Came across an older BusinessWeek article detailing the author's encounter with German red tape:
...[W]hy, 11 years after moving to Germany, was I starting the same driver's training program as a German teenager, one that involves 40-plus hours of car and classroom instruction and costs $1,200? The answer reveals one of the less attractive aspects of German society. Not the side that's fun-loving and generous, but the side that's pathologically risk-averse and mindlessly bureaucratic, bent on making everything -- putting up a building, starting a new business, buying a house -- so difficult that nothing happens. It's one of the small ways the nation sabotages its own economy.
The article is entertaining, but I also find it somewhat sad because unlike the author, I do not believe German bureaucracy has only a small negative effect on its economy. One of the first principles of economics--and life--is that people respond to incentives. Germany has unfortunately set into place incentives that discourage the most important wealth-generators of an economy: innovation, entrepreneurship, risk-taking--the kind of activities that facilitate Schumpeterian creative destruction and redeploy capital from dying industries into new, growing ones. Change is a necessary economic growing pain. One need only consider that from 1980 to 2001, all of the American net growth in employment came from firms younger than five years old to understand my point.
Many people are naturally risk-adverse to be sure, but to discourage those who are not with mind-numbing bureaucracy is to shoot oneself in the foot for fear of running too fast.