Germany never thought it would be in the current situation - decaying health care, pension system, cornerstone industry in decline, lack of digitalization, the list goes on. Massive reforms are needed, action is needed, but there is too much inertia in the system to change anything quickly.

Smaller countries like Estonia have the ability to be much more nimble.

Yes somehow they believed the 90s continue despite zero public investment. They talk about the dangers of debt for future generations, but they are silent about the infrastructure debt they are saddling their children with by not investing on any serious scale.

Fun fact, the Bundestag is one of the most representative parliaments in the world thanks to MMP. Is the executive dysfunctional? Is it the federal split into 16 tiny states causing this?

If it was just a matter of size, similar/larger countries would be in the same state, and at least one of your smaller states would get ahead right?

Germany is incredibly under developed in the digitalization plus the amount of red tape to do even basic things is also very large as well. Getting rid of these things takes a lot of will power and at the moment there is very little.

Just wait until you try to use their trains