A state that spends 48% of its budget on social-welfare entitlements and 14% on interest payments on a growing mountain of debt, and can only invest 11% in modernizing infrastructure, has long since lost its ability to act. It is bankrupt. Any company that behaved this way would rightly be liable for fraudulent avoidance of bankruptcy under German law. An economy that requires at least half the hourly wage to be paid over to the government in the form of taxes and entitlements, and on top of that significant consumer and corporate taxes, is no longer competitive. Whether or not Merkel can bring about the needed reforms depends in large measure on whether Germany is finally willing to admit to the fundamentally anti-democratic roots of its social welfare state.

In the words of German constitutional court judge Udo Steiner, Germans have an "equality sickness" that makes them dependent on the welfare state. This describes our society's worst burden, cultivated in the 20th century under various forms of government. Germans were never able to complete a bourgeois revolution. Their democratic institutions emerged from the chaos of defeat after two world wars--in which they had been insulted, frightened, humiliated and, after 1945, burdened with guilt, and were forced to seek a new beginning. Both times, the German democrats, who had always existed, took up the ideas of the American declaration of independence and the French revolution, but gave them a peculiar cast. The eternally conflicting principles of freedom and equality were reinterpreted and ranked in a specific, German way. Civil equality before the law became social equality, and freedom was, in case of doubt, always sacrificed to the idea of social equality.

After 1878, when there were two attempts on the life of the German Emperor that were believed to be associated with revolutionary Socialism, many limitations were placed on activities in support of Socialism through extensive restrictions on the Social Democratic Party...

The Socialist interest was perhaps the most potent of the domestic challenges to Bismarck's Imperial Germany and, although the restriction placed on Socialism failed to subdue support for Socialism, several seemingly radical social security related legislative arrangements devised by Bismarck to provide for systems of accident and health insurance and for old-age pensions effectively drew the teeth of Socialism in Germany when they were passed into law in the mid eighteen eighties. Given that these social security measures were in place the perceived urgency of socialistic reform abated and the working classes in Germany viewed the state with more acceptance and, in most cases, effectively turned away from thoughts of revolution.

...when reactionary regimes like imperial Germany... introduced pensions, they did so under the pressure of radical or revolutionary challenges. Bismarck, Germany's 'iron chancellor', introduced pensions to fend off challenges to the state. He argued that 'anybody who has before him the prospect of a pension, be it ever so small, in old age and infirmity is much happier and more contented in his lot, much more tractable and easy to manage'.

The collectivist "public good," so defined, always ranked higher in the public mind than the protection of basic civil rights and universal human rights. To this day, Germans speak of a "Father State" that will always put things right. They see it as an insurance policy against absolutely everything. The vast majority believes, to this day, that the concepts of state and society are interchangeable--that they are synonymous.

The policies of the "social market economy" in the early years of the Federal Republic paid tribute to this disastrous tradition. It was Konrad Adenauer who tied the level of state pension to income, and thus achieved sensational electoral victories without any concern for the future. At the same time, East German leaders declared the "unity of social and economic policy." Despite the disaster that followed, the economic consequences of which Germany will be paying off for many years, many East Germans still look back fondly on the warm hearth of socialism.

Angela Merkel won't have an easy task. She will have to oversee the lean years of reform and consolidation. Germans must recognize that equality means equality before the law and finally accept freedom as a fundamental value. The coming years will be very interesting politically. Only afterward will we know whether we are really--as we like to claim--a firmly established democracy.