Innovation Requires Freedom and Confidence

Less government regulation, bolder investment in our future – that could get the German economy rolling again.

Do you recall the last time youheard about a big state-sponsored invention or achievement? Theycertainly have existed – take the moon landing the U.S. set out to achieve, and then did in fact accomplish, under President John F. Kennedy. That was a literal “moonshot,” and one that created progress and laid foundations across a wide variety of fields. But ultimately, successful science projects in which government calls the shots are very rare. Too often, they merely serve short-term political goals or to build prestige. Even the moon landing itself, however much of a catalyst it was for many different industrial sectors, was a project with ulterior motives. It speaks volumes that adequate funding for NASA dried up almost immediately after the U.S. declared victory in the “Space Race.”

But how many innovations come from inventors, tinkerers, engineers or free spirits who start out on their own? And how many more could there be, especially here in Germany, if it weren’t for stifling government regulations? How often do I hear from family businesspeople that they can’t put solar panels on the roof because the array will be too big, because the grid isn’t adequate, because legal obstacles mean it doesn’t pencil out?

How often do government regulations get in the way? How often do people lack the equity needed to take risks because the tax burden in Germany is so heavy compared to other countries that the only investments possible are in replacements, not expansion? According to a survey of family businesspeople, only 18 percent can or wish to invest in expanding their business these days. A whopping 49 percent of companies have no plans for any investments at all, not even in replacements.

I read the latest news about the Starship rocket system from SpaceX in the U.S. via Google News on my iPhone and write op-eds about it in Microsoft Word. As I do, I wonder: Where is the German Musk, Page, Brin, Jobs or Gates? Where are the German geniuses, the unicorns? They must exist, since our country is rightly known for its inventive spirit. But can they become successful here? No, because the conditions simply aren’t right.

Private financing through venture capital – exactly what innovation requires – is incredibly rare here. This is because in Germany, bold entrepreneurial risks are always treated as suspicious, which is also why German politicians look on private equity as a resource with disdain or at least as involving greed. If it must exist, it should be taxed, at least from the perspective of the rampant “nanny state.” But used in the private sector? To be successful? And maybe even earn a profit? Shock, horror! And so, the German stars of tomorrow would rather go where the opportunities are: abroad.

Even our longstanding family businesspeople would like to take more risks, but they run into the same issues as start-ups. In Germany, we have high incidental wage costs – unfortunately, not much of which ends up in my employees’ pockets on a net basis – high energy costs, heavy tax burdens, incredibly high bureaucratic costs, a sluggish digital transformation and inefficient administration.

And in spite of all these costs, we use the returns on the investments we do make to keep our businesses running. We entrepreneurs invest what we can to stay competitive. But it doesn’t leave us with much for the big swings, to experiment, even at risk of failing. And then, many of the things we might want to try run into bureaucratic hurdles. Take our labor law, for example. It is so restrictive that entrepreneurs have reason to worry if a couple of enthusiastic employees might want to hang around after work and play around with a bright idea. This is no way to produce innovation.

Instead of despair, we need confidence and freedom. Freedom to do business and build equity, and freedom to take the plunge and follow an idea or try something new. We need a tax system that accepts courage, allows for investments and periods of loss and does not punish profits. After all, there’s no point in investing if you have no chance of ever making a profit, and innovation is no exception.

But above all, we need a paradigm shift. Across society, we need to take a more tolerant view of failure, acknowledging and respecting those who try new things instead of judging them for making mistakes. We need a state that unleashes our free spirits, engineers and entrepreneurs and gives them room to try new things instead of arrogantly claiming it knows better or deciding for us what the future should be like. Innovation requires freedom – at every level.

Marie-Christine Ostermann

• has been a partner in Startup Teens GmbH and deputy chair of STARTUP TEENS Netzwerk e. V., whose mission is to get young people excited about entrepreneurship, since 2015.
• joined the Free Democratic Party (FDP) in 2013 and became a member of the presidential council of nonprofit Die Familienunternehmer e. V. that same year; she has been president since April 2023 and is the first woman to hold this position since the lobbying organization was first founded, 75 years ago.
• worked first as a division head at Aldi Süd in Munich before joining Rullko Grosseinkauf GmbH & Co. KG., a grocery wholesaler founded by her great-grandfather in 1923, in the role of managing partner in 2006.
• was born in Hamm in 1978. After finishing high school, she enrolled in a vocational training program to become a management assistant in banking in 1997 and earned her certification in 1999. She went on to study business administration at the University of St. Gallen and completed her degree in 2004.