German Politics

Hayek for Social Democrats.

While reading the following excerpt from a speech called “Flexibility for the Labour Market” given by Germany’s new economics & labour super-secretary Wolfgang Clement’s at a conference in Berlin yesterday, you might become a little confused about the current position of the German Social Democrats on the economic left-right scale. Has the SPD become a proponent of Hayekian laisser-faire econmics instead of state-regulated intervention? Hardly. But let’s see (quick-and-dirty translation by myself)

we tend to continuously pass new legislation to improve social welfare. But this well-meaning attempt can be perverted if those whose lifes are supposed to be improved by new legislation are getting lost and drown in the wave of regulations that are imposed on many different levels. In addition, there is the danger, that too strict rules are making the necessary development of processes more difficult or are preventing them entirely instead of speeding them up.”

But let me assure you: It’s just words. And words can be, at most, a promise for deeds. They are a lot more credible if backed by acredible record or credible committments. The problem with the former is, there is no credible SPD record regarding deregulation for the post 1998 period. Social security reforms, yes, to some extent. But labour market DE-regulation? No. If anything, things have become worse due to the still rampant union inducied insider-outsider problems.

Actually, Clement somewhat recognizes the lack of a record in the excerpt. So past experience does not quite work to help convince the public of the truthfulness of his (speechwriter’s) words.

And there’s the core of the government’s communication problem (which is huge, but evidently pales in comparison to the fiscal and regulatory ones.) It has no idea how to credibly commit itself to the reform rethoric it is once again employing.

That’s why so many people are wary believing the SPD today when it employs libertarian rethoric. They believe it just means further state regulation and more unemployment, however much disguised.

Shame on you if you fool me once, shame on me if you fool me twice…