Everyone Has a Plan

I. The Grade

In February 2026, the ifo Institute surveyed 6,300 German companies on their assessment of the federal government's economic policy. The result: a grade of 4.2. In the German school system, that is a bare "adequate" — trending toward failure. The SME association followed up with a letter to the Chancellor whose sharpness is without precedent in the history of German business associations.

Friedrich Merz, nine months in office, had shortly before written to his coalition MPs that the economic situation was "very critical" and the measures taken so far "insufficient." "Radical" steps were needed. In saying so, he unwittingly delivered the most devastating verdict on his own government.

The numbers behind the grade: 400,000 industrial jobs lost since 2019. The automotive industry alone shed sixty thousand positions in 2025 — six percent of its German workforce. Industrial production stands fifteen percent below its 2018 level. Volkswagen is announcing plant closures for the first time in its history. Nearly 200,000 companies folded in 2024, the highest number since 2011. One in four industrial firms is planning relocation abroad; by 2025, one in three.

One can examine these numbers individually and search for individual causes: energy prices, bureaucracy, Chinese competition. Or one can see them in their totality and recognise that something fundamental is missing. Something that every successful industrial nation possesses — and Germany does not.

A plan.

II. The Outlier

Among the major industrial nations, Germany is the sole outlier that believes industrial policy is a foreign concept. Not in vocabulary — certainly in practice. While others act, Germany debates. While others invest, Germany saves. While others implement strategies, Germany writes strategy papers that disappear into desk drawers.

This was not always so. The Gründerzeit, Bismarck's protective tariffs, the industrial policy of the post-war era — Germany has perfectly respectable traditions of state-directed economic development. But somewhere between reunification and the Agenda 2010 reforms, an ordoliberal orthodoxy took hold that treats any targeted industrial promotion as an impermissible intervention in the sacred market. Ludwig Erhard was declared a patron saint, the "invisible hand" elevated to state religion.

The market will sort it out. And if it doesn't, there simply wasn't enough market.

This doctrine has one decisive disadvantage: the competition doesn't believe in it.

III. The Plan from Beijing

In May 2015, China's State Council published the "Made in China 2025" strategy — inspired, and this is the bitterest irony, by the German initiative "Industrie 4.0." China took the German strategy paper, which in Germany remained a strategy paper, and turned it into a master plan with concrete targets, timelines, and massive funding.

Ten key sectors: electric vehicles, semiconductors, robotics, aviation, biotechnology, new materials, medical devices, agricultural machinery, rail equipment, shipbuilding. Defined targets for each sector, self-sufficiency quotas, support measures. Behind the plan stood the entire power of the Chinese state: subsidies, tax incentives, forced technology transfer, state equity investments, guaranteed procurement.

The results, documented in a 2025 report by the US-China Economic and Security Review Commission: all targets for electric vehicles were exceeded ahead of schedule. BYD, a niche player in 2015, has risen to become the world's largest automaker. In solar panels, batteries, and high-speed rail, China is the undisputed global market leader. Between 2015 and 2023, Chinese firms accounted for nearly a quarter of global export growth in MIC2025 sectors.

This is not old-style planned economy. It is strategic industrial policy with clear objectives and unconditional commitment to implementation. China has made mistakes — overcapacity, price wars, at least twenty percent of industrial companies operating at a loss. But it has acted. "Made in China 2035" is already in preparation.

Germany, meanwhile, left its Industrie 4.0 paper in the drawer.

IV. The Plan from Washington

The United States were long considered the motherland of laissez-faire. That Washington of all places would embark on the most active industrial policy since the Cold War surprised most observers — but not those who knew American history. From the Erie Canal through the railroads, the Interstate Highway System, DARPA, and the internet to the moon landing, America's greatest infrastructure and technology achievements were always state-initiated.

The Biden triad of 2022 stands in this tradition. The CHIPS and Science Act with a subsidy budget approaching 200 billion dollars for domestic semiconductor production. The Inflation Reduction Act with hundreds of billions for green energy and climate. The Infrastructure Investment and Jobs Act for physical infrastructure.

The results are striking. Factory construction spending more than doubled in 2023 compared to 2022. The share of computer and electronics manufacturing in total manufacturing construction rose from eleven percent in 2018 to sixty-four percent in 2023. Private investment far exceeds government spending — the leverage works. Around 15,000 new jobs in semiconductor production alone, clean energy employment growing at four percent annually.

The philosophy is decisive. Jake Sullivan, the National Security Advisor, put it unmistakably: "We will unapologetically pursue our industrial strategy." No apologies. No ordoliberal pangs of conscience. No faith that the market will sort things out on its own when it comes to strategic industries.

