THE INHERENT CURSE OF EFFICIENCY

I. The Promise

Efficiency is modernity's most beautiful promise. You invest less and get more. Less material, less labour, less time — more output, more profit, more prosperity. Every generation of German engineers has delivered on this promise: more precise machines, leaner processes, higher output per hour, per head, per euro invested. The German economic miracle was, at its core, a miracle of efficiency.

And therein lies the curse.

For efficiency creates surplus. Whoever produces more efficiently than they consume must sell — elsewhere, to others who are not yet as efficient or whose demand exceeds their own production. This is not a side effect. It is the structure itself. An economy that raises its efficiency faster than its domestic consumption must export. The export surplus is not a sign of strength. It is the symptom of an economy that produces too much for itself.

II. The Patron Saint

That this mechanism has been allowed to operate unquestioned for two hundred years is owed to a theorist whose work has hardened into dogma: David Ricardo.

In 1817, Ricardo formulated the law of comparative advantage. Portugal makes wine, England makes cloth. Both specialise in what they do relatively better. Both trade. Both profit. An elegant model, a comforting thought: trade is not a zero-sum game. Everybody wins.

Ricardo has been elevated to the patron saint of economics, and his concept has never truly been questioned. In every economics lecture, his theorem is taught as foundational truth — not as a model with limitations, but as proof that free trade is always and everywhere to everyone's benefit. Whoever questions it is labelled a protectionist. This is not scientific discourse. It is dogmatism.

For Ricardo's model works only under assumptions that he himself took for granted and that have never materialised:

First: capital stays in the country. It does not migrate to wherever returns are highest. In Ricardo's England, this was still conceivable — capital was bound to machines and buildings, to local relationships and national loyalties. In today's globalised world, capital is everywhere in milliseconds. It knows no loyalty. It seeks the highest return, and the highest return lies wherever labour is cheapest, environmental regulations weakest, and taxes lowest.

Second: workers who lose their jobs seamlessly find new ones. The cloth maker in Portugal, pushed out of business by England's cheaper fabric, simply becomes a wine grower. In reality, he becomes unemployed, embittered, and poor. Or he takes a worse job that does not use his skills and pays him less. The "temporary adjustment pain" that economists speak of lasts generations. Entire regions wither.

Third: trade is balanced. What one country exports, it imports in equal value from elsewhere. In reality, trade balances are chronically imbalanced — structurally, not by accident. Germany's export surpluses were for decades the mirror image of other countries' trade deficits. What Germany gained, someone else lost. Ricardo's model does not know this someone.

Fourth — and this is the most devastating assumption: when a local industry is destroyed by cheaper imports, this is a temporary loss. The productive capacity will make itself useful elsewhere. In reality, a destroyed industry does not come back. The knowledge disappears, supply chains dissolve, training structures die, skilled workers retire or emigrate. What is once dead stays dead — unless it is rebuilt at enormous expense over decades.

Economics is not a science. It more closely resembles a voodoo cult, with Ricardo playing the role of high priest. His doctrine is not tested but believed. And this belief has created a world economy in which the efficient annihilate the inefficient and celebrate it as progress.

III. The German Chapter

Germany won the efficiency game for decades. In the 2000s, wage restraint and the relocation of supply chains to Central and Eastern Europe created an export machine of unprecedented force. The first China shock — China's WTO accession in 2001 and the flood of cheap consumer goods — barely touched German industry, because it was positioned as complementary: Germany supplied the machines with which China equipped its factories.

It was the perfect symbiosis — as long as China remained a customer.

But an industrial strategy that relies on the coming competitor buying one's own machine tools carries its own demise within it. You sell your rival the sword with which he will defeat you tomorrow. And you call it good business.

The balance sheet today, in March 2026, is devastating. German industry shed more than 120,000 jobs in 2025 — nearly double the previous year. The automotive sector was hit hardest, with 50,000 jobs lost. Unemployment rose to nearly 3.1 million in January 2026 — the highest level in twelve years. Since 2018, industrial production has shrunk by 15 per cent. 260,000 jobs have vanished. Every month, another 10,000 disappear. 41 per cent of industrial firms plan further cuts. Only one in six companies expects an upturn in 2026.

This is not a business cycle. It is a structural rupture now in its eighth year.

The Chinese BYD Seal costs €9,000 less than the VW ID.3. Specialised machines from China cost one-fifth of their German counterparts — at comparable quality. German exports to China fell by 7.6 per cent in 2024, after already declining by 8.8 per cent in 2023. The trade deficit with China reached €40 billion in the first half of 2025 — an increase of 58 per cent.

The VDMA — the association representing Germany's industrial backbone — soberly notes that Chinese suppliers are no longer merely the cheaper alternative, but technologically serious competitors.

IV. The Chinese Chapter — or: The Final Phase

China is now playing the same game that Germany played. Only larger, faster, more systematic — and with a domestic market encompassing fourteen times as many people.

