Getting out of the stagnation trap: Why the state is not a business – and how it can function again anyway

Forget the "start-up fairy tale": What modern governance really looks like

Germany is considered rich, politically stable, and highly educated – and yet, problems abound. Whether it's the sluggish pace of housing construction, the cumbersome digital administrative services, or the endless permitting processes: the German state seems increasingly suffocating under its own complexity. Citizens' frustration is growing because political promises often fizzle out in practice. In such moments, the knee-jerk reaction is to demand that the state finally be run as efficiently and agilely as a business. But this comparison falls short. A state is not oriented towards profit and market success, but rather towards social cohesion, legal certainty, and legitimate problem-solving. The real problem lies not in a lack of resources, but in a political culture that has lost sight of output and instead incessantly produces new rules and symbolic politics. The following text analyzes the structural weaknesses of our governance system and outlines a concrete roadmap – from digitalization to a reform of federalism and a new accountability for results – to make the state capable of acting precisely where it really matters for the future of our country.

Rethinking governance: A country that is getting in its own way

Germany is rich, educated, and institutionally stable – and yet it sabotages itself on almost every major task. Housing is built too slowly, digital administrative services remain fragmented, permitting processes take years, and political announcements often fizzle out before they reach citizens' daily lives. This observation is not new, but it has intensified: A state that could, in principle, afford to act sovereignly appears increasingly overwhelmed by its own complexity.

The knee-jerk comparison many draw in this situation is: the state must finally be run like a business. More efficiency, clear key performance indicators, quick decisions, less bureaucracy. This idea is understandable, but it misses the true nature of the problem. A state is not a business, and it cannot and must not be. The real question is not whether the state should become more entrepreneurial, but how it can be organized more professionally, consistently, and with greater capacity for learning, without damaging its democratic and constitutional foundations.

Why comparing companies is misleading

A company can clearly prioritize its goals. It focuses on market success, profitability, growth, and liquidity. It can withdraw from unprofitable business areas, lose customers without facing legal repercussions, and make decisions within a relatively clear ownership and management structure. A state has none of these freedoms. It must act even where markets don't function, where decisions are unpopular, expensive, and whose effects only become apparent decades later. Internal and external security, education, healthcare, infrastructure, the judiciary, social welfare, crisis preparedness, and the protection of minorities cannot be optimized according to business logic because their purpose is not to generate profit, but rather to foster social cohesion and legal certainty.

A state's performance is therefore not measured by profit, but by legitimate problem-solving under the conditions of law, public sphere, and pluralistic diversity of interests. A company can close a branch if it is unprofitable. A state cannot simply abandon a structurally weak region because no economic value is being created there anymore. This difference in standards of action makes it clear that the appropriate frame of reference for the state is not a company, but a highly complex, multi-layered governance system comprising the constitution, parliaments, courts, administrations, states, municipalities, the economy, and civil society. Precisely because this system is so complex, it requires different, far more sophisticated governance mechanisms than a company—not less, but more intelligent governance.

The real problem behind the dissatisfaction

Anyone who takes a sober look at the state of German administration and politics quickly realizes that the core problem does not lie in a lack of rules, personnel, or financial resources. Germany has one of the most densely regulated administrative apparatuses in the world, a comparatively large number of public employees, and tax revenues that would allow for considerable leeway. The real deficit lies in prioritization, the ability to implement political decisions, and an institutional accountability structure that too often remains vague.

In Germany, political processes frequently produce new laws, funding programs, announcements, and symbolic resolutions without first precisely clarifying which specific problem is actually meant to be solved, who bears responsibility for the results, which level of government is responsible for implementation, what data will be used to demonstrate success or failure, and what happens if a measure is ineffective. This gap between announcement and effect is the real reason for the growing discontent of many citizens. The National Regulatory Control Council, the German government's independent advisory body for better legislation, estimates the ongoing annual bureaucratic costs for citizens, businesses, and public administration at around 64 billion euros. At the same time, a significant increase in the burden has been observed since 2011, even though a noticeable reduction of approximately 3.2 billion euros was achieved for the first time in the current reporting period. This turnaround is a positive sign, but it does not change the structurally still very high starting point.