Germany could have made the Intel plant in Magdeburg the centrepiece of a German semiconductor strategy. Instead, it became a symbol of paralysis: ten billion euros promised, sunk in a coalition dispute between Economics Minister Habeck and Finance Minister Lindner, never disbursed, ultimately postponed indefinitely by Intel itself. The probability of realisation, according to experts: below fifty percent.

V. The Plan from Tokyo

Japan's Ministry of International Trade and Industry — the legendary MITI — was the historical template for all post-war industrial policy success stories. Chalmers Johnson described it in his 1982 classic "MITI and the Japanese Miracle" as the prototype of the developmental state: an elite bureaucracy with political latitude that identifies strategic sectors and advances them through cooperative research and development consortia between competing companies.

The VLSI Project of 1975 is the textbook example. Five corporations — Hitachi, NEC, Fujitsu, Toshiba, Mitsubishi — bitter competitors in the marketplace, jointly researched the next generation of semiconductors. The state identified the objective and shared the costs; the companies cooperated on basic research and competed in commercialisation. Result: Japan overtook the United States in memory chips.

Over two hundred such consortia existed between 1959 and 1992. The model rested on a simple insight: there are areas where cooperative research is more efficient than atomised competition. The state need not be better than the market — it need only remove the obstacles that prevent the market from deploying its own strength.

Germany once had something similar — the Fraunhofer Society, the Max Planck Institutes, the dual education system. But between basic research and industrial implementation, a gap yawns that nobody bridges. Because bridging gaps would be industrial policy. And industrial policy in Germany is a foreign concept.

VI. The Plan from Seoul

South Korea is perhaps the most impressive proof of what targeted industrial policy can achieve. In 1961, per capita income was below one hundred dollars — lower than Guatemala, Cameroon, or Chad. Lower even than North Korea, whose economic output was a third higher. Within a single generation, South Korea became an OECD member and technology leader. Samsung, Hyundai, LG, SK — names that today stand for cutting-edge technology.

The path there ran through the hardest industrial policy any democracy has ever pursued. After his 1961 military coup, President Park Chung-hee's first act was to arrest the country's fifty-one wealthiest businessmen — for "illicit profiteering." He then assigned the large conglomerates, the chaebols, concrete tasks: you build steel, you build ships, you build machinery. The state provided infrastructure, extended below-market loans, granted temporary monopolies. But it monitored performance. Those who failed to deliver lost their support.

This was not laissez-faire. This was not a free market. This was state-directed industrialisation with clear objectives, strict performance controls, and an unmistakable message: we will industrialise, and we will do it now.

In Germany, by contrast, corporations can use the inventions of individual engineers, earn billions from them, and silence the inventor — without the state so much as shrugging its shoulders. That is not ordoliberalism. That is organised indifference.

VII. The Plan from Paris

Even France, not exactly considered a model of economic dynamism, pursues a more consistent industrial policy than Germany. Dirigisme is state doctrine in Paris — from de Gaulle through Mitterrand to Macron. "France 2030" invests fifty-four billion euros in vertical industrial policy: automotive, aerospace, digital, biotechnology, green industry. Plus one hundred billion from the Covid recovery programme.

The results are remarkable. France has seen a significant surge in foreign direct investment in recent years and a thriving tech startup scene. Energy policy — thirty years of consistent nuclear power — is proving a strategic advantage: in 2024, France exported a net 89 terawatt-hours of electricity, the highest level in twenty-two years. Export dependence on the United States amounts to 1.8 percent of GDP — for Germany, it is 3.8 percent.

On 11 February 2026, one day before this essay's publication, Macron demanded at the EU summit in Alden Biesen joint European bonds for industrial investment and a "Made in Europe" preference in public procurement. His words were unmistakable: "If the EU does nothing in the next three to five years, it will be swept out of these sectors."

Berlin is forming an axis with Rome against joint EU debt. Blocking rather than shaping — that is the role Germany plays in European industrial policy.

VIII. The Country Without a Plan

Bruno Le Maire, France's finance minister, put it succinctly in 2024: "What strikes me is that everybody in the world has an economic strategy, except for Europe." He meant Germany above all. For it is Germany that has enforced the ordoliberal orthodoxy in the EU for decades. No industrial subsidies. No strategic sector promotion. No joint debt. Balanced budget above all else.

The results of this non-strategy are plain to see. Since 2017, the German economy has grown by a mere 1.6 percent — the EU average over the same period: 9.5 percent. Germany is not the engine of Europe. Germany is the anchor dragging Europe down.

