Germany

From the standpoint of economics, Germany was the crown jewel of the European Union but that is changing because of several factors some of which are self-inflicted wounds. It began with the 2005 election of Angela Merkel. She led the grand coalition of the three major parties. One of her first major policies was to replace fossil fuels with wind and solar. This was done without any deep investigation and failed to recognize that Germany did not have much sun or much wind. In 2008 she began closing the first of 17 nuclear power plants and the last one closed in 2023. The second big mistake was the failure to recognize the oncoming demographic problem of having too many older people and too few younger people. Both of these potential problems were easily discernable to anyone who took the time to look but no one did. Third was the influx of cheap goods from China which led to job loses in sectors like autos and machinery. The straw the broke the back happened the year after Merkel left office when Russia invaded Ukraine and the German government decide to stop buying natural gas from Russia. This caused a steep rise in energy prices which led many German companies, particularly those in chemicals and auto, to suffer and led to lay offs and transferring production to the US. For many years the German government was able to provide significant social benefits because the US offered military protection and Germany used defense spending to prop up social programs. For many years Germans worked much less than Americans averaging 1,340 hours per year verses 1,800 for Americans. The threat to these programs, in particular social security, is now prompting the government to demand that people worked longer hours. In addition, the government will now increase its defense budget from 2% of GDP to 5%. Ten years ago, the US was on the same glide path as Germany but recognized the potential pit falls and changed course. Today the US is moving away from providing military protection for Europe and changing energy policy away from wind and solar and toward nuclear. The US is bringing jobs back home, especially from China and placing tariffs on Chinese import. The US is embarking on a plan to lead the world in AI. The US must next find ways to include recent immigrants into the work force eventually leading to citizenship.