Mathew D. Rose: Hubris and Nemesis In Germany – Volkswagen, Refugees, and Football

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By Mathew D. Rose, a freelance journalist in Berlin

It was Nick Shaxson, a Brit, who brought me into the fold. I had been complaining that being a skilled forensic journalist is a fine thing, but facts only tell half the story. Reproducing reality, as far as we can get near it, is an exercise in understanding and interpreting. This is however not the sort of stuff that current commercial journalism wants. Myths are more in demand these days.

Nick however introduced me to Naked Capitalism and Yves, with the simple instruction: “If you want to do that sort of stuff, this is the place”. In my pieces for Naked Capitalism I have tried to make current affairs in Germany comprehensible for people outside of the country (in the meantime within Germany, as most of my pieces for Naked Capitalism are reproduced in a prominent German blog). There may have been moments where I was too polemic or emotional, but Yves has given me a free hand to develop my ideas, for which I am very grateful.

It is this approach by other authors that makes Naked Capitalism a unique blog, which has had real influence upon my thinking. What I especially value in Naked Capitalism are the comments, which range from corrections of my grammar and diction to aspects, which have never occurred to me or of which I was not cognisant. There is a community feeling and camaraderie that I rarely encounter in a blog. In this spirit, I would like to contribute this piece to the fundraising campaign.

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Hubris, Nemesis and Germany

What do the recent Volkswagen scandal, the current refugee crisis in Europe and the Football World Championship of 2006 have in common? They are all excellent examples of an inherent German Hubris, excessive self-confidence resulting in the loss of contact with reality, usually ending in Nemesis, with dreadful consequences.

Most Germans are rightly proud of their nation’s engineering skills, especially in the automobile industry. The manufacturing of cars has become the backbone of the German economy: it is responsible for five percent of the nation’s jobs and the automotive industry is the leader in almost all economic categories in Germany: investment, exports, research and development, buyer of goods and services from other sectors to name just a few.

With their prestige and economic clout, car manufacturers in Germany have become a law unto themselves. They have easy access to the corridors of power. The automakers reward obsequience and service with munificence towards political parties and individual politicians. The German government has sidelined employees in its ministries critical of the car manufacturers and has become the chief booster for the industry at the EU, watering down environmental legislation unfavourable for the car makers and defeating or delaying the implementation of more stringent standards. It is of no surprise that the chief lobbyist of the car industry in Germany is a former transport minister of Chancellor Merkel’s Christian Democratic party and many of the industry’s lobbyists are drawn from the predominant Christian and Social Democratic parties. Two have been recently drafted in by Volkswagen and Daimler (Mercedes-Benz) from Chancellor Merkel’s close staff.

That the official emissions levels of German cars have nothing to do with reality is a well-known fact. Major European cities such as Paris are considering a ban on diesel-powered cars to fulfil the air quality guidelines set by the EU. In Germany the automobile club, ADAC, environmental groups and the International Council on Clean Transportation, an independent nonprofit organization, have been railing against the official figures concerning fuel consumption and emissions, conducting their own real driving condition tests for up to a decade. The official figures for emissions were not relatively close to reality. Although they could never prove it, these groups assumed that “defeat devices” were in use. Neither the German government nor the EU was interested in the truth. EU officials, experts and scientists received generous salaries from taxpayers to do nothing about the matter.

All the while Volkswagen propagated its myth of a high-performance, environmentally-friendly diesel motor at a competitive price – at the cost of our health. This was a blatant failure of its diesel engine development. Conforming with environmental standards, which would have required using Daimler’s technology, would have damaged Volkswagen’s engineering reputation and profits, at a time when the company was aiming to become the largest seller of cars in the world.

Germans are very fond of superlatives and being clever sort of chaps – much cleverer than the rest of us – and having the German government as their lobbyists, they simply broke the law. If some of us die a bit earlier due to air pollution, which has become one of the major causes of death in Europe, what sort of value does that have in comparison to the success of Volkswagen and Germany being “World Export Champion”?

One must assume that the competition, BMW and Daimler, had looked into Volkswagen’s “unique” diesel technology and discovered how they lied their way to success. One must ask why neither competitor blew the whistle enabling them to sell more of their own diesel powered cars? The answer probably lies in the fact that they are using similar technical legerdemain to achieve the proscribed standards.