These figures are more than just a technical footnote. They reflect a political logic of production that almost automatically answers new problems with new legislation, new responsibilities, additional documentation requirements, and ever more exceptions. Dismantling existing, outdated, or ineffective regulations, on the other hand, yields little political prestige because it's difficult to sell in campaign speeches or press releases. This is precisely one of the central structural weaknesses of the political system.

The logic behind partisan political behavior

It would be too simplistic to explain the behavior of politicians solely as the moral failings of individuals. Party-political action largely follows predictable, systemic incentives that operate independently of the integrity of individual actors. Election cycles reward visible, immediate measures far more strongly than long-term reforms, whose positive effects often only become apparent after five, ten, or fifteen years and are then rarely attributed to the original government. The logic of the media rewards conflict, personalization, and emotion, while structural administrative modernization rarely generates headlines and therefore appears politically unattractive.

Furthermore, there is a pronounced departmental logic in which each ministry primarily defends its own responsibilities, budget, and visibility, rather than collaboratively addressing cross-departmental problems. The logic of coalitions further reinforces this effect, as multi-party governing alliances effectively become permanent bargaining transactions, where each party needs visible successes for its core constituency to survive the next election campaign. The influence of lobby groups and associations is not inherently illegitimate – interest representation is part of any pluralistic democracy and often provides crucial expertise. It only becomes problematic when well-organized, resource-rich special interests are structurally superior to diffuse, poorly organized public interests, thereby unilaterally shaping legislation.

Finally, German federalism, in its current practical form, allows for a considerable diffusion of responsibility. The federal government, states, and municipalities can mutually point the finger at each other when problems remain unresolved, which dilutes political accountability and makes it difficult to publicly attribute success and failure. The result of this complex situation is not a deliberately malevolent state, but rather a system whose incentive structure too often prioritizes short-term political rationality over long-term political rationality.

State-political thinking as a counter-proposal

What is needed to counter this situation is a stronger focus on national policy. This means consistently evaluating political decisions based on whether they will enhance Germany's capacity to act in ten, twenty, or thirty years, even if they appear unpopular in the short term or do not promise immediate applause. Key areas of such national policy thinking include defense and security capabilities, energy, transportation, and digital infrastructure, the quality of education and securing skilled workers, innovation and industrial competitiveness, the demographically resilient design of social security systems, functioning municipalities with accelerated permitting processes, and resilience to crises, cyberattacks, and economic dependencies.

To institutionally safeguard such thinking, Germany needs a binding framework for state action that focuses on a few, clearly prioritized national goals. These goals must remain valid across legislative periods and be measured publicly and transparently on an annual basis. Crucially, such a framework must not end up as a non-binding strategy paper, as has often been the case in the past, but rather function as a politically binding steering instrument with concrete consequences for the budget, personnel, and implementation responsibility.

Housing construction provides a clear example. The political success metric here should not be simply the passing of a new law. Instead, it must be based on the actual approval process, the number of completed housing units, the availability of building land, cost trends, the administrative capacity of municipalities to enforce regulations, and the duration of potential legal disputes. Only when political evaluation is consistently aligned with such verifiable impact factors will there be an incentive to actually solve problems, rather than merely demonstrating a willingness to act.

The limits of agility

In debates about modernizing the state, it is often demanded that the state simply become more agile. This idea is not wrong, but as a sole political magic formula, it is insufficient and in certain areas even dangerous. A state must not experiment constantly like a start-up when fundamental rights, equal treatment, security, and trust in reliability are affected. Citizens must be able to rely on the fact that pension entitlements, legal procedures, or police powers are not constantly being fundamentally reinvented.

