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For too long, Germany’s political and corporate elite coasted on the country’s postwar economic and political success story, avoiding difficult but necessary reforms that could have kept extremist populist parties at bay. Now that the barbarians are at the gates, mainstream elites must rethink everything.

BERLIN—Not so long ago, Germany seemed like it could do no wrong, thanks to its strong economy, excellent infrastructure, and stable political system. Yet now it seems as though Germany can do nothing right. With a sluggish economy and crumbling infrastructure, it is falling behind technologically and succumbing to extremist political parties.