What’s Wrong with Berlin?

I have lived in Berlin. I have explored Berlin. Like most Berliners, I love Berlin. But it’s more like a love/hate relationship.

Berlin is a city that doesn’t really know what it wants to be when it grows up. More than seven years after BER was supposed to have its grand opening, Berlin still doesn’t have a world-class airport. Air Berlin declared bankruptcy in August 2017 and ceased operations two months later. The S-Bahn commuter rail system is great, but it seems to break down on a regular basis. Affordable housing isn’t even close to keeping up with Berlin’s rapid growth (not unique to Berlin).

Berlin is Different

The German capital city isn’t like other European capitals. For various historical reasons Berlin is not the cultural and economic hub of Germany in the same way that London is for the United Kingdom, or Paris is for France. Even in the 19th century, when Alexander von Humboldt was a world-renowned Prussian explorer, Berlin was a provincial backwater. The city didn’t even have a university until 1810, when Humboldt’s brother, Wilhelm, established the University of Berlin, today’s Humboldt University. Alexander von Humboldt much preferred Paris over Berlin, to the extent that he lived there most of the time when he wasn’t on an expedition. Finally, in 1827, King Friedrich Wilhelm III had to command his court advisor to abandon Paris and return to Berlin and the royal court that Humboldt found “tedious.” Berlin at that time was home to fewer than 250,000 souls. Paris then had over 750,000 inhabitants.

Berlin’s first university as it looked in 1850. PHOTO: Wikimedia Commons

It was relatively late when Berlin installed a modern sewer system. Writer and politician August Bebel wrote: “In the public buildings the sanitary facilities were unbelievably primitive… As a metropolis, Berlin did not emerge from a state of barbarism into civilization until after 1870.”

Following the First World War, Germany’s monarchy and aristocracy were replaced by the Weimar Republic, with a now swinging Berlin as its capital. The Greater Berlin Act of October 1, 1920 created Groß-Berlin by incorporating several neighboring towns and villages into the city. Overnight Berlin’s population doubled from about 2 to almost 4 million inhabitants. But then came the Great Depression, the Third Reich, and World War II – a war that ended with almost the total destruction of Berlin’s central districts.

Berlin in the Cold War

The war’s end led to occupation zones and division. Large German firms such as Siemens abandoned Berlin because of the city’s new isolation. East and West Germany were established in 1949. Later, during the Cold War, Berlin’s insular status not only stunted its postwar growth, but helped create an attitude that Berlin was somehow “special” and entitled in ways that other German cities weren’t. The era when the West German capital was no longer the capital, and the western half of the divided city was living on the dole, heavily subsidized by the West German government, left a legacy that today’s Berlin has never totally shaken off. (The city-state still depends on federal subsidies from wealthier states to cope with its high debt.)

With its capital and seat of government in remote, sleepy Bonn, West Germany’s other cities had to fill the gapping hole left by West Berlin’s isolation. While it was a cool, hippie place for artists and musicians such as David Bowie in the 1970s, West Berlin largely slumbered as Frankfurt became the German financial capital that it still is.

The Federal Constitutional Court (Bundesverfassungsgericht) is in Karlsruhe. To this day, the “Federal City of Bonn” is still home to many German federal government offices and 20 United Nations institutions. People forget that the 1991 vote to move the seat of German government back to Berlin from Bonn was very close (338 to 320). Berlin’s history as the national capital is truly unique. No other major nation has a capital that has moved around and been as subverted in the ways Berlin has, certainly not in Europe.

Berlin’s Drag on the German Economy

A recent study found a unique situation among major European capital cities. Berlin is the only national capital found to be a negative factor to its nation’s per capita income. Brussels, London, Madrid, Paris, Prague, Rome, Vienna, and Warsaw are each a plus factor, sometimes a large one, in their country’s per capita figure. Unlike Berlin, if you took away any of those capitals, the national per capita income would drop an average of 14 percent – ranging from 20 to two percent.

But if you subtract Berlin from Germany, the average German becomes 0.2 percent wealthier! In other words, Berlin is a drag on the national economy, rather than a large contributor, as in other European countries. There are historical reasons for Berlin’s negative effect on the German economy, but 27 years have gone by since the Berlin Wall disappeared. It is time for Berlin to realize it is no longer the isolated, forgotten hinterland it was during the Cold War.

Hamburg, Frankfurt, and Munich are all much wealthier than Berlin, despite having fewer people than the capital. Even before the war, Berlin was not a wealthy city. It was more blue collar, working class than other large German cities. East Berlin was predominantly working class, while West Berlin was more middle/upper class. Even now, three decades after the Wall came down, Berlin is still divided economically and culturally. Although the differences have been reduced, wages continue to be lower in the east than in the west, nationwide and in Berlin. Germany’s far-right AfD party is using these rifts to its advantage to target potential voters.

2019 was the first year in which all of Berlin’s public school teachers, East and West, received equal pay. For many years, teachers in the former eastern parts of Berlin were paid less than those on the western side, supposedly reflecting the lower living costs in the East. But such pay equality is not necessarily the case in all locations and professions across Germany.

