Second, there has been an obsession with controlling debt rather than investing, whether in public infrastructure or in new industries. Again, it’s easy to blame climate change, and that may well be part of the reason for more extreme weather conditions. But in Germany, a quarry dam collapsed under the weight of the water, and others were in danger of being ruptured. The question will surely have to be asked whether the dams should have been reinforced. Likewise, it is perfectly possible to build barriers, and other flood defenses. The problem is, it costs money.
And yet, under Merkel, the country has focused on balancing the books. In 2009, at the start of his reign, the country introduced a constitutional debt brake that limits structural public borrowing to no more than 0.35% of GDP, a tiny amount by international standards. The country has run budget surpluses for much of the past decade. The result? He has clearly spent both much less than he can afford and, above all, much less than he needs, on the maintenance of public infrastructure.
Finally, a mercantilist trade policy channeled all available resources towards exports. Under Merkel, Germany focused all of its energies on building up some of the biggest trade surpluses a developed country has ever recorded. Even in 2020, in the midst of the pandemic, it accumulated a surplus of $ 261 billion. And yet, it also means focusing on heavy industry, which is the only sector where Germany has a competitive advantage, and diverting resources from the domestic economy, as well as destabilizing the global financial system. It is hardly surprising that the country’s infrastructure is collapsing. You can’t export it to China, so it doesn’t matter.
The flooding could have happened anywhere. No one controls the weather, nor can it stop it from wreaking havoc and devastation. And yet it is telling that they struck just weeks before Merkel finally stepped down as chancellor following the federal election on September 26. They are, in truth, an epitaph to her legacy of indecision and under-spending – and a reminder that she will leave a country in decline behind.