There will be few and potentially no consequences for Volkswagen in Germany or the EU. Ms. Merkel will take care of that. Already the next Volkswagen myth is in the making: Just a handful of technicians knew about the defeat device and that in a company that has always prided itself in its engineering hands-on management. Yes, there will be enormous fines from the US. However what the German elite fears most is the possibility of German managers ending up in American jails. One must understand that managers – and high ranking politicians – are above the law in Germany. They are well and truly too big to jail. The few exceptions have unique reasons. The German justice system will be doing all in its power to prevent the extradition of Volkswagen employees.

Then there is the Willkommenskultur, which has morphed to a Not-So-Willkommenskultur. Following the public relations fiasco with regard to Greece, Ms Merkel sought to regain the moral high ground, declaring Germany’s willingness to take in all refugees from Syria who sought a place of safety.

While this is a praiseworthy decision, Merkel left one important element out of her calculation: the German people. Many, probably the majority, are not pleased. Realising her miscalculation, the chancellor tried to pressure Eastern European countries to close their borders as well as accept refugees like the Germans, so that her decision would appear to be a sort of EU initiative. Having just seen how the German government had dragooned the Greeks, East European leaders like Hungary’s Viktor Orban knew they would be stuck with the refugees and had no desire to pay the bill for Ms Merkel’s gesture of humanitarianism. In the perverse version of the game of hot potato, Ms Merkel was clearly going to end up with the refugees when the music stopped.

It is not as if Germany cannot cope with a “flood” of refugees. It is a wealthy nation with an excellent infrastructure. Of course there will initially be logistical problems. There always are in a crisis or during a natural disaster. The Germans are however excellent administrators and will get things under control rather quickly. The situation is of course not being helped by years of austerity, which has eroded many state services. Add to this Wofgang Schauble’s dogmatic insistence that the costs of the refugee crisis cannot ruin his balanced budget resulting in a deficit. Apparently there is such thing as a free lunch.

The greatest difficulty, however, is the latent but inherent racist ideology that has been an integral part of Angela Merkel’s Christian Democratic Party and its sister party the Bavarian Christian Social Union. Now Merkel is currently trying to fulfill two roles simultaneously: the German chancellor who demonstrated Germany’s new found humanitarian quality and welcomed the refugees and the German “Iron Chancellor” who demonstrated that she could stop the hordes of foreigner from flooding in.

To solve this conundrum Ms Merkel is currently courting Turkey’s up and coming dictator Recep Erdogan, while the EU is offering him billions of Euros and loads of concessions to close his border for refugees. Merkel has even made an unexpected journey to Turkey to appear with Erdogan, who is facing election in a couple of weeks. There she declared: “I believe that Turkey will have a fair and free election,” and that in a country in the midst of a civil war, while the offices of opposition parties being ransacked and the media is being massively intimidated by the state.

Even Greece has amazingly received offers of German financial aid, of course with the condition of sealing its borders for refugees and terminating its herculean humanitarian effort of assisting 500,000 refugees this year, despite its current financial crisis. Thus Merkel can claim to have opened Germany’s gates for Syrian refugees, at the same time making sure that none make it that far. That, like the disgraceful handling of Greece, appears to be the sort of leadership that Germany is offering Europe.

Last but not least, there have been some long overdue questions raised concerning how Germany won its 2006 bid for the Football World Cup. The decision to award the tournament to Germany had occurred under extremely suspicious conditions, as a decisive official from New Zealand simply disappeared shortly before he was to cast the deciding vote, giving Germany the edge. As we all know, since the days of Adidas founder Host Dassler, who corrupted both the International Olympic Committee and the World Football Federation (FIFA), the right to host the Olympic games of the football world cup has been won by purchasing the votes of sport functionaries. For the Germans, the only exception was of course the 2006 Football World Cup, as Germans do not do things like bribing officials. Corruption is, in their opinion, something that is rampant in developing nations or southern Europe, but not in Germany.

