy of modernization that is about qualitative change essentially about adjustment to The Climate crisis I'm afraid with MTZ one of the more traditional elements is that he still seems I think to think that prioritizing business-led growth is the is the you know the the Alpha and Omega of German politics”
Merkel understood after Trump's 2017 visit that Europe needed autonomy and self-sufficiency, but made minimal policy moves to achieve it; despite the clarity of this need, Germany persisted with projects like Nord Stream, which subsequently appeared to be poor geopolitical and economic investments.
“she had these very high stakes very unpleasant encounters with Trump and came back from those in the spring of 2017 saying now Europe needs to stand on its own two feet and precious little happened and I think that's where I would really where I really think questions have to be asked”
German auto firms' inability to transition to EVs affects the SPD (through worker constituencies), FDP (through business concerns), and CDU (through traditional conservatism), but also has cultural resonance for FDP Liberals' ideological commitment to speed and automotive freedom—the Autobahn fantasy of unrestricted performance.
“almost like a kind of cultural Style way of describing the fdp Liberals is as autobar liberals their idea of freedom is going as fast as they D well like on the autoban in their Porsche like that's their fantasy of Freedom it's like the American road trip that it's all about speed and ultimate performance so it's a kind exclusive it's quite a class exclusive idea but that aristocratic idea of being able to just you know get in your port at 11: at night and go to 250 km an hour”
The bandwidth and magnitude of disagreement between FDP Finance Minister Lintner and Green leader Habeck over economic policy is comparable to the disagreement between Manchin and other Democrats during the Biden administration, but the US had more fiscal resources to paper over such conflicts.
“I don't know whether you'd agree but I don't think the gap between Linton and Harbeck is anything any wider than the gaps you see within the Democratic Party in the United States”
Merz was raised in the Saarland, a region in Western Germany where Catholic conservatism, small and medium-sized family manufacturing enterprises, and the social market economy model remain culturally significant, shaping his formation as a value conservative and supply-side liberal.
“Friedrich meritz and if we were to sort of look ahead to trying to Envision merits L government in Germany at least there's a lot of talk among you know the Christian democrats opponents castigating merits for his work at Black Rock basically he had left politics for a number of years and then became an executive at Black Rock”
Merkel's leadership during the eurozone crisis was inadequate and halting—not liberal or progressive but rather delegating real decision-making to Mario Draghi and the ECB, who 'pulled the chestnuts from the fire,' while German policy remained defensive and self-interested.
“I wrote extensively and very critically about her governments in the Eurozone crisis where again her leadership was was um anything but liberal anything but Progressive but really halting and in the end totally inadequate to the crisis and again you know in that case she hands off decision- making to the ECB and Mario dragi who have to have to pull as the Germans would say have to pull the chestnuts from the fire”
The Greens are offering a 'creative and constructive politics' focused on qualitative modernization and adjustment to the climate crisis, whereas Merz still prioritizes business-led growth as the alpha and omega of politics, which is remote from current realities.
“the greens are for ating a policy of modernization that is about qualitative change essentially about adjustment to The Climate crisis I'm afraid with MTZ one of the more traditional elements is that he still seems I think to think that prioritizing business-led growth is the is the you know the the Alpha and Omega of German politics and I think that's quite remote from realities actually”
Merz defends the internal combustion engine and rejects green energy transition approaches, instead advocating 'technological openness' (Technologie Offenheit) as policy—the belief that government should not pick technologies but should remain neutral on whether internal combustion engines survive long-term.
“he thinks carbon capture is probably the way to go they have this slogan which is technological openness technology ofen height which means the government isn't going to try and pick technologies that matter and he is a DieHard defender of the internal combustion engine um so he's you know he's one of the few people sentient people who still believe that whether or not the internal combustion engine survives long term is an open question”
Merz is a value conservative, member of a Burschenschaft (student fraternity), an aggressive polemicist, a notable palmist (animal rights advocate), and anti-green in the sense that he doubts the viability of energy transition approaches favored by the Greens—this positions him as culturally and ideologically conservative.
“he is a value conservative I mean he was part of a Bren shaft um which is quite significant in West Germany so he was part of a you know the once commonplace student fraternities in Germany once as in in the Vima Republic and in the vine period but in West Germany to be part of abortion shaft really means that you are distinctly on the conservative side of youth culture”
Cameron Abadi has personal knowledge of Merz's home region through family connections—his wife was raised in the region, his in-laws still live there, and he regularly visits family in the area, giving him direct empirical grounding in understanding Merz's political formation.
