Tag Archives: Germany

Kapitalismus II

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The FT asks today (behind the dreaded ppv firewall I’m afraid) whether the current “Kapitalismus” debate in Germany may not represent something more than short-term electioneeering. Could a real shift in the SPD be actually taking place?

The most ignominious defeat of Gerhard Schr?der’s political career may be at hand. On Sunday, in the 12th regional election since Mr Schr?der, the chancellor, scraped back into national office in 2002, polls suggest that his Social Democratic party will be routed in North Rhine-Westphalia – Germany’s most populous state, the industrial heartland of the country’s postwar economic miracle and an SPD bastion for decades.

Defeat would not only turf the SPD out of regional government in the state for the first time since 1966 but would end the last ruling coalition of Social Democrats and Greens in any of Germany’s 16 regions, leaving the federal government in Berlin as the last “red-green” partnership in the country.

The central point is: where is all this leading? It is far from clear. There is a clear danger of electoral setbacks in Germany and a ‘no’ in the French referendum producing an ‘anti-reform’ backlash, with growing protectionism as a backdrop.

European GDP Numbers

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Provisional GDP numbers for eurozone countries in the first quarter are out today. The German economy surprisingly bounces back, whilst Italy is now officially in recession after two quarters of contraction. Also worthy of note is that the Dutch economy contracted slightly in the first quarter, which may have some implications for the forthcoming constitution referendum there.
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Shifting points of reference?

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Two days ago, Brad DeLong published an unfortunate post with an even more unfortunate title – “G?nter Grass minimizes the Holocaust” – in which he harshly criticised the German Nobel laureate G?nter Grass and even called him “Nazi scum”, an accusation he retracted later following intense criticism on his own blog as well as on others, including Crooked Timber – for statements he made in a radio address on German NDR radio a couple of days ago (“Freiheit nach B?rsenma?” – mp3 in German, read by himself, text in German (via DIE ZEIT), English translation) which was later translated and reprinted by the New York Times on May 7, the day before the 60th anniversary of VE-day.
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No Fire Without Smoke

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First a bit of ‘breaking news’ for German readers: the main factor which has lead to the massive round of cost cutting and staff reductions in Germany has not been the activity of a small group of hedge funds, the main culprit, let’s get it out of the cupboard, has been the high euro.

Whilst the contents of G7 meetings are never formally disclosed, it has been a more or less open secret that for some time now that the focus of recent meetings has been on how to overcome perceived imbalances in the global economy, and in particular how to force through ‘structural reforms’ in countries like Germany and Japan where such reforms are enormously politically unpopular. So the structural reforms have been pushed via the indirect route: making them virually inevitable due to cost pressures in export dependent economies.
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Locusts, or Incongruency Revisited.

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It seems we’re not the only ones who are beginning to see governance model incongruencies behind some of the German economic ills (see two of my last posts (1, 2), and, especially the comments to the last one).

Over at Crooked Timber, Henry Farrell (who knows Germany well, having beeen a research fellow at the The Max Planck Institute for Research on Collective Goods) gets a bit angry at the Economist for their usually biased coverage of Continental European social and economic models, before declaring his support for Franz M?ntefering.
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Hysteria In The Kindergarten.

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Someone must have put something really bad in their lemonade. I am at loss for words about the hysteria that the ongoing German class struggle has become (for more information see the comments to my last entry). It’s like a gang fight in kindergarten.

While Nobel Price laureate G?nther Grass (literature, not economics) made headlines with his important realization that even German MEPs are not living in a dimension of their own, and thus – in spite of the constitution’s stipulation that their decision’s are only subject to their conscience – are often subject to pressure from “a ring of lobbyists”, Guido Westerwelle, chairman of the German Liberals, thought he was missing out on all the fun and – in a truly surprising move – lashed out against trade unions, apaprently calling them ‘a plague upon the country’ and ‘traitors of the interests of employees’.

