by EES President Dr Ingo Friedrich

According to Hermann Hesse, there is a miraculous magic inherent in every new beginning. We sincerely wish the new federal government in Berlin this beautiful magic, because the prosperous development of our country also depends on it. However, it is to be feared that this spell will very soon be overtaken by the rather rigid, if not to say gigantic, challenges of the harsh reality.

First of all, there are the "big footprints" that the previous Chancellor has left behind. After the 16 years of her chancellorship, she is celebrated around the world almost as the shining light of a stable and reliable Germany. The former American ambassador Kornblum even believes that during this time Germany had grown to become the third most influential and one of the most respected nations in the world after the USA and China. It will take a Chancellor Scholz years in order to - if at all - advance into these dimensions internationally.

And it will be just as difficult for him and his government to cope with the foreseeable huge challenges that lie ahead for him and all of us. In addition to the acute fight against the dramatically rampant Corona pandemic, there are above all five major problem areas that need to be solved:
 
(1) Securing the stability of the national and European financial system
It can be assumed that the European and global interest rate policies of the other major currency players will stick to their zero interest rate dogma, including expansive monetary policy, for years to come, despite significantly higher inflation rates. If this assumption is correct, then it means that the global money supplies continue to grow steadily and will reach new highs every year. The long-term consequences of such an economic policy, which is constantly fueling the economy, cannot be seriously researched, because such a situation has not yet existed in economic history. But with the best will in the world, there is no feeling that this can go well in the long run. However, the short-term effects are deducible and do not bode well: Higher inflation (possibly even six to eight percent per year) accompanied by negative redistribution effects and further increases in real estate prices and apartment rents.
Setting the right course here in the future as a major industrial and export nation is a real Herculean task for the new government.
 
(2) The transformation to a climate-neutral economy
In advance one can say today: The path to electromobility for cars is lashed down and can no longer be reversed. The situation is completely different with air traffic, shipping and possibly also with trucks. But that only shows a small part of the ambitious overall picture of a climate-neutral economy: Is the entire energy supply in Germany even feasible after the shutdown of nuclear, coal and gas power plants? Can the climate-neutral energy sources shoulder the base load in dark and cold winters when there is no wind? The answer to this question certainly also depends on the timely development of completely new electricity storage systems and new generations of batteries. Overall, a broad field is opening up in this area that has to be laboriously "plowed".


(3) The problematic effects of demographic development in Germany
The statistics are clear: the aging process in German society is dramatic! The number of people over 60 is growing disproportionately and the proportion of those under 30 is constantly decreasing. The resulting lack of skilled workers is already hindering economic development in Germany and there is no end in sight. The pension deficit to be covered annually by a tax subsidy is already € 100 billion per year and the trend is rising. One can only hope that the new government will develop above-average strengths and ideas in this area so that we can get out of this mess.
 
(4) Overcoming the many new social divisions, especially through the Internet
Not just since the Corona pandemic, but here with new force, we have to state completely new oppositions, even enmities, between social groups and subgroups. Vaccination opponents against vaccination advocates, national identity advocates against citizens of the world, etc. "Alternative facts", echo chambers, skepticism of science, contrarians are just some of the new discussion topics, on which many believe that after a quarter of an hour of surfing the Internet, they are an expert and are on "eye level" with the scientifically trained experts. One can only wish the new government the best of luck in finding a clear line in this modern chaos and preventing the whole community from drifting apart to the detriment of the common good.
 
(5) The timely recognition and control of the coming "black swans"
Just as a black swan suddenly appears instead of the normal white swans, in politics a crisis suddenly comes "around the corner", completely unannounced. In the previous government, it was the EURO crisis, the refugee crisis, the Corona pandemic and a number of smaller crises (Crimean occupation by Putin, NATO crisis by Trump, Brexit) that were not in any coalition agreement and had to be overcome with great effort. Unfortunately, the same will happen to the new government: What is China doing to Taiwan? Is Trump coming back to government in America? When will there be another row in the Middle East? When will the great battle about being No. 1 in the world between China and the USA begin? Or staying closer to home: Will one wing of a party eventually shear and kill the government prematurely? In this area of crisis management, the master proves himself, and one can only hope that a Chancellor Scholz with his team of three does not fail here.
 
All in all: Despite the really difficult situation I have described, I remain cautiously confident that Germany, albeit probably quite bumpy, will make the coming route without major downturns. Other countries are much more unsafe than Germany in most areas and in some cases are nevertheless beginning to recover, as is currently the case with Italy under Prime Minister Mario Draghi. As an optimist, I trust German steadfastness and reason and expect a development that will continue to be more stable in Germany in the coming years than in most other countries in the world. And it is also important that the community of the peoples of Europe in the EU make a valuable, indeed indispensable contribution to stabilizing the overall situation.