“I have been so exactly starting next year if you want to know about the town not only the region the town where Fredick Meritt is from I've spent a lot of time there it's town that my wife was raised and my in-laws still live in in fact... he's in the they the old age home and which I've passed by regularly when I'm visiting my in-laws”
Merz's economic philosophy is conventional supply-side conservatism: he supports the debt brake, wants business tax cuts, seeks to increase incentives for business, and would trade family benefits for reduced taxation on overtime—this is comparable to standard centrist Republican positions in the United States.
“he likes the debt break he's at least said as much though I think everyone recognizes if he is in head a chancellor of a government they'll probably have to find ways around it but right now it doesn't pay for him to say that so he doesn't say it he likes tax cuts for for businesses he wants to increase incentives for business uh he would like to pair back family benefits in favor of reducing tax on overtime”
Merz is anti-Green not as a climate denier (which would be electorally impossible in Germany) but because he advocates for 'technological openness' (letting markets choose technologies rather than government picking winners) and is a 'diehard defender of the internal combustion engine.'
“he's anti- Green in the sense not that he's a climate denier you just can't do that in Germany but um he's a you know he thinks carbon capture is probably the way to go they have this slogan which is technological openness technology ofen height which means the government isn't going to try and pick technologies that matter and he is a DieHard defender of the internal combustion engine um so he's you know he's one of the few people sentient people who still believe that whether or not the internal combustion engine survives long term is an open question”
Merz's political career was derailed in the early 2000s by Angela Merkel, who took party leadership and effectively blocked his advancement through her dominance rather than through policy disagreement, forcing him into the private sector where he joined BlackRock.
“you could write the history of German politics in the last 30 years as pivoting on the fact that in the early 2000s Angela Merkel um made him her victim I mean he he basically you know is out of the party leadership by 2004 whereas he was I think widely seen as the young West German star and it's Angela merkel's aent that really interrupts that career and causes him to drop out of Frontline leadership in 2004 not over substance because in the early stages Angela Merkel herself was quite a Hardline Market orientated neoliberal but I think really as a matter of him just realizing that she was going to take all of the oxygen out of the room for the foreseeable future and he's an ambitious guy and then making it very smart one has to say move to Black Rock”
Merkel, despite being East German and anglophone/America-oriented, became a major European figure through brokering constitutional arrangements in the late 2000s and handling the eurozone crisis, but the question of whether she was truly a committed European (in the sense of the Christian Democratic tradition) remains ambiguous.
“I'm not sure whether MZ fits quite in that mold with Angela Merkel there was always this question of whether she was a European because she was East German and she was very actually very anglophone and America and Britain orientated she turned into a major figure in European politics because of her role in brokering the Constitutional Arrangements um in the late 2000s and then in handling the Euro Zone a very ambiguous European figure but a deeply committed you know she did politics at the European scale”
Cameron compares the gap between Lindner and Green co-leader Habeck to gaps within the US Democratic Party, arguing the bandwidth of conflict is no wider in the German government than in the US Democratic coalition.
“I don't think the gap between Linton and Harbeck is anything any wider than the gaps you see within the Democratic Party in the United States I don't think the bandwidth in the German government is wider than in the Democrats”
Merz appears to believe that prioritizing business-led growth remains 'the Alpha and Omega of German politics,' whereas this perspective is 'quite remote from realities' and reflects his generational positioning rather than understanding of contemporary challenges.
“with MTZ one of the more traditional elements is that he still seems I think to think that prioritizing business-led growth is the is the you know the the Alpha and Omega of German politics and I think that's quite remote from realities actually and does reflect his age I guess”
Tooze is closely involved with the Greens and would 'never in my life vote for the CDU,' explicitly stating his political bias, which frames his subsequent analysis of Merz's approach.
“I should admit I'm very party pre here I would never in my life vote for the CDU and I'm quite closely involved with the greens”
Merz is a cultural and value conservative who was part of a Burschenschaft (an elite student fraternity), which marks him as distinctly on the conservative side of German youth culture, and he is known as a harsh polemicist who 'comes across as like a really mean School Master' with a noted Palmist orientation.
“he is a value conservative I mean he was part of a Bren shaft um which is quite significant in West Germany so he was part of a you know the once commonplace student fraternities in Germany once as in in the Vima Republic and in the vine period but in West Germany to be part of abortion shaft really means that you are distinctly on the conservative side of youth culture to say the very least so that's really the kind of he's a you know he's a guy who quite likes to take a Hardline position he's a noted palmist he's really I mean he comes across as like I always say he comes across as a really mean School Master but apparently that's popular with at least about a third of the German electorate”
Even slower growth in Germany would not necessarily represent economic catastrophe—the major adjustment needed is political and social (not merely economic) to address outstanding issues like inequality, education, and migration governance.
