Hans F. Sennholz, “The German Affliction” (2004)

This short political-economic essay diagnoses Germany’s early-2000s malaise as the outcome of entrenched welfare-state politics rather than a temporary downturn. Sennholz begins with German opposition to the Iraq War, but treats foreign policy chiefly as an entry into domestic political economy. Chancellor Schröder’s antiwar position, and the similar caution of rival parties, appear less as principled statesmanship than as electoral maneuvering amid stagnation, unemployment, and public anxiety.

The official German position must be viewed in the light of politics, which is simple strife of party interests masquerading as a contest of principles.

The essay’s central claim is that Germany’s crisis is institutional. Welfare benefits, labor protections, subsidies, and taxes have created a political order in which almost every reform imposes visible losses on organized constituencies. Sennholz’s argument is explicitly market-liberal: unemployment is produced by policies that raise labor costs, protect insiders, and transfer the burden of exclusion to public programs. The resulting economy is not merely overregulated but politically immobilized.

In a welfare society, such as the German, where the benefits and burdens are the result of lengthy and bitter political struggles between various pressure groups and social classes, change has many enemies.

Sennholz frames postwar history as a fall from the freer conditions of the Wirtschaftswunder into redistribution, corporatism, and regulatory bargaining. The Social Democratic turn after 1968 receives much blame, but the Christian Democrats are not exempt. Under Helmut Kohl, in Sennholz’s account, opposition to intervention yielded to accommodation: spending, borrowing, taxation, and unemployment rose, while reunification became a continuing fiscal burden rather than a completed national achievement.

The Red-Green coalition is therefore presented less as a rupture than as another stage in the same trajectory. Tax-rate reductions are outweighed by energy taxes, labor-market rigidity, pension obligations, union power, and new fiscal demands. Firms remain responsible for the costs imposed by political compassion, while those excluded from employment are sustained by the very system that helps keep them excluded.

The workers they cast off depend on the generosity of the welfare state.

Germany’s European role gives the essay broader significance. Once the continent’s feared or admired industrial center, Germany now appears to Sennholz as a stagnant “sick patient” whose weakness affects the European Union. Enlargement, deficit pressures, and calls for easier money all reflect the same underlying problem: a large economy unable to reform because its political class and electorate remain tied to social guarantees they can no longer finance.

The essay’s conclusion is pessimistic but not fatalistic. Sennholz argues that Germany does not lack technical knowledge; it lacks political capacity to dismantle privileges, subsidies, and controls. The final remedy is not a negotiated adjustment among pressure groups but a renewed liberation of economic energies—an appeal to recover the market freedom he associates with the postwar miracle.

Sadly, many Germans now are convinced that, on their own, they are no longer able to agree upon and carry out a reform.