Peer Steinbrück: Germany will lead the fourth industrial revolution

In his journeys through Germany, Peer Steinbrück has met many young people starting their own companies in the digital economies – often turning down secure, well-paid jobs to do it. They all talked about vision. Their vision. Digital entrepreneurs come to mind when you think of the great innovators of the last few years.

“What is your vision?” is rarely asked of politicians. That’s justified to some extent, because day to day problems need to be dealt with. Helmut Schmidt said “If you have visions, go to the doctors”.

But you have to know where you want society to go in the long run. How do we maintain cohesion with the growth of inequality. What is the future of Europe beyond the crisis? These questions need visionary answers.

He has seen both the vitality of the digital economy and the strength of traditional industrial manufacturing. Germany should start the fourth industrial revolution. This will begin with digitisation and networking entering production and manufacturing. Just as e-mail revolutionised business, so the digital world is revolutionising industry. Think of the so-called 3D printers being presented at conferences worldwide. In 10 years, your car dealer will print the parts you need to repair your car.

You need the people who design and manufacture things in the same place. You will use new materials. Germany will be the pioneer. The 1st came from the UK, the 2nd and 3rd from the US. Why Germany? Because it has the strongest and most diverse industrial base. It produces a huge amount of blue in the world’s manufacturing industries – out of proportion with its size. Germany has held its industrial backbone despite the rise in service industries. The share of GDP attributable to manufacturing is twice that in the UK or France. This will be the launchpad for the fourth industrial revolution.

Small and medium sized business will have a competitive edge as they perfect the processes to individual customers’ needs.

What political decisions need to be made? In his view there are 3:

Infrastructure

Broadband networks are the lifeline of the digital world. Germany is the furthest back in Europe in this. Getting rural broadband is vital to support all the manufacturers in rural areas. The private markets alone will not provide this. A statutory universal service requirement will deal with this, funded through investment bonds.

Education

We need to radically change schools and universities to support the digital age. The laptop is the workbench of the future. Skills are the key resources of the fourth revolutions. We are underfunding education by billions ever year. We need to change the constitution to allow the federal government to fund local education. And they need to raise taxes – on those with the broadest shoulders.

Entrepreneurship

The biggest companies have been around for over 100 years. In the US, the biggest companies were founded only few years ago. Germany can generate more stories like this. It needs money. We need more venture capital and seed capital. He wants to reintroduce the business starter subsidy, and to steer more investment into new businesses rather than financial products. The big corporations should mobilise corporate venture capital. We also need a culture of failure. Things need to be perfect – no they don’t. Most trials end in failure – but with no trials there are no successes. We need to let young people take chances – and fail sometimes. We must let them fly freely – and help them land safely.

Q: Is the desire to boost entrepreneurship at odds with your desire to raise taxes?

A. I don’t want to tax businesses – he’s talking more the income tax on the wealthy.

We need a public discussion about the culture of failure, and give some support from public banks – the KFW – special programmes to support young entrepreneurs. Big companies should be interested in being helpful to small companies starting up. The lack of funding is tied to the mentality of wanting everything to be organised perfectly. We want to reduce risk and play safe. The Anglo-Saxon companies are more curious.

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