Berlin’s S-Bahn works most of the time. PHOTO: Hyde Flippo

Meckern und Nörgeln (bitching and moaning) are in
the Berlin DNA

It’s not like Berliners don’t have legitimate things to complain about. (See above.) And they do gripe. But when Berliners complain about the rising cost of living – rent in particular – it’s hard to be sympathetic when you’re aware that many large German cities have much higher costs of living. A recent Expatistan.com cost-of-living survey ranked Berlin 39th out of over 100 European cities, far below Munich (18th), Frankfurt (19th), Hamburg (23rd), and Cologne (29th). Berlin is also by far a cheaper capital city to live in, compared to Oslo (5th), Reykjavik (6th), London (7th), Dublin (9th), Copenhagen (10th), Amsterdam (11th), Paris (12th), Luxembourg (13th), Stockholm (14th), and Helsinki (16th).

While it is true that housing costs in Berlin are higher than they used to be, that is also true for almost anywhere today. In my US hometown you’ll hear the same complaints about affordable housing that you hear in Berlin. But for perspective, consider this: A startup founded in Stockholm, Sweden now calls Berlin home. The company’s Swedish founders moved the firm to Berlin because the German capital is much cheaper to live and work in than the Swedish capital. As we stated above, Stockholm ranks 14th compared to Berlin’s 39th rank.

“Complaining is part of the Berlin DNA. Here the glass is always half empty, not half full. Nevertheless surveys show that Berliners like living in their city.”
– Klaus Wowereit, former Berlin mayor

It’s time for Berlin to cast aside the “poor but sexy” slogan coined by its former mayor, Klaus Wowereit, and replace it with “prosperous and sexy.”

Don’t get me wrong. I’m a Berlin fan. I first set foot in Berlin in 1969 when the metropolis was still split into East and West. At that point, the Berlin Wall was barely eight years old. Later I visited the city many times, and even lived there for almost a year in 2007/2008 and for two months in 2011.

Frankfurt am Main has the banks and skyscrapers. Munich certainly has its charms – and built a new airport on time and on budget! The charming port city of Hamburg is another place I enjoy visiting. There are many German cities I like. But Berlin is my true “go to” city in Germany. Ever since I first laid eyes on the city those many years ago, I have been drawn to the place. But…

Berlin can be a frustrating city in which to live and work. Its politicians and leaders don’t always seem to be working towards the same goals. Whether it’s better bike lanes, less dog poop, or affordable rent for housing, Berlin often gets confused about where it wants to go and how it wants to get there.

Berlin seen from the top of the Reichstag dome. PHOTO: Hyde Flippo

More recently Berlin has tried to be the startup capital of Europe (“Silicon Allee”), and as of 2018 it was Europe’s second largest startup hub, after London. Most of Germany’s startups are in Berlin (15.8%), with the rest in the Düsseldorf/Rhine-Ruhr metro region (19% in several cities), Hamburg (7.2%), followed by Stuttgart, Karlsruhe, and Munich (12.3% in all of Bavaria). But the startup scene in Germany has a few problems. Most startups have an average of only 12.3 employees. There is a huge gender disparity in founders (only 15.1% female). Startups in Germany have great difficulty recruiting software engineers/developers. Berlin dropped a percentage point in the 2018 rankings from the previous year.*

But startups come and go. They don’t usually contribute to the local economy as much as traditional firms, although Berlin has certainly benefited from its startup activity overall. But pay tends to be low. And the German government could be doing more to encourage and support startups – through education, financial support, and other programs.

Tourism is one area where Berlin has been doing much better (if you ignore the BER airport debacle). Increasing tourism brought new wealth to the German capital, almost doubling from 7 million visitors in 2006 to 13.5 million in 2018 (not counting an additional 12 million convention and meeting attendees). In comparison, Munich only attracted 8.3 million guest arrivals in 2018, but Bavaria was the most-visited state in Germany. Berlin ranked third in Europe, after London and Paris. But the city wants to spread its international visitors out around the city. Most only visit the central parts of Berlin.

As is so typical of Berlin, success breeds stupidity. Some local politicians recently uttered some nonsense about limiting tourism. “Don’t come to our city!” is not really a good slogan for any place, definitely not for a capital city in Europe. Yes, it’s important to strike a balance between tourism and the local quality of life, but banning or limiting tourism is not a good idea.

That is one example of how Berlin is wasting its potential. Another is the city’s leftist, anti-capitalism protests, complete with arson (burning cars) and other property destruction. That does not encourage new companies to move to Berlin. But the city-state has found it difficult to truly adjust, even after all these years, to its current status as the capital city of the EU’s biggest economic powerhouse. But that is also true of Germany in general, as tensions between the United States and Europe have altered the old Atlantic Alliance.

– HF

*Source: KPMG AG 2018, “Deutscher Startup Monitor 2018” (PDF)