A more sensible approach is a nuanced one that distinguishes between what must remain stable and what should be flexible. In the realm of the rule of law, fundamental rights, procedural guarantees, and the principle of equal treatment must be enshrined, while administrative processes, forms, and digital access can certainly be further developed flexibly. With regard to infrastructure, long-term network objectives, technical standards, and basic funding should be maintained, while project management, procurement, and specific approval processes can be made considerably more flexible. In the welfare state, the security of entitlements and protection against poverty must remain untouched, while access channels, data matching, and advisory processes should be modernized. Economic policy requires a reliable regulatory framework, but the specific design of subsidies should be technology-neutral and adaptable to new market developments. Finally, in crisis management, responsibilities and emergency powers must be clearly defined, while the specific situational picture and operational control must be adapted quickly and situationally.

Agility is therefore particularly useful where the state shapes concrete services, such as digital services, information technology, administrative processes, pilot projects, crisis management, procurement, and project management. It is significantly less suitable, however, when it is misunderstood as a substitute for careful democratic consultation, sound legislation, or legal obligations.

A stronger political center

Formally, Germany is a chancellor democracy, but in practice it is often a collection of largely autonomous ministries. Major cross-cutting issues such as digitalization, accelerated planning, the energy transition, securing skilled workers, migration, internal security, and administrative reform are fragmented into individual departmental responsibilities that rarely collaborate effectively. The Federal Chancellery should therefore assume not only a coordinating role, but also genuine steering authority for a limited number of national projects.

This includes binding targets and milestones for key projects, cross-departmental project teams with clearly defined responsibilities, a publicly accessible implementation dashboard that makes the progress of major projects transparent, effective escalation procedures in the event of political or administrative blockages, regular status reports to the Cabinet and Parliament, and clearly defined overall political responsibility for every strategic project. The National Regulatory Control Council, in its latest annual report, also calls for significantly stronger political leadership from the newly created Ministry for Digital Affairs and the Federal Chancellery, coupled with clearly defined departmental targets, binding legislative standards, and the early integration of practical implementation experience from public administration and local authorities. Such an approach would not constitute authoritarian centralism, but simply the organizational capacity to make consistent decisions on genuinely national priorities and to monitor their implementation.

From measures management to results responsibility

In Germany, political success is traditionally often measured by input: the amount of funding provided, the number of programs launched, laws passed, or newly created positions. However, the decisive factor should be the actual output and the societal impact. Therefore, every major reform project should, before its adoption, provide a publicly and transparent explanation of the specific state to be achieved and by when; the objective indicators used to measure success; who is politically and administratively responsible; the total costs, including administrative implementation; the key implementation risks; when an independent impact assessment will be conducted; and when the regulation will automatically expire if it is not explicitly extended.

This approach would fundamentally change political culture. Instead of simply stating that action has been taken, it would require demonstrating that a specific problem has actually diminished. This shift from symbolic activity to verifiable impact is precisely the core of what many citizens rightly expect from better politics.

Legislation conceived from the perspective of enforcement

A significant part of the German implementation problem lies not in the political goal of a law, but in its administrative translation into practice. If municipalities, authorities, courts, companies, or citizens are unable to implement a law effectively, a gap inevitably arises between the written legal text and lived reality. Therefore, every significant legislative proposal should undergo a mandatory implementation and digitalization review in the future.

This process requires examining whether a regulation can be implemented without additional paper documentation, which data the state already possesses elsewhere and can reuse, which administrative levels need to collaborate, how many additional cases, audits, and appeals are likely to arise, whether personnel, information technology, and expertise are sufficient for implementation, and whether standardized interfaces and uniform enforcement across the country are ensured. In its latest report, the National Regulatory Control Council explicitly calls for such a combination of practical, digital, and citizen reviews, as well as binding and sufficiently long consultation periods before the final adoption of new regulations. In the future, legislation without a realistic and vetted implementation plan should not even be allowed to enter the parliamentary process.

Functionally reorganizing federalism

German federalism protects regional self-government and the political balance of power between the federal government and the states. This is historically grounded and remains valuable in its core principles. However, it becomes problematic in administrative practice when sixteen federal states and thousands of municipalities have to solve the same standardizable task using completely different information technology systems, forms, legal interpretations, and procurement procedures. Therefore, what is needed is not the abolition of federalism, but a clearer distinction between political diversity, which is useful where regional differences genuinely reflect legitimate local priorities, such as in culture, educational priorities, or municipal development, and technical and administrative uniformity, which is necessary where differences merely generate additional costs and friction.

