compulsory reading, Economics, German Politics, Germany

Zeitenwende. End Of An Era.

It took some time and more of their money to make Germans understand.

It took more than ten years of subsidizing consumption and unemployment in a previously bankrupt former communist economy and virtual non-growth to make us see that it is not only necessary to think about the problematic long-term consequences of the current incentive structure in the German version of the continental model of the Welfare State but to actually change them.

It was no joke when, earlier this year, two people working in a zoo, who were fired for grilling the animals they should feed, successfully sued their former employer for a golden handshake. An extreme case, of course, but one indicating rather lucidly what’s keeping Germany from growing (possibly apart from too high interest rates, but that’s another story – albeit a connected one).

For ages, Germany’s consensus democracy was unable to get reforms going because, well, there was no consensus to speak of – whichever party was in opposition made a bet that it would pay off to block government reforms as far as possible because the electorate would not believe change was necessary. Sure, such a perception is partly a consequence of failed leadership. But only to a small part. Because they were right – the electorate did not want to see.

Then Schroeder won the 1998 election, largely because of the implicit promise that he would become the German Blair – that he could transform the German Social Democrats into some sort of NewLabour without the need for a Thatcher or a “Winter of Discontent”. But when he had just won his first power struggle and made the loony left’s star propagandist Oskar Lafontaine quit the finance ministry in March 1999, he realized that the internet bubble induced growth (weak, in Germany, but real economic growth nonetheless) would allow him to put off fundamental reforms and to mend relations with the loony left with even more rigid labour market reforms.

Unfortunately, after the bubble burst, it was too late for reforms that would have paid off for the government in last year’s election. A fiscal expansion was impossible and, moreover, unwise given strained public budgets. So Schroeder had to play the hand he was dealt – rectal rapprochement to the trade-unions, exploiting the flood-disaster in East-Germany, and betting on the public’s opposition to the American stance on Iraq.

Having narrowly won last year’s election, Schroeder knew that he would have to deliver on his 1998 promise, even thought the economic climate was far worse than it was back then. And even if though delivering would probably lead to the most serious conflict the SPD ever had with trade unions which, for no obvious reason given the steady decline in their membership, still claim to be speaking for “ordinary Germans” when it comes to “social justice”. The readjustment of the social security system, as well as the “intellectual” separation of the Social Democrats from the unions – developments that will undoubtedly be beneficial to both the SPD and Germany as a whole – will be a lot harder now than they would have been back in 1994, under Kohl, or in 1998.

The difference is that now, for the first time, a growing majority of Germans seems to be willing to give up something for a risky future benefit – or put differently, a lot more people are scared by what they think could happen to them, their children, and this country, if the social security system is not dealt with right now. Let’s hope it remains this way for sometime. The tough reforms are still out there in the think-tanks waiting to be pasted into bills.

Of course, the loony left is barking and whining about its loss of discourse hegemony on “social justice”. But don’t we all know that dogs that bark don’t bite?

If only because they have lost their teeth.

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compulsory reading, German Politics, Iraq, US Politics

Inabilty? Or Willful Wreckage?

So Colin Powell and the German chancellor tried to look forward, not to explain, and not to complain. And what does Geroge W. do? He behaves like a spoilt kid trying to get even by chatting for fifteen minutes with Roland Koch, the premier of the German state of Hessen, a leading figure of Germany’s main opposition party, the Christian Democratic Union (CDU).

No one would have believed the White House affirmations that the meeting happened “accidentally”, that Bush “just walked in” after a scheduled talk between Dick Cheney and Koch anyway, but in an interview with ZDF television’s afternoon programme “Mittagsmagazin”, Koch was pretty much unable not to smirk when the interviewer suggested that a German state premier hardly gets fifteen “accidental” minutes with the US president. GWB’s childish behavior is good news only for those in the US administration who want to strain transatlantic relations even further, and for Koch, who is said to have ambitions to become the next chancellor-candidate for the CDU instead of the current leader Angela Merkel. It is bad news for everyone else.

Was it inability, or willful wreckage? While some people might be tempted to give Bush the credit of inability, the Involvement of Cheney makes it a lot harder to come to this conclusion. So the chancellor is probably quite right to take this as a serious personal attack that he is unlikely to forgive soon. And he, as the German population, will certainly remember that the CDU has chosen to become a pawn in a game originating in the White House.