China's 15th Five-Year Plan, being ratified by the National People's Congress as we write, continues the course charted since "Made in China 2025": technological self-sufficiency, independence from foreign technology, breakthroughs in semiconductors, AI, quantum technology. The programmes openly target the very sectors that form the backbone of German industry.

But here begins the real thought — the thought that goes beyond the usual stock-taking.

China's overproduction is not only destroying German industry. It is destroying Brazilian, Indian, Turkish, Vietnamese industry. When Chinese specialised machines cost one-fifth of German ones and Chinese electric cars are €9,000 cheaper, it is not only the German manufacturer that dies. Manufacturers everywhere die.

And then?

Who buys China's products when local production has collapsed everywhere? When the Brazilian workshop has closed, when the Indian machine builder has given up, when the Turkish supplier is insolvent — then their workers, too, are unemployed. And unemployed workers do not buy Chinese machines. The export has destroyed its own market.

This is the inherent curse of efficiency in its final phase. Earlier cycles — England in the 19th century, America in the 20th, Germany and Japan in the post-war era — could always escape to untapped markets. There was always another country not yet industrialised, whose population still had demand, whose workers were still cheap. The baton was passed on.

Today there is no next country. China is the last chapter, not because China is malicious, but because the mechanism hits its global limit. When the world's most efficient producer has displaced all other producers, it has also destroyed all customers.

V. The Blind Side of the Equation

Germany never saw this side of the equation. The export surpluses were cause for celebration, not reflection. That the German surplus was someone else's deficit — that Greek, Portuguese, Spanish industries suffered under the pressure of German efficiency — was a marginal topic, a concern confined at best to academic circles. The political class saw only one side: we export, therefore we are strong.

China will probably repeat this error. Beijing, too, sees only one side: the growing exports, the technological dominance, the market shares. That this systematically undermines the world's purchasing power is a problem for the future. And for the problems of the future, so the calculation goes, solutions will be found.

This thinking — we solve today's problems, for tomorrow's problems we will find new solutions — now dominates the entire world. It is the economic equivalent of "après nous, le déluge." One externalises the costs into the future, just as one externalises the social costs of export into other countries. Out of sight, out of mind.

But the future comes. And it presents the bill. For Germany, it is arriving now — in the form of 10,000 lost industrial jobs per month. For China, it will come when the world upon which it has forced its overproduction can no longer buy anything.

VI. Beyond Decay

If the mechanism is correctly described — if the chain from efficiency through overproduction and export dependency to the destruction of markets is indeed an inherent principle and not an avoidable accident — then the usual prescriptions are insufficient. Tax cuts do not help. Deregulation does not help. Subsidies merely shift the problem. And protectionism is at best a plaster on a wound that grows larger every day.

What is needed is a rethinking at the root. Ricardo must be toppled from his pedestal. Not to replace him with another dogma, but to pose the question anew: how would trade have to work so that it does not carry within itself the seed of its own destruction?

Two principles emerge — not as a finished programme, but as a direction of thought:

Equivalence: Trade between economies must represent an exchange in which both sides receive something of comparable value. Not in the accounting sense of a balanced trade balance, but in the structural sense: export must not destroy more value creation in the recipient country than it provides in benefit. Selling machines that replace an entire industry in the target country without creating something equivalent there is not a trade relationship but an expropriation.

Reciprocity: Every trade relationship must be based on the principle of mutuality — not as a diplomatic phrase but as a structural condition. Whoever exports to a country must also be willing to import from there. Whoever uses a country's markets must also grant its producers access to one's own markets. And — this is the crucial point — whoever exports to a country bears a responsibility to enable value creation there, not to destroy it.

This is not idealism. It is the logic of self-interest, thought through to its conclusion. Whoever ruins their customers has no customers tomorrow. Whoever destroys the industry of their trading partners destroys their own markets. The Germans did not grasp this when they flooded Europe with their export surpluses. The Chinese will not grasp it as long as their exports are still rising.

VII. For the Future

This essay is not an instruction manual for today. In the current state of the world, any thought of equivalence and reciprocity is powerless. The machine is running. The curse is unfolding. China marches, Germany crumbles, and the rest of the world is ground between them.

We write for the future. For those who, after the collapse, will pick up the pieces and ask: how did this happen? And how can we do it differently?

The answer begins with toppling Ricardo from his pedestal. It begins with understanding efficiency not as an end in itself but as a tool that loses its purpose when it destroys the hand that holds it. It begins with ceasing to celebrate export as a sign of national strength and recognising it for what it is: a symptom that must be treated, not an achievement to be proud of.

And it begins with accepting an uncomfortable principle: that lasting prosperity does not arise from victory over others, but only from the prosperity of others. That one cannot grow rich by making one's customers poor. That the economy is not a war, even though it has been waged as one for two hundred years.

I very much hope that there will still be a future in which people do not have to start again from zero. This text is for them.