The beautiful south - Germany’s new divide.

As its election campaign kicks off, Germany’s north-south split is ever starker.

The Economist, Print Edition Europe, August 19, 2017 – Bremen and Dresden.

When Helmut Kohl was buried on July 1st, Germans reflected approvingly on his legacy: the scars of the country’s east-west division are gradually healing. Yet as its longitudinal split closes, a latitudinal one is growing.

Imagine that Germany were sundered once more, this time into north and south. The south would contain the Länder (states) of Saarland, the Rhineland-Palatinate, Hesse, Baden-Württemberg and Bavaria from the former west, plus Thuringia and Saxony, the two southernmost states of the former east. South Germany’s border with north Germany would track what linguists call the Uerdingen line separating “high” and “low” dialects of German.

It would be an equal split. Each Germany would contain half of the population, five of the ten largest urban regions and similar proportions of the still-poorer easterners. Yet the new South Germany would have the better prospects of the two. For Germans in the southern states are doing better than those in northern ones (see chart 1). They go to better schools, get jobs more easily, earn more and live longer to enjoy it. Their governments have healthier finances, so they can invest more, sometimes five times as much per head. According to a recent study by the German Institute for Economic Research (DIW), crime rates are “strikingly” lower in the south. To rub it in, the south even contains the country’s best football team, Bayern Munich.

Länder of milk and honey (2016 or latest available).

North Germany – Population: 40.6 m (change since 1990: -100,000) – GDP per person: €34,967 – Unemployed: 1.7 m – Debts of Länder: €371 bn – insolvencies: 72,619 – Exports: €390.9 bn – Patents registered: 13,692 – DAX30 companies: 12 – Average education ranking*: 9.4.

South Germany – Population: 40.7 m (change since 1990: +1.3 m) – GDP per person: €39,481 – Unemployed: 1.0 m – Debts of Länder: €170 bn – insolvencies: 49,895 – Exports: €558.8 bn – Patents registered: 34,782 – DAX30 companies: 18 – Average education ranking*: 4.8.

Sources: IDW; Federal employment agency; Initiative Neue Soziale Markwirtschaft; DAX.

* Out of 16 Länder, 1=best, 16 = worst.

The picture is not uniform. Former coal-mining regions of the Saarland and brain-drained Saxon villages plagued by nationalist politics hardly fit the image of a southern sunbelt. Conversely, high-tech northern cities like Hamburg and Düsseldorf are among the richest in Europe. And some of the disparity is explained by the struggles of giant North Rhine-Westphalia, which would make up almost half of North Germany’s population, and the soaraway success of Baden-Württemberg and Bavaria in the south. But not all of it.

So pronounced is the overall trend that on some statistical maps it is now easier to spot the Uerdingen line than the former east-west border. The gap between the unemployment rates in north and south, for instance, will soon be wider than that between east and west (see chart 2). In the New Social Market Economy Initiative's education rankings, Saxony and Thuringia took the two highest places among Germany’s 16 states while Berlin and Brandenburg, also eastern states, took the two lowest. The north-south divide on life expectancy is now greater than the east-west one; women in Baden-Württemberg and Saxony live the longest. According to André Wolf of the Hamburg Global Economics Institute, “in the medium term the north-south differential could definitely supersede the (current) east-west one.”

To visit Dresden and Bremen, both cities of about half a million, is to witness this blurring. Dresden has cleaner and less potholed roads, and better-kept social housing. Its unemployment, poverty and indebtedness rates are lower and its house prices higher. Yet it is in the formerly communist east; Bremen in the former west. The fact that Bremen is also in Germany’s poorer northern half, and Dresden in its richer south, is a more significant fact.

Laptops and Lederhosen.

It was not always thus. For much of the 20th century the north, with its coal, steel and shipping industries, was wealthier. Even in 1960 Bavaria was the poorest part of West Germany. Like its neighbours, it lacked natural resources and had to find work for millions of Germans who had fled central Europe from 1945 and settled in rural areas. So successive governments limited bureaucracy and offered incentives for investment not just in big cities but also in smaller-scale production in towns and villages. This suited economic traditions: the hilly south had generally been farmed in small patches by self-sufficient families, while the flatter north lent itself to larger, more class-stratified agri-businesses.

The south’s specialised firms, serving high-precision giants like Daimler and Siemens, left it better prepared than the north for the decline of heavy industry. Bruno Hildenbrand, a sociologist, even suggests that the relative autonomy of the southern farming families gave the region a more entrepreneurial and pragmatic mentality. The region also has most of Germany’s best universities, its main stock exchange (Frankfurt) and its two biggest airports (Frankfurt and Munich), all ever-bigger assets in an age of digitisation, globalisation and financial services.

Southern parts of the former east have similarly combined luck and skill. More urban than the rest and bestriding major transport routes, Saxony and Thuringia had pre-communist industrial traditions—trade fairs in Leipzig, optical technology in Jena, aviation in Dresden—that could succeed in reunified Germany.

When Germany goes to the polls on September 24th, the political contours of the divide will be on display. The larger southern states are strongholds of Angela Merkel’s centre-right CDU/CSU alliance; quite how resounding a victory she wins depends partly on her ability to win votes in poorer, traditionally Social Democratic (SPD) parts of the north. Notably, the chancellor launched her campaign in post-industrial Dortmund, in the north-western Ruhr Valley. Both she and Martin Schulz, her SPD rival, are making early campaign stops in Bremen.

North and south are not yet distinct political blocs. But it is possible to imagine this changing with time. Gigantic transfers of western cash have helped close the east-west divide, while transfers from south to north are politically trickier. Under the constitution, the federal government is not generally permitted to interfere in education, making it harder to direct remedial funds to the (overwhelmingly northern) states where schools are struggling. Likewise, a “debt brake” limiting state borrowing introduced in 2011 applies mainly to the more heavily indebted northern governments. Other big national issues pit one end of the country against the other: the SPD’s proposed rise in the top tax rate would most hit the south, which contains nine of the ten cities with the highest salaries; federal action to increase infrastructure investment is pressing mostly in the under-funded north; interventions to slow house prices make more sense in pricey southern municipalities than depressed northern ones.

The Demographic Risk Atlas, a study of population trends, suggests that Germany’s north-south divide could become larger than Italy’s. As Marcel Fratzscher of the DIW notes, such a rift would contravene the constitution, which guarantees equal opportunities for all Germans. In a country with a federal structure, and without the unique circumstances of reunification, this pledge will not be easy to keep.

https://www.economist.com/news/europe/21726705-its-election-campaign-kicks-germanys-north-south-split-ever-starker-germanys-new-divide?frsc=dg%7Ce