The Soul-Sapping Grind of Doing Business in Bureaucratic Germany

Entrepreneurs warn that the country’s thicket of red tape has grown so dense it could choke a planned $1.1 trillion stimulus package

By Bertrand Benoit of The WSJ. Excerpts:

"Germany’s economy has barely grown for the past five years. The new government wants to change that by spending one trillion euros on defense and infrastructure in the next decade. But economists warn the stimulus could be wasted without a crucial step that costs nothing: Rid the economy of the red tape that is smothering growth and discouraging investment.

“We urgently need to decide where obstructive, paralyzing rules should be abolished and which need amending,” said Veronika Grimm, one of five economists who advise the government on economic policy. The group flagged bureaucracy as a key hindrance to growth in their yearly report in May."

"A well-run state can make life predictable and provide services to companies. Yet too much state can gum up the system. Excessive bureaucracy exists everywhere, but Europe is particularly affected because governments there tend to follow the precautionary principle."

[It says] "the state should seek to prevent risks before they arise. Initially limited to environmental legislation, the principle is now increasingly applied to other areas"

"the burden has increased over time—despite parliament passing several anti-bureaucracy laws. Employees in Germany spent 1.02 billion work hours fulfilling state-mandated bureaucratic tasks last year"

"Bureaucracy . . . costs German businesses €146 billion a year"

"the volume of economic, financial and tax legislation had roughly doubled in Germany since 2009"

"Only 10% [of German executives] said Germany was welcoming for business"

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