Word: easternism
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...local economy had strong roots going back to before World War II, Dresden has turned itself into a world center for semiconductors, Leipzig has attracted automakers including BMW and Porsche, and Jena has successfully built on the reputation of its optical firm, Carl Zeiss. But for the most part, eastern Germany is still far from resembling the "blossoming landscapes" that former Chancellor Helmut Kohl predicted back in 1990. True, living standards have soared thanks to the cash infusions, giving easterners more than 80% of the purchasing power of their western compatriots. But even two decades on, the region remains substantially...
Germany has learned a second lesson; big spending packages don't work if the economic policies underlying them are miscued. In hindsight, eastern Germany's economic wellbeing was sabotaged at the very beginning of the reunification process by the political decision to exchange its currency for West German marks at the rate of one-to-one. Haimann, of the Halle Chamber of Commerce, thinks that was a crucial error. The true value of the old East German mark was just one-fourth or one-fifth of the West German currency, so when it was swapped in 1990 at parity...
Given the enormous bill for reunification, such failings have inevitably given rise to a debate in Germany about the policy of propping up the east. In 2004, an informal commission headed by Klaus von Dohnanyi, a former mayor of Hamburg, concluded harshly that eastern Germany was still far from being able to stand on its own two feet. One of the commission's key findings was that industrial policy should have been better coordinated and the money invested in a few promising centers, rather than being showered as if from a watering can across the economic landscape. But the fact...
...attempts to woo industry through subsidies work so well. While Dresden has managed to reinvent itself as a micro-electronics "cluster," a similar attempt by the town of Frankfurt an der Oder failed. Around eastern Germany, there are numerous examples of industries without real prospects being kept alive artificially, complains Holznagel of the Taxpayers' Federation, citing tilemaking and leather-treatment plants on the Baltic coast. "The subsidies just prolong the death," he says, "but it comes anyway...
...Stuttgart, where almost half a million people have been put on short-term work since last October as auto and machinery factories have slowed production. The east has been somewhat protected because its firms don't export as much as their west German opposite numbers. An unmistakable streak of eastern stoicism helps, too. "I notice that when I'm in the west, the fear of this economic crisis is much greater than in the east," says Halle's Mayor Dagmar Szabados. "We've been steeled by crisis here." That may be true; but as the state of her town proves...