Germany urgently needs uniform standards, particularly regarding digital identities, public registers, data exchange formats, building and planning procedures, business start-ups, registration systems, digital payment processes, and public procurement. The federal government should provide a common digital infrastructure that states and municipalities can use in a binding manner, instead of continuing to develop costly and incompatible parallel solutions. The fact that the federal government is allocating additional funds for projects such as a digital citizen account, a European digital identity, and the modernization of public registers is a step in the right direction. However, the crucial question remains whether these projects will actually be implemented in a binding and nationwide interoperable way, rather than once again getting bogged down in isolated pilot regions.

From a state of subsidization to a state of provision

Germany's pronounced reliance on state aid is itself a symptom of a lack of political prioritization. Instead of fundamentally improving general economic and social conditions, policymakers often react with ever-new funding programs, application procedures, documentation requirements, and ad hoc, case-by-case subsidies. This creates a paradoxical situation: The state wants to support citizens, businesses, and municipalities, but in doing so, it simultaneously generates considerable administrative costs, a dedicated consulting market for grant applications, and de facto barriers to access for less professionally organized actors. Larger companies and specialized applicants often benefit disproportionately more than small businesses, the self-employed, or financially weak municipalities.

Instead, more sensible measures would be blanket, understandable and digitally enforceable regulations, a significant reduction in fragmented funding programs in favor of fewer but more effective instruments, standardized funding formats with clearly defined durations, an automated entitlement to benefits where the necessary data is already available, a clear priority for infrastructure, education, research and accelerated procedures over purely symbolic subsidies, and regular independent impact assessments to determine whether a funding program actually triggers additional investments or merely subsidizes projects that were already planned.

A more professional administration as the backbone of the state

A high-performing public administration needs far more than just additional information technology. It needs a fundamentally different operating model. In the future, the public sector should offer more independent specialist career paths, facilitate transitions between administration, academia, the private sector, and local government, and establish more modern leadership training. Especially at higher management levels, project management, digital skills, procurement expertise, data literacy, and practical implementation skills should be given significantly greater weight than they are today.

At the same time, the political level must remain clearly separated from the technical administrative level. Politicians set democratically legitimized goals and priorities, while a professional administration provides honest advice on risks, costs, and actual feasibility. Agency leaders require genuine operational responsibility within clearly defined political guidelines, and technical warnings must never be interpreted as political disloyalty. The real alternative to partisan arbitrariness is therefore not a technocracy without democratic control, but rather a democratically controlled professionalism that intelligently combines technical expertise and political legitimacy.

Digital architecture instead of digital facade

Digitizing government means far more than simply making existing paper forms available online as fillable PDFs. It means capturing data once, reusing it in a legally compliant manner, and proactively providing services to citizens and businesses. The central guiding principle should be to capture information only once, rather than having to repeatedly prove it. This includes secure digital identities, interoperable public registers, uniform data standards, open technical interfaces, fully digital files with end-to-end processes, and a consistent focus on real-life situations and business events instead of the previous logic centered on individual authorities. Equally essential are a clear allocation of data responsibility and effective, yet practical, data protection oversight.

A modern, well-organized state should no longer ask which form a citizen wants to fill out for routine services. Instead, it should recognize when someone has had a child, started a business, or changed their place of residence, and proactively derive and offer the relevant services and obligations from this information.

Lobbying as a reality that needs counterweights

Lobbying is neither entirely avoidable in a pluralistic democracy nor is it inherently illegitimate. Associations, trade unions, companies, non-governmental organizations, and academia provide crucial expertise upon which politics and administration depend. Interest representation only becomes problematic when informational advantages, privileged access, and financial resources translate into covert, barely controllable regulatory advantages.

