Germany Makes a Business Decision

Germany just announced that it could accept an additional 500,000 refugees when other countries are jockeying to accommodate as few as possible. As much as the announcement was portrayed as a humanitarian effort, it is just as likely a simple business decision.

Few members of the European Union, or those outside of the EU for that matter, would accuse Germany of fuzzy-headed liberalism. Their insistence on economic reforms focused on austerity, curtailed government benefits and a balanced budget (or at least closer than most nations manage now), has earned them the enmity of most Greeks and  economic liberals throughout the continent.

While I can’t criticize the undeniable human benefits of Germany’s decision, it also reflects two key factors that are important for any business or economy; the size and talent of its workforce.

Like northern hemisphere nations from Canada to Japan, and including the United States, China and the entire European Union, Germany’s working population is ageing. Multiple studies by both their government and private think tanks predict a shortage of up to 1.5 million skilled workers in the next five years.

Any shrink in new and skilled workers (who are also consumers) will slow economic expansion. The EU countries with the lowest birth rate over the last 30 years are Greece, Spain, Portugal and Italy. Japan is already feeling the impact. China will be hit worse, but a bit down the road ( from 2030 to 2050). In the US, the massive exiting of the Boomers from the workplace has begun, and will accelerate over the next ten years.

The key term is “skilled” workers. As technology whittles away at the middle class, few societies are say “Give me your tired, your poor, your huddled masses” anymore. That’s where Germany’s offer is brilliant.

The Atlantic published a great look at the Islamic State in its March issue. Trained by ex-KGB agents, IS infiltrators enter a city in advance of their military force. They attend town meetings and other public events, noting the names of community activists, elected officials and business executives. When they attack in force, assassination squads equipped with the names and home addresses of these leaders go from house to house eliminating them. Their objective is to decapitate any local nucleus for organization.

The result has been to create a refugee population that is generally better educated and wealthier than their countrymen. Anecdotally, a friend who visited Greece a few weeks ago tells the story of a Syrian refugee’s frustration at the inability of Greek shopkeepers to make change for 500 Euro notes, the smallest denomination he carried. Many of these refugees are anything but destitute. Germany is seizing an opportunity to add much-needed skills (and possibly capital) to their worker population.

In the meantime, the run up to the U.S. Presidential nomination continues to generate waves of anti-immigration rhetoric, ranging from the racist to the silly. Mass deportations, amending the Constitution to limit citizenship and building a giant wall are populist sops that, unfortunately, play well with a frustrated population.

The problem isn’t immigration, it’s the right immigration. I understand that the egalitarian ideal expressed in “All men are created equal” is part of our national psyche, but does it mean that we have to run our economy into the ground in its observance? I’m certainly not racist, but no rational businessperson would argue that a Latin American subsidence farmer has the same economic potential as a Chinese PhD.

Germany has seized a business opportunity by reaching out to talent that can positively impact its economy. The United States can do the same by introducing a sensible immigration policy that includes some consideration of economic merit.