Mario Draghi's report of September 2024 was an attempt to wake Europe up. 800 billion euros in annual additional investment. A European ARPA. Capital markets union. Regulatory simplification. More majority voting. After one year, eleven percent of his recommendations have been implemented. Zero percent in the areas of energy, defence, pharmaceuticals, and automotive. Draghi himself, frustrated: "Do what I told you."

But Germany does not act. It debates. It forms commissions. It writes coalition agreements with florid declarations of intent. And when those intentions fail against reality, the Chancellor declares that "radical steps" are needed. Like the admission of a doctor who, after nine months, concedes that the current therapy isn't working — and yet prescribes no new one.

IX. The Five Hundred Billion That Cannot Be Spent

In the spring of 2025, something historically unprecedented occurred. Germany loosened its debt brake and established an infrastructure fund of five hundred billion euros — four hundred billion federal, one hundred billion for states and municipalities, spread over twelve years. Plus a defence budget set to rise from two to three and a half percent of GDP.

It was the moment when hope flickered that Germany might flip the switch.

Ten months later, it is clear that money alone does not solve the problem. Federal investment in 2025 reached a record level — 87 billion euros — yet fell twenty-nine billion short of the government's own target. Nearly a third of planned investment could not be executed. Not for lack of funds, but for lack of planning capacity, lack of permits, lack of construction companies, lack of skilled workers. The Bundesbank is sceptical. Finance Minister Klingbeil concedes: "We need to do better here."

Germany cannot spend the money. Not because it doesn't have any, but because its structures won't allow it. Decades of underinvestment have degraded the administration just as surely as the bridges. A state that saves until it can no longer act cannot restore its capacity to act through sudden spending. The debt brake did not merely ruin the infrastructure — it ruined the ability to build infrastructure.

By comparison, China invested hundreds of billions of dollars in ten strategic sectors within the MIC2025 timeframe alone, with purpose and precision. The United States mobilised multiples in private follow-on investment through the CHIPS Act and the IRA. South Korea built the world's fourth-largest semiconductor industry in a single generation. Germany cannot manage to build even a single chip factory.

X. Why?

The standard explanation runs: bureaucracy, energy prices, skills shortage. This is not wrong, but it is superficial. The deeper question is: why does Germany have these problems — and others do not?

Japan has bureaucracy too, but one that functions as a lever rather than a brake. France has high energy costs too, but an energy strategy built on thirty years of consistent nuclear policy. China has skills problems too, but an education system that produces more engineers each year than Germany has inhabitants.

The difference lies not in the problems. The difference lies in the ability and the will to solve them. And that will presupposes having a plan at all — a vision of where you want to go and how to get there.

Franz Oppenheimer distinguished between the economic and the political means of satisfying needs. The economic means is one's own labour and voluntary exchange. The political means is the unrecompensed appropriation of others' labour. What we observe in Germany is a third category: the organised absence of any means whatsoever. Neither is there targeted promotion nor is the existing base protected. There is administration, regulation, debate — and the passive observation of others taking over the value creation.

The German economy does not lack markets. The German economy lacks the state — not as a regulator, of which it has more than enough, but as a strategic partner, an enabler, an entity that says: this technology matters, this industry is strategic, this is where we invest.

XI. The Irony and the Outlook

The greatest irony of twenty-first century German industrial history can be stated in two sentences. "Industrie 4.0" was a German idea. "Made in China 2025" was its implementation.

As I write these lines, in February 2026, January unemployment has hit a twelve-year high. Verdi is striking hospitals and public transport. The Chancellor calls for "radical steps" without saying which ones. The industrial electricity price, announced as a key measure, has still not been introduced. Five hundred billion euros lie ready, but the state cannot manage to spend them.

In Washington, the CHIPS Act factories are producing their first semiconductors. In Shenzhen, BYD is approaching its five millionth electric vehicle. In Seoul, Samsung is opening its newest chip factory. In Paris, Macron is planning the next generation of nuclear power plants.

In Berlin, they are still debating.

Wolfgang Münchau wrote in his book "Kaputt": "Innovation was inseparable from incumbent companies. Innovation was defined by what VW, BMW, and Mercedes considered it to be." That was the diagnosis. The therapy would have been to develop an industrial policy that transcends the interests of individual corporations — one that protects inventors, promotes startups, identifies strategic sectors, and invests.

Instead, Germany did something no other industrial nation in the world has done: it declared the absence of a strategy to be the strategy.

Everyone has a plan. Except Germany.

"What strikes me is that everybody in the world has an economic strategy, except for Europe."
— Bruno Le Maire, France's Finance Minister, 2024