Now Jens Weinrich, one of Europe’s great investigative sport journalists, has uncovered what appears to be a €6.7 million slush fund, most likely used by German football officials to bribe FIFA officials to vote for their bid. The money was apparently lent to them by a former Adidas chief executive. As the millions were to be paid back, the money apparently had to be laundered, as the bidding committee was required to publish its financial dealings. To cover up this major expenditure the German bid committee transferred exactly the sum of €6.7 million to FIFA to finance the traditional show at the opening ceremony. This transaction, however, was mysteriously cancelled. The German bid committee never asked for their money back. Yet FIFA however then transferred €6.7 million to the former Adidas manager. While the German football federation is threatening to sue Weinrich, his publisher, the news magazine Spiegel, and others, there has been no explanation of why the bid committee had never requested a repayment of €6.7 million from FIFA for an opening ceremony that never took place.

The next moment of nemesis could be the German economy. Germany’s economy, which has thrived by exporting much more than it imports, may soon be caught up in the worldwide economic slowdown. What use are exports if no one can buy them? If one looks at Germany’s most important trade partners outside of the EU, most of them are experiencing serious economic slowdowns (China, Russia, Turkey, Japan, Korea, United Arab Emirates, Brazil, and Mexico). Considering that the rest of the EU has adopted Germany’s strategy of exporting their economic crises, it is likely that the EU, especially Germany, will be next in the row of falling domino tiles. Then we shall see what years of austerity have really brought Europe.

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  1. Eric Patton

    However what the German elite fears most is the possibility of German managers ending up in American jails.

    Dear Germany,

    Don’t worry about it.


    Loretta E. Lynch

    1. Praedor

      You got right to the punch in the first post. The US is expert at only going after the little fall guy, adroitly sidestepping even LOOKING at the real culprits higher up the chain. Only when it is so blatantly obvious that a club member is guilty (Petraeus, McChrystal, etc) but even then it is a way to cover the malfeasance of higher political fish. So unless there are high political figures in the US in danger that requires fairly high-level German VW execs to go to jail, the US will be all too happy to stick with the German government’s selected fall guys.

  2. OIFVet

    Erdogan played Merkel and the EU like Itzhak Perlman plays the violin, a virtuoso performance for the ages. He may not get his no-fly zone in Syria, but getting visa concessions, money, and the appearance of movement on the EU accession negotiations will help him greatly domestically. Stand by for more journalists getting jailed, protestors beaten up, Kurds bombed, and Islamists proliferating. Thanks, Mutti. I am sure you will find a way to blame the backward Eastern Europeans for all that.

  3. Thure Meyer

    I don’t quite understand how corruption and incompetent governance in Germany becomes posterized as a Hubris and Nemesis Greek play. It’s hardly that dramatic.

    Germany is really no different in terms of political economy than the US, UK, France, etc. The corridors of power and influence are the residence of the rich and powerful. Positing as the author does an “inherent German Hubris” is not a particularly strong basis for any analysis, its just simplistic profiling.

    I don’t pretend to know exactly what’s happening in Germany in particular or Europe in general, but this article isn’t very helpful due to its “inherent Bias”.

    1. MyLessThanPrimeBeef

      Interesting that they ‘arranged’ to have Germany host the 2006 World Cup finals (and that made many corporations and rich guys happy).

      But they failed to ‘arrange’ for Italy not to take the title away from the Germans. A victory would have made many not-so-rich Ger,am guys happy.

      So, again, like elsewhere and repeated throughout history, the rich guys got what they wanted, but not the little guys.

  4. TheCatSaid

    Great post. It seems like the German auto industry has the national clout of the US and UK financial industry.

    As for “inherent German Hubris, excessive self-confidence resulting in the loss of contact with reality, usually ending in Nemesis, with dreadful consequences”–I’ve been guilty of that many times. I’m not German, so maybe there’s hope for me.

  5. Synoia

    Most Germans are rightly proud of their nation’s engineering skills, especially in the automobile industry.

    Cannot see why. The Germans see to believe their own PR, always a big mistake. “Dat is Deutsche my a…

    My wife, has owned 3 Mercedes, a Porsche, an Audi & a BMW.. In all cases I knew the service personnel at the dealerships by name, because I was there so frequently. IN this period I owned a Toyota LandCruiser (whihc was both too big for one and too small for the whole family) and then a bicycle.

    My bicycle was more trouble than the LandCruiser; with the LandCruiser I did not need to know the location of a Toyota dealer – There were no repairs in 220,000 miles.

    German engineering? Not as good as the Japanese by my measures.

    My bicycle was fixed (from too may punctures) by the application of rim-guards by a skilled bicycle mechanic.

