Germany’s far right, China, and Trump

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KUTTNER ON TAP
Germany’s far right, China, and Trump

Unless the West devises better economic strategies, the AfD will keep gaining ground.

The 44 percent support for the neo-Nazi Alternative for Germany (AfD) party in the small east German state of Saxony-Anhalt has produced great anxiety about the causes of a new turn to fascism in the nation that produced Hitler. Call me an economic determinist, but for the most part it’s the economy, stupid. And absent drastic changes in the global economic order and the role of China, Germany and the West are headed for much worse.
This story comes in three parts. Part One: Hitler came to power due to the collapsed German economy following the draconian terms of the 1919 Treaty of Versailles. During the post–World War II boom, with over-full employment and the return of prosperity, there was virtually no support for neofascists. The far-right National Democratic Party, predecessor of the AfD, founded in 1964, whose leaders included former Nazis, never succeeded in gaining the 5 percent required for seats in the federal Bundestag.
Part Two is what occurred after German reunification in 1990. The West German government, under conservative Helmut Kohl, basically bungled the economic integration of the former DDR.
Communist East Germany had a state-run, command economy. Living standards were well below those of the West. On the other hand, everyone had a job and the communists were serious about good health benefits, pension plans, and child care. When I visited East Berlin in 1990 after the wall came down, several anxious people whom I interviewed used the same words: “Not everything here was bad.”
Protected East Germany was soon exposed to the full force of the productive West. The Kohl government did invest in infrastructure but executed a hasty sell-off of state-owned enterprises through a transitional trust called the Treuhandanstalt. Within five years, the agency transformed a state-run economy into a private market-based model. The Treuhand privatized more than 8,000 state companies. About 60 percent were sold to private businesses; another 30 percent were liquidated; the remainder were restored to previous pre-communist owners.
As an exercise in crash privatization, the conversion was a success. But the project left out one key detail: What would all the displaced workers do for a living?
While the government did try to use job retraining and temporary employment in environmental cleanup and infrastructure, it was insufficient. For much of the post-unification period, unemployment in the East was about double that of the West, though lately rates have partly converged, and wages in the East have lagged wages in the West.
A pertinent digression: When I was in my early twenties, I was very into photography, and my first serious camera was a Praktica. It was very inexpensive for a fine single-lens reflex camera, because it was made in East Germany. (You could buy a Praktica in the U.S. because consumer goods were exempt from the strategic embargo of Soviet bloc exports.) It wasn’t quite as good as my next camera, a far more expensive made-in-Japan Nikon, but it was more than good enough. It was, after all, German.
After the war, the famous Zeiss optical company was split into a private Western company, Carl Zeiss, and an East German state-owned company, called Zeiss Jena. Among other products, Zeiss Jena made lenses for Praktica cameras. Zeiss Jena employed about 70,000 people. Today, it employs about 3,000. The company that made the cameras, Pentacon, based in Dresden, employed 6,000. It went bankrupt and employs none.
With the abrupt absorption of the East German economy into the West, a lot of decent jobs for skilled workers just vanished. Some of the political reaction went far right. For others, who had benign memories of the Soviet era, it went far left.
But Part Three of the story is the most alarming—the weakness of the German economy generally. There were two important and emblematic stories out of Germany last week. The one that got the most attention was the large vote for the AfD in Saxony, and the risk that the neofascists would form the next state government.
However, equally alarming was a story that got a lot less notice outside Germany. The powerful IG Metall, which represents workers at Volkswagen, agreed to the company’s request for 50,000 layoffs. The deal includes a sweeping cost-cutting plan to cut a further 50,000 positions by 2030, and the closure of four plants. The reason for VW’s woes is China’s increasing dominance of the global auto industry, which has been killing VW’s worldwide exports.
For decades, Germany thrived as the Western nation that still does a lot of manufacturing, especially in high-end engineering products. But that dominance is also being undermined by the rise of China.
Germany’s economic model is failing. Its real per capita growth rate was just 8 percent between 2012 and 2025. And the mainstream parties are being held responsible.
And so the appeal of the AfD is heading relentlessly westward. The AfD won 20.8 percent of the vote in the national elections of 2025, up from 10.4 percent in 2021, giving it 152 seats in the 630-member Bundestag, and making it the second-largest parliamentary group and official opposition. It has gained ground in west German states.
Hostility to immigrants is also definitely a factor, but a secondary one. When Germany had over-full employment during the postwar boom, the country tolerated foreign guest workers.
At a time when U.S. leadership is desperately needed to work with Europe to figure out a way for China to be part of the global economy without its predatory trade policies and low wages putting the economies of other nations out of business, Donald Trump is preoccupied with vanity projects. In anticipation of Chinese President Xi’s visit next month, Trump has paid far more attention to the appearance of the White House than to strategic goals for the summit.
Neither Trump nor the AfD has economic policies to get at the root of pocketbook grievances, which are only marginally related to immigration. But the more the grievances fester, the better the nationalist far right does. It’s the same story in depressed former industrial regions all over Europe and in the American Rust Belt.
The West needs a better economic model—one that prizes fair trade and plentiful good jobs. If it fails, the future will look a lot like the AfD.
Robert Kuttner
Co-Editor, Co-Founder
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