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President Roman Herzog Calls for a Renewal of Confidence (April 26, 1997)

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So our problem is actually one of mentality. It’s not as if we don’t know that the economy and society are in urgent need of reform. Nevertheless, progress is painfully slow. We lack the urge for renewal; we are not prepared to take risks, to stray from the beaten track, to dare to try something new.

In my opinion, our problem is not one of perception but of implementation. Other industrialized countries, such as Japan, have also felt the impact of technological change on their labor markets and the consequences of demographic change on their social security nets. But we cannot plead extenuating circumstances in an attempt to explain the lagging pace of modernization in Germany. It is a homemade problem, and we have nobody to blame but ourselves.

And still, some people think we can afford the luxury of acting as if we had all the time in the world for renewal. The loudest voices on the issues of taxes, pensions, health care, education, and even the Euro are those of special interest groups and skeptics. Anyone who wants to postpone or impede reform in these major areas should know that the German people as a whole will have to pay, and the price will be high. I warn anybody who might be contemplating delaying or even blocking these reforms for political reasons that it is, above all, the jobless who will pay the price.

All political parties and social groups lament with one voice the great problem of high unemployment. If they really mean what they say, I expect them to act – quickly and decisively! We must show greater resolve in addressing these issues! We simply cannot allow our political institutions to suffer self-inflicted gridlock.

Innovation begins in the mind – in our attitude toward new technologies, toward new types of work and training, quite simply in our attitude toward change. I would go so far as to say that Germany’s attitude and mentality has a greater impact on its status as a center of business and industry than its ranking as a financial center or the level of its non-wage labor costs. What will decide our fate is our ability to innovate.

It took us twenty years to liberalize our tightly regulated retail shopping hours. At that rate, there is no way we will ever come to grips with the larger challenges of our age. If you need a 100- meter run-up to a two-meter jump, you may as well not bother.

All too often, the urgent need for change is simply side-stepped by appealing to the state; this has practically become the national knee-jerk response. But the higher our expectations of the government, the easier it is to be disappointed – not just because our public coffers are low. The government and its institutions are often simply not equal to the complexity of modern life, with all of its borderline and special cases – nor can they be.

The state today suffers from the myth that its resources are inexhaustible. In short, the citizens ask too much of the government, while, for its part, the government asks too much of its citizens. The heavier the tax burden, the more is expected of the government – which then has no choice but to borrow more or raise taxes even more. When borrowing is too high, all that is left is radical surgery to balance the budget, with painful economic consequences. It becomes a vicious circle.

This ritualistic appeal to the state goes hand in hand, as I see it, with a dangerous decline in people’s commitment to the common good. When taxes are high, it is too easy to think that merely by paying them you have met your obligations to society in full. The individual urge to profit at society’s expense has virtually become a national pastime. What have things come to when a person is admired if he succeeds in milking the social welfare system, knows the most ingenious ways of evading taxes, and cashes in on the widest range of subsidies? People justify this behavior by pointing the finger at others: everybody’s doing it, they say, so why shouldn’t I?

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