    My wide now has a Toyota Prius (after I put my foot down and said no more German cars, or you have to get up at 6:30 am and take them to the dealer), and my bicycle is going well, and I’m fitter now then when I owned the LandCruiser..

  6. Carlos

    The German cars feel solid and are crisp to drive, they stick to the road better and are firmer through corners.

    Japanese cars seem to have a steering wheel made of soggy noodles. They are sterile and dull.

    American cars have digested way too many burgers, with oversized high capacity, normally aspirated engines chugging along like old tractors. Put your foot down on a damp sponge, five minutes later it will move forward.

    I generalise but you get the drift?

    1. Gio Bruno

      … German engineering is referring to specific driving characteristcs of their cars. I have german car that is 24 years old and still runs nicely. But regular maintenance is mandatory. Fun to drive. (I never for a moment believed the “clean diesel” tripe, however.)

  7. Tom

    This is a rant posing as an informative article. There are about 10 000 refugees arriving in Germany everyday and the infrastructure is completely overwhelmed. That is 3 million in one year and Germany has a popüulation of 80 Million. It is rather like the States taking in 10 Million in one year. Where to house them and how to cloth them? It isn´t possible and there is a rebellion brewing among the mayors who have to care for the refugees. Even Green mayor Boris Palmer of Tuebingen has declared that the limit is being reached.

    Finally and mysteriously Rose claims the following: “Add to this Wofgang Schauble’s dogmatic insistence that the costs of the refugee crisis cannot ruin his balanced budget resulting in a deficit.”
    Schauble´s dogmatic insistence on austerity is a well known fact. Unfortunately though in this very instance Schauble has had to open his pockets very wide. In fact – as any reader of the German press knows – there are 6 Billions promised as support by the federal authorities. Today the news is that Schaueble (to prevent a rebellion by the States and local authorities) will hike this support to 10 billion. Furthermore he is preparing the public for the certainty that Germany will have to issue new debt next year.
    And these are only the expenditures at the federal level. Much more will have to be expended by local and State authorities.

    1. Praedor

      Careful there. Schauble may be forced by circumstance to unclench his tightwad fist and let some money fall through BUT it will come at a high cost to the real German people. He WILL demand (and get, unless the Germans get someone other than Merkel at the helm) more austerity gutting the very things that help the German people the most and keep them (fairly) content.

      This has always been the danger of being too generous on taking in LOTS of refugees. They DO place a heavy burden on the social services and safety net to the point that it endangers the existence of both. Social unrest is inevitable as a result.

    2. OIFVet

      Do you have a source for the 3 million figure? Mutti herself says anywhere from 600k to 800k for the year. Which is a lot, granted. And a lot of it was self-inflicted, as is the lack of sympathy. Thank Mutti rather than blame the messenger.

      1. Tom

        The whole thing is totally out of control. The 600k to 800k refers only to this year. 3 Million is of course a worst case scenario if it continues like that. That is at 10 000 a day. And that is an estimate. Basically nobody knows. For all of Germany´s vaunted efficiency it is a fact that there is no in time registry of refugees. There are only local data bases that get consolidated every few month. The whole thing reminds one of the childrens crusade in the middle ages. And of course the German press is completely misinforming people. No broadcast on Syria without mentioning that more are on the way because of Putin. That the main culprits are first the US for destroying the middle East in the first place and then Turkey which sends the refugees to blackmail the EU is nowhere mentioned.

        1. OIFVet

          Erdogan and Davutoglu issued another migrant blackmail today, and their price: no-fly zone. Yes, Turkey is a prime culprit and Erdogan has a bug up his behind about the Kurds. It ain’t easy being the new Sultan, but Mutti is doing her level best to make it easier on him by playing right into his hands.

          1. Praedor

            There will be no “no-fly” zones in Syria unless Russia gives the OK. There will be no preventing Russian fighters and bombers from doing what they are currently doing…unless Turkey wants an actual shooting war to start between NATO and Russia, which cannot end well at all, certainly not for Turkey.

          2. Thure Meyer

            Just a question to OIFVet.

            Who is Mutti? Your posts keep referring to someone, but I don’t really know who.

            Surely you aren’t referring to Angela Merkel who has no children and is the furthest thing from a mother than I can imagine.

  8. Ignacio

    I strongly agree with the last paragraph. Germans may be the cleverest of all stupid europeans but will suffer the consequences of their leadership.

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