Reforms, radical change or turbulence?
Despite the actual reform efforts, Germany is heading for a catastrophic and chaotic development. It is time to prepare deliberately for it.

Germany in the year 2025: the government is insolvent, the International Monetary Fund refuses to grant further credit. Social Security can no longer completely meet the often meagre demands of its contributors. Social dramas are taking place. Spectacular bankruptcies of private pension and life insurance institutions, as well as turbulence on the stock- and real estate markets further intensify the problem.

The state can no longer fulfill its most elementary obligations. Welfare and unemployment insurance have merely symbolic character. The same goes for the wages and salaries of civil servants. The level of education has sunk to the that of a developing nation. The infrastructure is falling apart: 80 years after Germany began to rise from the ashes of war, it is falling once again increasingly to ruin.
The economy has fallen in the year 2025 to the ground. Ever more companies lay off personnel, live from the substance of their business, or shut down their operation altogether. The economic depression is nourishing itself. Social problems increase dramatically, social cohesion and solidarity is decreasing, criminality flourishes.

Global warming increasingly ensures droughts, flood, and storms causing great economic damage. The country is recording victims of heat wave and severe storms. The consequences of the changing climate are forcing the people in Africa, Asia, and Oceania to flee - to Germany, among other places as well. Germany’s social and economic problems further intensify as a result.
 

Why this scenario is realistic

Germany 2025 - a horror scenario? Yes. Unrealistic, far-fetched, and exaggerated? Not at all. Even though the culmination of events in the year 2025 is speculation, all of the portrayed developments are already under way.

This will be shown in detail with the aid of two examples. Concerning Public Finance: because the government has financed its budget partially through debt since the end of the sixties, cost intensive structures and standards which are difficult to put an end to have developed alongside of high liabilities and interest charges. Today, despite high existing debt and record borrowing, the government even intends to finance the reduction of taxes through new debt. This shows that it is, as always, more attractive to intensify tomorrow’s problems than to alter structures. On the other hand, it would be necessary to pay off public debt to a great extent in order to escape from the debt spiral. Otherwise, because of demographic development, the increasing burden of debt will have to be born by ever fewer citizens.

Concerning the economy: A multitude of developments will aggravate the crisis. Domestically, private pension funds, which are intended to offset the benefit cuts of Social Security, are consuming a large amount of purchasing power. In addition to that, consumption will fall off if the state has to greatly increase taxes because of its financial problems. Likewise, the desolate condition of public infrastructure and education will prove poisonous to successful economic development. Owing to the high cost of labor, German firms will have increasing difficulty competing in foreign markets compared to products from economically striving nations. And on top of it all, an international financial and economic crisis is threatening, because not only Germany is living beyond its means.

Fundamental mistakes

Even more than these facts, we must be afraid of fundamental mistakes. All current concepts for solving society’s problems are based upon highly optimistic economic prognoses, which assume that economic development will be undisturbed and linear. This is a primary dilemma, because in reality there are hindering factors. The pulmonary illness SARS, terrorist attacks, and the war in Iraq are current examples. Other events as well, such as the excessive debt of other economies and global warming, are being ignored just as potential risks: a drastic devaluation of the Euro, or if the expanded European Union were to founder, for example.

Society is not prepared for a reduction in economic achievement. Stagnation, and even slow growth, are already leading to crises. Permanent growth, upon which politics and society insist, is not possible. An economic growth of 5 %, which so many long for, requires a doubling of annual economic achievement every 14 years. Starting from a base year, that means that it is nominally four times as large in the 28th year, and eight times as large in the 42nd year. And that implies growth that must be created and consumed from an already high basis  with all the ecological consequences! Within three generations (90 years), goods and services would have to be produced annually with a value 80 times as high as in the base year. Whether economic development, tax revenue, or the value of private annuity insurance  permanent growth is unrealistic.

Just how strongly the factor growth is counted on when seeking solutions to problems can be demonstrated by annuity insurance. For the annuity insurance of workers and employees, the government predicts in its Pension Insurance Report 2002 that annual revenue will increase from 42 to 83 percent from 2002 to 2016. In order to realize this, the number of contributors must increase as much as the average gross income of a contributor (in West Germany from 2002 to 2016: + 48.7 %) and federal subsidies (for all annuity insurance forms combined) that already make up nearly one third of the federal budget.

In addition, society is closing its eyes to economic realities, which results in the second dilemma. Of course globalization offers an export nation such as Germany new opportunities. However, considering the high cost of production in Germany, these opportunities are overestimated, while a fundamental tendency of development remains underestimated: globalization ensures first and foremost a more uniform distribution of wealth! Poorer nations now make use of opportunities arising from new technologies and the break up of the protectionism of industrial nations. In the process, they are making use of low labor costs, as well as low social and environmental standards - as did Germany after WWII. If today many products no longer come from Europe, but from Asia instead, then wealth and available financial resources will increase there while decreasing here. On the other hand, neither citizens, nor firms, nor the state in such economically striving countries have the money to purchase expensive German goods. Germany must prepare for severe economic crash, as well as the consequences for the labor market, public finances, and social systems.

The third dilemma: Our standard of living and the financing of federal structures are based upon an extreme energy- and raw material intensive model of consumption. We transform considerable amounts of raw materials too quickly into waste products through too much energy consumption with considerable environmental damage. Germany’s energy consumption, which is covered by approximately 97 percent non-reneable energy sources, amounts to approximately three quarters the consumption of the entire South American continent. Alarming ecological perspectives, for instance, concerning climate, are the result, particularly in connection with national and global growth strategies.

Lacking courage to change; prepare for the chaos

How are the current extensive reform efforts progressing? Perhaps they are breaking some taboos, but they don’t lead to the goal - the fourth dilemma. Still, often merely the effects of problems and not their causes are being fought. And politics is still intervening in complex systems whose regularities and behaviour it doesn’t know well enough. And furthermore, some fundamental problems and dilemmas are not even being tackled.

The current behaviour will lead to critical conditions. Yet, we could break through many negative developments. In order to achieve that we would require, however, comprehensive, consistent, and radical measures that take the interrelation of individual problems into consideration and deal with their causes. It would be necessary to implement six goals: first and foremost, society would have to restrict itself to available financial resources, instead of using direct and indirect debt to live at the expense of the future. At the same time, it would be necessary to provide for adequate investment and education in order to be able to meet the challenges. Furthermore, the structures of government and social systems would have to be transparently and flexibly arranged in order to regain control of them and ensure their survivability in turbulent times. Bureaucratic hurdles for the creation of jobs would have to be removed. Consumption of resources and environmental damage would have to be drastically reduced. And poor countries would have to be given a fair chance for economic participation.

Concepts that allow the implementation of these goals are available. Research institutes and other organizations have developed them; however, politics and society do not seem to be capable of a far-reaching change of course. The fear of change is too great, and the necessary sensitive restrictions are too obvious. Yet, time is running out. Sustainable development will no longer be possible unless all social groups recognize the necessity of radical change and if not only the readiness, but also the ability to implement that change together does not flourish.

Therefore, in the name of risk provision, it is necessary to prepare deliberately for such situations as those portrayed in the scenario Germany 2025. The main objective is to ensure the existence of citizens, the state, and businesses. Important relevant questions are: How can the state, citizens, and businesses succeed within a chaotic society suffering deprivation? Which structures develop in the economy as a result? And which ones in the social sector? But the answers to such questions are not being sought. Our society is neither ready to consistently carry out radical reforms, nor to prepare itself for the consequences of not implementing changes.