Tag Archives: Angela Merkel

Flattened By The Flat Tax?

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Following Alex, more opinion polls seem to be showing that Merkel will struggle to get a majority in partnerhip with the FDP. At the same time voices are being raised within the CDU suggesting that the principal responsibility for this debacle lies with the Professor from Heidelberg.

Some indication of why flat tax ideas might impact so negatively on German voters is offered by the Financial Times this morning in a leader commenting on similar proposals from within the UK Conservative Party:
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Where Will It Lead Us From Here?

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The German election campaign is cranking up to as close to a throbbing wave of intensity as you are likely to find in modern Germany. Very soon, Chancellor Gerhard Schr�der is going to take on the CDU’s Angela Merkel in a televised debate. Merkel has always had to do it tough in the CDU, as I’ve remarked on before, because she isn’t really the kind of person who fits the traditional shape of the post-war German conservative movement. Last time around, she was party leader but was ditched as Spitzenkandidat (a German term which compromises between a quasi-US presidential candidacy and the reality of a Westminster-style constitution) in favour of the hard-right Bavarian, Edmund Stoiber. This time, though, the polls are running heavily in her favour, after she spent the intervening period selectively eliminating the men (and they were) who did her in the first time around.

This is where it gets interesting. Last week, she was moved to give a speech in which she said a very remarkable thing. Apparently, Germany needs to retrieve the spirit of the Gr�nderzeit. This word is usually translated into English as the Founders’ Generation, which doesn’t sound terribly interesting or controversial. The point is, though, which generation, and what did they found? When you speak of the Gr�nderzeit in Germany, or Austria, you mean the 1870s and the foundation of united Germany. For some reason the Austrians use it too, perhaps stretching the definition to include the 1867 Austro-Hungarian Compromise or Ausgleich. It’s not an especially controversial word, but then, that is in part because it’s most often used to describe architecture.

Outside Germany, though, you might be forgiven for thinking this pretty eyebrow-raising. In the Anglosphere, it is fairly conventional wisdom to hold that the Wilhelmine empire was a fatal aberration in Germany’s historic development, the point at which the Germans swung off the Whiggish tracks into the future onto that infamous Sonderweg that in the end led to world war, Weimar, Hitler, more war, Auschwitz, and partition. And that foundation, after all, took place by means of conquering northern France. The proclamation of the empire took place at Versailles.

(So far, so clich�d.)

The Left would never in a million years have said such a thing. Gr�nderzeit? The time of Bismarck’s Antisocialist Laws? The foundation of the three-class voting system? Surely the injustices that began the SPD’s historic struggle. Why she did, though, is part of a very important point about identity, history and German politics.
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Merkel’s Reform Agenda

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Angela Merkel has an interview in the Financial Times today. Unfortunately the transcript is subscription only. This is a pity, since to some extent she defines the kind of Europe she would like to see:

In an interview with the Financial Times, Angela Merkel, leader of the Christian Democrat Union, on Wednesday issued a clarion call for economic reform in Europe based on countries borrowing successful policies from one another. ?If I look at Scandinavia, for instance, I see we still have a long way to go in decoupling our social security system from labour; if I look at central and eastern European countries, I see I still have a long way to go in reforming my tax system; and when I look at the UK, I see I still have much to do to make my labour market more flexible.?

Ms Merkel’s references to central European countries and to the UK are striking, since the former are identified with low corporate taxes and in some cases, such as Slovakia with a ?flat tax? system. The deregulated UK labour market is often demonised by continental European politicians as alien to the European social model.

Her remarks provide clear backing for Tony Blair, prime minister and current holder of the EU’s rotating presidency, in his campaign to put economic reform at the centre of the EU’s effort to reconnect with European voters after their rejection of its planned constitution in France and the Netherlands in the past two months.

The big difficulty I see with her proposals is that they will put more of the burden of financing government on consumer taxes (VAT), and this will not help Germany lift domestic consumer demand which is one of the ‘big issues’.

Morgan Stanley economist Elga Bartsch, who I have in the past maligned somewhat here on this blog, has a pretty fair and balanced summary of the CDU reform programme here.

Two peoples divided by a common language

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Clay Risen has a perceptive article in Slate today, warning non-German observers that Angela Merkel (Gerd Schr?der’s likely successor) is no Margaret Thatcher. But embedded in that article is this astounding sentence:

[T]he CDU … is actually an alliance between the more free-market-oriented Christian Democrats, from which Merkel hails, and the more economically liberal Bavarian Christian Social Union. [Emph. added.]

Would these two terms be viewed as opposites anyplace else than America? In any other country, would the term ‘economically liberal’, as applied to the CSU, make any sense at all? (For the thing about the CSU is that it is more culturally conservative and less economically liberal than its sister party.)

Which does not detract, of course, from what Risen hints at: ‘economic liberalism’ is a relative concept. If the Union, even under Merkel, proves more liberal than the SPD, it will be a difference of degree not kind; and I suspect of quite modest degree at that.

Angela Merkel Promises…….

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Angela Merkel, the German opposition Christian Democrat leader, has promised that initiatives to cut unemployment would ?be at the centre of my thoughts and actions?. Laudible ideals, delivering on them may prove rather more difficult than Ms Merkel imagines. Still, she is focusing the debate on the relevant areas:

Mrs Merkel acknowledged that Germany was one of the most expensive countries to do business. ?We have to be better [than competitors] to the same extent that we are more expensive [than them]?, by being ?quicker and more flexible?. She said ?globalisation is now the context in which our ideas of democracy and of a social market economy must prove themselves?.

Policy priorities would include measures to reduce government debt and to cut non-wage labour costs paid by employers as social security contributions, in part by introducing a new tax-funded health insurance system. Labour market measures would include a loosening of job protection rules and more decentralised collective bargaining.

In fact they are so relevant and to the point that it is hard to see Schr?der disagreeing with them. Interesting campaign in prospect.

Angela Merkel The New Mrs Thatcher?

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It was inevitable I suppose. Comparisons between Angela Merkel and Margaret Thatcher are starting to roll. Such comparisons seem ludicrous to me, but I’d love to know what our German readers, who are undoubtedly a lot better informed than I am, think of it:

“Think of Angela Merkel as German chancellor and Nicolas Sarkozy as French president, and an intriguing notion arises – could Thatcherism belatedly arrive in Germany and France?

As soon as one imagines it, qualifications flood in. Ms Merkel has some characteristics of the former British prime minister – notably support for more radical economic reforms than previous CDU leaders – but not the same implacable force. She will probably tone down reformist zeal so as not to frighten the voters, and in any case faces internal resistance from conservatives, including the CSU sister party.“

Schr?der Strikes Back

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What better way to bury the news of your party’s ouster from power in a state it’s ruled for nearly 40 years than to up the ante?

Give this to Chancellor Gerhard Schr?der, he still knows how to dominate the news cycle like no one else in Germany. Angela Merkel didn’t hear the news until she was walking into the TV studios. I just saw Edmund Stoiber hem and haw about who would actually be the opposition candidate for chancellor. Squirming on the end of the moderator’s pointed questions, he was. Could not bring himself to say, “Yes, I support Angela Merkel.” Just couldn’t do it.

And there’s this:
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