Therefore, effective institutional countervailing power is needed in the form of a comprehensive and genuinely searchable lobby register, early publication of draft legislation and submitted comments during the legislative process, the most complete possible documentation of key contacts in significant legislative projects, mandatory disclosure of essential external drafting assistance, sufficiently long and genuine consultation periods, stronger integration of academic and municipal implementation perspectives, and clear cooling-off periods and transparency obligations for transitions between political office and the private sector. The crucial point is not to keep interests out of politics altogether, but to ensure that public interests, practical implementation experience, and long-term state interests are represented institutionally at least as strongly as well-organized individual interests.

Classifying emotions in a politically responsible manner

Politics without emotions does not exist and cannot exist, because people decide on matters of security, belonging, justice, fear, and hope. Anyone attempting to completely banish emotions from political communication ultimately cedes this field to populist forces who exploit precisely this. The true goal, therefore, cannot be a de-emotionalized politics, but rather responsible political communication that clearly names problems without artificially dramatizing them, exposes existing conflicts of interest instead of seeking easy scapegoats, communicates uncertainty transparently without appearing paralyzed, clearly distinguishes between short-term relief and long-term structural solutions, and consistently demonstrates progress based on verifiable results.

A politically mature state does not simply declare its intention to accelerate housing construction. It explains specifically that permits currently take too long on average, identifies the amended procedures, describes the planned standardization of data, creates additional personnel capacity, and then publishes the actual development of the relevant key figures quarterly.

A realistic roadmap for the coming years

Germany does not need a permanent, sweeping overhaul, but rather an institutionally secured modernization agenda that will last for at least two legislative terms. In the short term, within twelve to eighteen months, it would be sensible to establish a national implementation center in the Federal Chancellery for a few, clearly prioritized projects; to implement a binding review of the practical application, digitalization, and enforcement of all significant laws; to consistently reduce bureaucracy with a net target for each ministry, stipulating that new burdens may only be introduced if other burdens are simultaneously reduced; to systematically streamline legislation with automatic expiration clauses for temporary or particularly consequential regulations; to establish uniform digital standards for the federal government, states, and municipalities; to provide publicly accessible project metrics for approval duration, administrative performance, and digital usage; and to implement multi-year, bundled programs to specifically strengthen municipal enforcement capacity.

In the medium term, over a period of two to five years, a fundamental reorganization of responsibilities for digital basic services, public registers and standard procedures should take place, combined with a professionalization of procurement, project management and information technology architecture, a stronger data-driven focus on impact in the public budget that asks not only about the amount of funds used, but also about the actual impact, an expanded independent evaluation of subsidies, laws and major projects, a modernization of personnel structures with faster recruitment of critical specialist profiles and binding nationwide standards for planning and approval procedures.

In the long term, over a period of five to fifteen years, Germany needs a cross-party basic consensus on the state's capacity to act in the areas of infrastructure, education, security, digitalization and demography; fiscal rules that differentiate consumption expenditures, genuine investments and transformation costs much more clearly than before; institutions that systematically examine future consequences in the fields of demography, resilience, technological dependence, defense capability, climate adaptation and productivity; and an administrative and political culture in which mistakes are no longer primarily covered up, but are systematically evaluated and used for future decisions.

The true measure of good governance

The crucial question is not whether the state should become more entrepreneurial. This question is too simplistic and distracts from the actual structural causes. The more important question is whether the state is capable of setting binding goals, effectively pooling responsibilities, implementing decisions in a legally sound manner, honestly measuring results, and systematically learning from its own mistakes without damaging democracy, federalism, and the rule of law.

If this question can be answered positively more often in the future, there will automatically be less purely symbolic politics, fewer paralyzing bureaucratic processes, and greater public trust in the ability of the state to act. The German state does not need to become leaner at any cost. Rather, it should be lean and unbureaucratic precisely where it places unnecessary burdens on citizens and businesses, while simultaneously acting with particular strength, competence, and speed where only it is capable of truly safeguarding the common good, security, and long-term sustainability. This clear distinction is the real key to better, more credible, and more effective governance.