“I mean a I don't think growth is over but B if it were it wouldn't be the end of the world but C is the major adjustment necessary to this to this uh new even slower growth rate and are there a whole bunch of outstanding very significant social issues there certainly are”
Friedrich Merz is from the Saarland, a region of Western Germany with conservative social attitudes, active medium-sized family manufacturing firms (Mittelstand), and heavy Catholic influence, which shaped his formation and likely continues to shape his worldview.
“in addition to being a place with you know kind of these medium-size Industries and and socially conservative it's also heavily Catholic or that or maybe that social conservatism is rooted in that Catholicism every town is the big Catholic Church in the center of town and that is the m that mer still uh moves in”
Friedrich Merz, the likely next German Chancellor from the CDU, was born in 1955, making him only one year younger than Angela Merkel, and his entire career trajectory reflects the 'classical machine politics of Christian democracy anti-communist Cold War social market liberal German West German establishment' rather than modernizing innovation.
“he was born in 55 he's only one year younger than Angela Merkel and in fact that's really decisive for his entire career because whereas Merkel was on the other side of the Iron Curtain making a you know a young life in as a researcher in stem researcher in in East Germany um good old Merz was coming up through the real like exactly as you say like the absolutely classic machine politics of Christian democracy anti-communist Cold War social Market liberal German West German establishment”
The crucial variable in determining Merz's European stance will be France's political outcome—specifically who replaces Macron in the French presidency and how the Franco-German anchoring relationship evolves under new French leadership.
“the crucial issues will be who ultimately replaces macron in the French presidency and you know where and how that kind of anchoring relationship would work”
Merz is likely to 'drive a hard bargain on all European business' and 'apply the same kind of medicine to Germany' (austerity and supply-side conservatism), making him uncomfortable for other Europeans to deal with because of his unwillingness to make concessions to European partners.
“I would expect MZ to drive a hard bargain on All European business I don't think he's going to be a comfortable person for the Europeans to deal with because I think he's going to apply the same kind of medicine to Germany if he gets the chance and so that is the kind of mood in which the Germans then are very unwilling to make concessions to anyone else”
The crucial issues for Merz's European positioning will be who replaces Macron in the French presidency and how the German-French anchoring relationship works, but given Merz's decades away from European politics, it's hard to determine his exact European positioning.
“it be the crucial issues will be who ultimately replaces macron in the French presidency and you know where and how that kind of anchoring relationship would work he's a little bit you know since his days in Europe which are now you know decades ago since he spent so much of his time in opposition it's a little hard to figure out you know exactly where he's going to stand on European issues”
Friedrich Merz's anti-Green, pro-internal-combustion-engine positioning, combined with his and the FDP Liberals' anti-Green stance, narrows coalitional possibilities for German government formation because it rules out partnership with the Greens, the second-largest party in polling.
“he is a DieHard defender of the internal combustion engine um so he's you know he's one of the few people sentient people who still believe that whether or not the internal combustion engine survives long term is an open question so it's a he's a it's it's a noted it's a notable profile and it's really the alternative of the conservatism that Germans didn't take in the early 2000s when they opted for Merkel instead I mean I guess if we look back and how we got to this point with this malaise and Germany it does seem like one thing that's gone wrong is that Germany has kind of missed the boat on the digital economy”
Merz has shown no distinctive or different economic positioning from run-of-the-mill German social market conservatism: he supports the debt brake, tax cuts for business, increased incentives for business investment, and reduction of family benefits in favor of tax cuts on overtime.
“I've tried quite hard but I find it very difficult to find anything that marks him out as any way in any way distinctive or different than exactly as you put it your run-ofthe-mill German social Market conservative I mean he he likes the debt break he's at least said as much though I think everyone recognizes if he is in head a chancellor of a government they'll probably have to find ways around it but right now it doesn't pay for him to say that so he doesn't say it he likes tax cuts for for businesses he wants to increase incentives for business uh he would like to pair back family benefits in favor of reducing tax on overtime”
Cameron Abadi has personal familiarity with the Sauerland region where Merz is from, including knowing the specific town where Merz is from and having visited his parents' area regularly through in-law connections.
“I've spent a lot of time there it's town that my wife was raised and my in-laws still live in in fact globally relevant expertise I I know where his parents his parents are still are they in the they the old age home and which I've passed by regularly when I'm visiting my in-laws”