The latest, and most bizarre, development: In what is apparently an attempt to amend Godwin’s Law [“As a Usenet discussion grows longer, the probability of a comparison involving Nazis or Hitler approaches one.”] , the Jewish German historian Michael Wolffsohn compared the SPD’s chairman Franz M?ntefering’s statement about ‘Financial investors that descended upon companies like locusts’ to the anti-jewish agitation of the Nazi era and demanded that Mr. M?ntefering apologize to all affected by the Nazi dicatatorship.

According to a report from the Frankfurter Neue Presse he wrote among other things (translation mine) –

“…a boycot of companies is called for. And that should nor remind me, as a historian and a Jew, of January 1, 1933? ‘Don’t buy from Jews’ they said back then and just as now it was allegedly all for the good of the people and the simple man against the “greedy capital”, which was called “Jewish capital” then.”

Paul Spiegel, Chairman of the Central Council of Jews in Germany, hurried to tell the press that he finds it absurd to allege antisemitic motives for M?ntefering’s statements, but added that comparisons of humans to animals were generally hapless.

Hapless. Quite right. Like the entire debate. At least now I know that Germany really needs more kindergarten teachers…

21st Century Socialism.

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As all of Germany seems to engage either in market or Marx bashing these days, I thought it is time to add my two cents to the debate – and I’ll do it with the help of the US Europhile Jeremy Rifkin, who gave the “Stuttgarter Nachrichten” an interview about an old book of his, “the end of work.” The current German debate – the “Kapitalismuskritik” (“capitalism critique”) – is the result of a surprising lack of political imagination, a lot of disappointed social democrats, an important regional election in May, and the lack of a referendum about the European Constitution that would serve to channel the electorate’s fears, as it just happens in France.

Despite the fact that almost everyone, including business professors, in Germany – just as everywhere else – agrees at least theoretically, that there are issues to be debated with respect to the way our economy works, including obvious CEOcratic excesses, the political participants don’t seem to be able to update their class-struggle vocabulary to the needs of the 21st century. While I always thought “the left” had won a conceptional edge over so-called free-market fetishists by accepting that markets are “one coordinational mechanism among others”, I’m not sure about that anymore after having to endure the conflicting and confusing use of so many economic terms by leading German Social Democrats.

Thus, I suppose it was a good idea of the German government to invite Jeremy Rifkin to talk about his ideas concerning the future, or rather the end of work as we know it.
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Scary Stuff

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In a post which appeared earlier this week Tobias asks us whether, given some of the possible consequences of a French “non”, it might not be reasonable to ‘scare’ voters a little by spelling out some of the potential fallout which might follow a French rejection of the Constitution Treaty.

Perhaps the phrasing is unfortunate, but undoubtedly voters in Eurozone countries need to think long and hard about one especially sensitive area of impact: the future of the euro itself.
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Germany Leads

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Not just in the production of reigning Popes, but also, according to according to a report from the Commission, in subsidies. (As reported in a German newspaper whose website really could be better organized.)

Germany spend ?16.5 billion on subsidies in 2003, the latest year for which statistics are available, nearly one-third of the EU-15 total of ?53 billion. Part of the lead is the natural result of Germany having the largest economy in the EU. The next closest subsidizers are France (?9 billion) and Italy (?7 billion). The EU’s fourth G7 economy, the UK, spent ?4.2 billion, a share of GDP that was less than half the Union average.

As a share of GDP, Finland leads (1.41%), followed by Portugal (1.24%), Germany (0.77%) and Ireland (0.69%).

This was also interesting: “Of the ?9.7 bn of aid (in cases for which the aid amount is known) declared illegal by the Commission and due to be recovered under decisions adopted since 2000, some ?6.7 bn (including interest) had been effectively recovered by the end of 2004. Four Member States (Germany, Spain, Italy and France) account for more than 90% of the pending recovery cases.”

The new members were assessed separately earlier in the year. They were also assessed somewhat differently (transition to a market economy and all that), although interestingly the top two subsidizers in GDP terms were not post-Communist countries but Malta (3.9%) and Cyprus (2.9%).

Germany trails, however, in economic growth. Alas.