But Schröder is not the only who has been embarrassed by the latest Bushism. For Colin Powell and the US state department the Bush-Koch meeting conveys an even more serious message – it confirms again and very visibly to everyone abroad who is actually in control of US foreign policy – that Foggy Bottom doesn’t matter and that Powell’s role has apparently been reduced to that of chief messenger. I wonder how long he will go along.

The Cato Institute’s Doug Bandow wrote in October last year with respect to the transatlantic rift that

“… the [US] administration wants doormats, not allies.”

Today, Bush powerfully confirmed this. And while Schröder has repeatedly stated in the last few weeks that Germany does not wish to be forced to have to choose between its most important allies, the US and France, it looks like the American President is indeed waiting for an answer.

I highly doubt he will like it.

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German Politics, oddly enough, quicklink

I’m frightened.

Fair enough, all this is probably even more speculative than the much debated question how long the US will stay in Iraq. Now that a lot of people believe that Joschka Fischer will go to Brussels next year to become the first ‘European Foreign Minister’ once the Constitution will be ratified, the establishment of his party is already vulturing for his current job.

According to SPIEGEL ONLINE, even the current Minister for environmental affairs, Juergen Trittin, is interested in the top-job in the German foreign ministery. Even though his most notable foray into foreign affairs was rather successful (he managed to get the Kyoto treaty through against W’s opposition), I cannot possibly imagine “Juergen-can-deposit-Trittin” as Germany’s top ambassador. No way. Never.

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German Politics, Iraq, US Politics

I’m not sure Henry Kissenger

I’m not sure Henry Kissenger is right here. According to SPIEGEL ONLINE, he criticised the German foreign policy for allegedly not understanding “the American psyche” and not trusting “the American motives”.

So good ol’ Henry tells Gerhard and Joschka to flagellate themselves for not being able to see the truth. Just wondering – if the US have a specific agenda and would like the rest of the world to support it, wouldn’t it be their obligation to convince said rest? In my book, it would.

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German Politics, quicklink

Go Gerhard! Go. Finally the

Finally the chancellor is doing what he was elected for: to explain the world to the loony left within his own party and to demonstrate that Germany does not need a Margaret Thatcher to rebrand the SPD. The loony left is not happy to face realiy, to say the least.

But making Germany’s economic more flexible is a struggle for social equality, not against it. Why don’t people see that? It is a class struggle only for those corporatist functionaries bound to loose power. And loose it they will. Spiegel Online tells us about the chancellor’s Labour Day speech.

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compulsory reading, German Politics, Iraq, media, US Politics

Does it matter…

that I forgot to mention Paul Krugman’s latest column so far? It probably doesn’t. The very fact that I am reading his columns confirms that Paul does get sufficient public exposure even without my mentioning him [I wonder – does this sound pretentious or merely ironic to your ears ;-)].

But as Paul Krugman wonders whether it matters that the US population has been misled into war given that it allowed the most powerful military in the world to quite successfully flex its muscles and liberate-slash-conquer Iraq in a blitz, I think I would be guilty of omission should I not mention the column at all.

Now I don’t think that one should expect politicians to be entirely truthful about their motives, all the time. And I think I am cynical enough to say that Krugman is probably not actually expecting that

“… a democracy’s decisions, right or wrong, are supposed to take place with the informed consent of its citizens.”

He certainly knows enough about transaction costs and the reasons for having division of labour in politics, ie representative democracy. But the gist of his argument remains right: It is wrong, if not outright amoral, for the political class of a country to willingly engage in creating wrong perceptions in a major policy area – in Paul Krugman’s words –

“[t]hanks to this pattern of loud assertions and muted or suppressed retractions, the American public probably believes that we went to war to avert an immediate threat – just as it believes that Saddam had something to do with Sept. 11.”

We all know that truth can be a fickle firend sometimes. So it is probably correct to argue, that, in a purely logical sense, the US administration was not ‘lying’ to anyone, just as it claims –

“We were not lying,” a Bush administration official told ABC News. “But it was just a matter of emphasis.” … According to the ABC report, the real reason for the war was that the administration “wanted to make a statement.” And why Iraq? “Officials acknowledge that Saddam had all the requirements to make him, from their standpoint, the perfect target.”

