Saturday, September 10, 2005

Why a science degree and a handbag are not enough for the new Iron Lady

Why a science degree and a handbag are not enough for the new Iron Lady

GERMANY AND JAPAN will be going to the polls over the next two weekends, in their most important elections for a generation. The two most extraordinary economic and political successes of the post-war era both stumbled suddenly in the 1990s. The consensus-based constitutions imposed on both countries to prevent a return to their wartime madness worked all too successfully, thwarting the formation of strong governments and thereby blocking any possibility of significant economic reform. But now hopes are high in both countries that this deadlock is about to be broken. In Japan on Sunday the voters will probably re-elect their existing Prime Minister, Junichiro Koizumi, but he will now head a reinvented ruling party from which he has expelled the cautious traditionalists. In Germany a week later, Angela Merkel is almost certain to become the new Chancellor. She is being hailed as a Teutonic Margaret Thatcher, and global business and financial markets are getting increasingly excited about the prospect of a Thatcherite revolution in both Germany and Japan. Germany’s electoral system is still very biased against a strong Thatcher-style government. Frau Merkel’s reform programme, for all its fine rhetoric about competition and incentives, is economically misconceived. In Japan, by contrast, conditions are now much closer to those in the mid-1980s heyday of Mrs Thatcher’s popularity. Koizumi comes much closer than Merkel to sharing Mrs Thatcher’s combination of political toughness and pragmatism, economic conviction and good business sense. That is why Japan is a better bet than Germany to re-emerge as a great economic power.

Britain could soon be Europe's sick man again

Barely noticed, Germany has overtaken America to become the world's biggest single exporter, shipping the hardware that powers the rising economies of Asia and eastern Europe. Its trade surplus is now greater than that of China, Japan and India combined, reaching a staggering 16.8 billion euros in June alone. The profits made by German companies are running at over 33 per cent of national income, the highest in 40 years. Berlin will fall to Angela Merkel, the shy physicist who grew up under Communism as the daughter of a Lutheran pastor, a "non-person", learning young how to question the system. Those who assumed she would play safe are having to think again. Her putative finance minister, Paul Kirchoff, wants a 25 per cent flat tax and calls for the abolition of 90,000 tax rules. Britain could opt for the entirely different strategy of Anglo-German condominium, creating a fresh EU axis, this time run on free-trading, pro-American lines - and let the Latin chips fall where they may.

How Europe fails its young

Europe's only chance of preserving its living standards lies in working smarter than its competitors rather than harder or cheaper. But Europe's failing higher-education system poses a lethal threat to this ambition. Europe created the modern university. Scholars were gathering in Paris and Bologna before America was on the map. Oxford and Cambridge invented the residential university: the idea of a community of scholars living together to pursue higher learning. Germany created the research university. A century ago European universities were a magnet for scholars and a model for academic administrators the world over. But since the second world war, Europe has progressively surrendered its lead in higher education to the United States. America is not the only competition Europe faces in the knowledge economy. Singapore is determined to turn itself into a “knowledge island”. India is sprucing up its institutes of technology. In the past decade China has doubled the size of its student population while pouring vast resources into elite universities. Unless Europeans reform their universities, they will soon be left in the dust by Asia as well.


At September 11, 2005 6:03 AM, Blogger John Sobieski said...

I'm not prejudging Merkel until I see her confront the 'Turkey problem' and that is coming up real quick. If she says no to Turkey ascension talks for September, then I will think positively of her.


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