So, in democracies the people elect their government, right? Well, not in Germany. Two months ago, the Germans gave Angela Merkel's Christian Democrats 41.5% of the vote. Her nearest rivals, the Social Democrats, got 25.7%. However, Merkel hasn't been able to get herself elected chancellor yet. She is still negotiating with the losers about forming a coalition. And the losers are dictating the agenda.

Welcome to proportional representation. This, together with the fractured nature of the electorate, ensures that the composition and the programme of governments are decided in backroom deals. Since Merkel couldn't gain an absolute majority, and since she lost her previous coalition partner – the liberal Free Democrats, who were voted out of parliament – she has to form a coalition with the Greens or the Social Democrats, the very people she claimed in the election would ruin the country. It's enough to make you a cynic about democracy. The Greens declined; the Social Democrats agreed to negotiate.

Second, welcome to Merkel's modus operandi, which is to let things drift until the very last moment. The coalition talks are to be wrapped up on Friday, and still nobody knows who will get what, and how much of the wish list the negotiators from both sides have drawn up will make its way into Merkel's programme.

And third, brinkmanship. Sigmar Gabriel, the SDP leader, has promised his party that the coalition agreement will be subjected to a plebiscite of the party rank and file. It's a bit like David Cameron promising a referendum on British EU membership in the hope that this will force the other member states to give him what he wants. Unlike Cameron, however, Gabriel seems to be getting away with it.

This means that a tiny fraction of the electorate – the Social Democrats have been leaking members for years – will decide whether we get a new government or have to go to the polls again. And since, as with all parties everywhere, the party faithful are more radical than a party's voters, Gabriel has been able to use the prospect of their rejecting the coalition agreement to put what he calls "social democratic handwriting" on it.

It seems likely that the agreement will include a minimum wage of €8.50; higher pensions for non-working mothers and the poor; more exemptions from the pension age of 67; rent controls in cities like Berlin, Frankfurt and Munich; and other entitlements and sops to anti-capitalist feeling. This may seem like good news for Germany's struggling "partners" in the eurozone, as it will reduce its competitiveness. And as it will put more money in the hands of pensioners, a splurge on handouts also goes some way to countering the charges made by the European commission that Germany is pursuing a mercantilist (trade) policy at the expense of the rest of the EU.

However, the emphasis on money for pensioners, rather than for education; handouts for retirement-age mothers rather than help for young mothers; rent controls rather than innovative social housing – in a word on policies that either cater directly to the grey-haired majority or reflect its views – is symbolic. Germany may look like the strong man of Europe but its underlying weaknesses are obvious.

Germany is ageing and shrinking. France and Britain will overtake it soon, in terms of population. Too few women enter the workforce and they have too few children. Germany is over-reliant on industry and underperforms in services. Over half of every generation leaves school after 10 years, often with only a rudimentary knowledge of English and similar cultural skills. Immigrants are still not welcome. Most of these problems could be fixed with quotas for women in senior management and for immigrants in the civil service and the police; allowing dual citizenship; and encouraging kids to stay at school. But these reforms are unlikely to happen.

No, it's not good news. And it gets worse. As part of his pivot to the left, Gabriel has promised that the Social Democrats will be open to coalitions with the Left party, the heirs of the East German Communists. Since the SPD, the Left and the Greens already hold a majority in parliament, the temptation for Gabriel to break with Merkel in, say, two years to form a "red-red-green" coalition with himself as chancellor could become irresistible. And then Germany will be in real trouble. As I said, in other countries you get more or less the government you voted for. Not here.