By the way, the same argument can be made for those German union leaders and those within the social democrats who still claim that the German labour market does not need reform. But then again, I am not too sure about their motives being vile. Maybe their own perception has been clouded and they actually don’t know better… in which case we would be back to the old question: what’s better? A political class working against the people’s interest for reasons of a private agenda or for reasons of incompetence, pure and simple.

That’s certainly a tough call. Especially on a sunny socialist holiday ;-). [ author off to a beer garden. ]

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German Politics, quicklink

Oskar Lafontaine and the “loony left”

Whenever people start talking about the “loony left” I can’t help but thinking about Oskar Lafontaine, the former chairman of the Social Democrats and German finance minister who luckily stepped down in March 1999. This week’s English edition of the Frankfurter Allgemeie Zeitung reports that I am not the only one who is being driven mad by his seemingly scheduled attempts to obstruct the government and regain influence in the SPD.

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compulsory reading, German Politics, Iraq, oddly enough, US Politics

Reality Construction.

One of the currently more popular theories of US-war-blogosphere regarding the German and French government’s opposition to the war is that they opposed it in order to conceal the extent to which they were involved in the built-up of Iraq’s pool of WMD. This theory has been prominently publicized by Steven DenBeste.

For all those who hold the opinion that no thinking human being could oppose the war for non-selfish reasons, DenBeste’s theory seemed to be a logic explanation of reality. But it has serious flaws. It is certainly not flawed to say that there is a certain possibility that a number of German and French companies (as well as companies from other nations…) sold suspicious stuff to Saddam’s regime pre-, but especially post 1991 in breach of UN sanctions. It is, however, flawed to argue that the French and German government’s opposition to the war must have been informed by this, including the possibility that the governments actually found out about such a breach by companies legally residing in the respective country. In fact, such a conclusion is actually illogical – although chances are, we will never find out, because whatever is or is not reported to be found in Iraq is entirely within the discretion of those in control of the area.

Thus, depending on the US’ government’s intentions of how to involve Europe in the reconstruction of Iraq (that’s what denBeste calls the ‘blackmailing strategy’), the theory could well be a self-fulfilling prophecy. Eamonn Fitzgerald today points to an article in the New York Times that illustrates this rather well – now that the US and the UK are actually in charge of Iraq and will soon be in control of whatever remains of the previous administration, they are unlikely to reveal information that would put blame on themselves for whatever remains of WMDs they may find down there. And I suppose they will find something eventually – they simply have to, after using the Iraqi WMD-threat as a pro-war-discourse element for so long. So it is very likely that the stuff they will acknowledge to have found will be of Old European production – French, I suppose – and, again, the amount of stuff revealed will probably depend on the development of the transatlantic relationship in the coming weeks and months.

Looking at the problem from this perspective, the DenBeste theory does not make much sense. Had Germany’s and France’s governments been involved in the military build-up of Iraq in a way they would have deemed necessary to conceal, the logical policy would have been to be as involved in the invasion as possible in order to retain as much control over what will be found and what will be published now. Being as closely allied to the US as possible is certainly a better way to achieve that than publicly angering the Pentagon’s PR people, don’t you think?

But even though the theory may be wrong, the result may eventually be close to what Steven DenBeste predicted. Some reality will be constructed, even though, in the end, no one will actually know what has been going on.

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German Politics, oddly enough

Anti American Room Cleaning.

Although it could be, this entry is not about the certainly soon-to-be-amended amendment to the White House war financing budgetary requests excluding German, French, and Russian companies from receiving US funds for the future Iraq reconstruction that the American legislature passed two days ago.

In these times of increasingly global interaction, there are more and more people who can tell stories about the limits of citizenship regimes which are organised along classic national lines. Personally, I know a number of people who are legally German but never actually put a foot on German soil. I know a guy hailing from Argentina who is a Swedish national and now lives in the United States. Every member of a close friend’s family holds a different – or even combinations – of the following nationalities – Spanish, Mexican, British, and American.

And here’s an added political twist, given the recent row between GWB and the German chancellor, Gerhard Schröder. In a recent interview, Schröder stated that the daughter of his fourth wife, Doris Schröder-Köpf, is an American citizen, actually, she is *only* an American citizen – for she was born when Doris Schröder-Köpf lived and worked as a journalist in New York some years ago. I don’t know if Schröder legally adopted her child, but he does refer to her as “our daughter”.

So the German chancellor does have an American daughter. I guess she will have fun invoking his alleged “anti-Americanism” when he tells her to clean up her room.

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