Class Revival.

Every few years, a national polling institute asks Germans what they want most from their society. Each time, a majority--or close to it-- answers Gleichheit, or equality. It is the supreme good, more highly prized in Germany even than Freiheit, freedom. Indeed, Germans' vision of equality--spreading the country's wealth, eliminating capitalist- class barriers, creating a prosperous and socially open meritocracy-- has, over the decades, become the very foundation of their modern welfare state.

How ironic, then, that Gleichheit has in recent years turned on itself. The very institutions meant to bring about equality are now doing precisely the opposite--creating new inequalities, killing opportunity and erecting fresh barriers to social advancement. Institutionalized mass unemployment, a direct result of the phasing out of low-wage jobs in the name of Gleichheit, has created families where two or three generations live off government handouts. Rigid labor laws protect well-off jobholders from having to compete with the jobless. The famous craftsmen's guilds that were supposed to ensure quality for customers as well as a decent living for their members have more and more come to resemble exclusive clubs, shutting down competition and killing hundreds of thousands of potential jobs. And the country's failure to provide sufficient education and employment opportunities for its huge immigrant population has created potentially the most explosive underclass of all.

All this is not new. It is part of a common clutch of problems that Europe's welfare states are grappling with, from France to Finland. What's different, however, is the growing realization of just how miserably Germany's ideal of an equitable and meritocratic society is failing. Recent months have brought a slew of studies that show Germany to be one of the least upwardly mobile places in the industrialized world. A new report by the Organization for Economic Cooperation and Development in Paris is especially shocking. When it comes to breaking through class barriers, getting a university education or landing a white-collar job, it reveals, working-class German kids face extraordinary disadvantages. It's no surprise that homogenous nations like Japan or South Korea lead the world in leveling the social playing field for their citizens. But it's astonishing that Germany should lag well behind such places as Russia, Thailand and Mexico--not to mention Albania and Peru.

According to the OECD, there is a strong correlation between class (as measured by parents' education and income) and achievement. Of 41 countries surveyed, lower-class kids in Germany were the least likely to do well in school, making them less likely to progress beyond their parents' rank in society. "In Germany, which social class you come from is more important [in predicting an individual's future] than in all the other countries we looked at," says the study's chief author, Andreas Schleicher.

Of all the institutions limiting upward mobility in Germany, the most pernicious is the education system. From Singapore to Sweden, other developed countries have been modernizing schools and universities for decades, investing money and broadly raising standards. Germany's schoolteachers are the highest paid in the world--yet in many ways the country remains stuck in another age. As in the late 1800s, its three- tiered school system divides kids up at the age of 10, when students are selected either for pre-university study, for the professional trades or for a rudimentary education preparing them for only the most basic jobs. Once assigned, their "career choice" is all but cemented; few students ever switch tracks.

As if this weren't bad enough, those who make the selection--grade- school teachers, not parents or the kids themselves--often base their choice more on the parents' socioeconomic background than any assessment of a student's potential. "The child of a broomsweep has to get astronomical grades to make it, while someone from an academic household doesn't even need to be average," says Rainer ...