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Home | Wire | The New German Government Is Bad News

The New German Government Is Bad News

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Tags Global EconomyPolitical Theory

02/08/2018

Germany finally has a new government. After months of negotiating, a breakdown of talks between the Conservatives, Greens, and Liberals, and constant fighting between the Conservatives (CDU/CSU) and Social Democrats (SPD), the two major parties reached an agreement yesterday.

Members of the SPD still have to vote on the coalition agreement, which is “only” 177 pages long, but this should just be a matter of time – that is, no later than early March. For all Germans however, this spells trouble – well, at least for everyone except the Social Democrats. The SPD, despite being the biggest losers in the federal election, are the triumphant winners of the coalition talks.

Martin Schulz, their leading candidate in the elections, will become Minister of Foreign Affairs, something unimaginable just a few weeks back, when his political career seemed closer to coming to an abrupt end after the miserable job he was doing, rather than getting one of the most prestigious jobs in the country. Under the leadership of the former President of the European Parliament, the SPD had the worst result in party history – in current polling, they now even have to fight for second place with the right-wing Alternative for Germany (AfD). Funnily enough, right after the election Schulz proclaimed loudly that he would never be a minister in a Merkel-led government. So much for that.

But Schulz is not the only SPD loser who suddenly comes out as a (temporary) winner. Olaf Scholz (yes, the same name just with an “o”), the mayor of Hamburg, was close to having to step away from his position last July, when his city got demolished by left-extremist groups during the G8 meeting, Hamburg became a war zone between the “antifascists,” and the police. Now he is Minister of Finance. Whatever one might think of his predecessor Wolfgang Schäuble, in comparison to Scholz, Schäuble will surely seem as a fiscal hawk – he did balance the budget after all, and was the loudest proponent of the EU’s austerity policy, which was so heavily attacked by the SPD.

Even worse, Heiko Maas will probably return to the Justice Department. Thanks to him, hate speech and fake news are now monitored in Germany, which for many has made the normal usage of Facebook an impossibility.

Long term, however, the appointment of Andrea Nahles as the new leader of the SPD could be worst. All of the SPD politicians mentioned so far do have high positions for now, but in reality are merely “dead men walking” (as George Osborne would say).

Nahles, though, has finally arisen from the far-left wing of the SPD, after being Minister of Labor in the last four years. Her goal is that the “new” SPD will from now on focus more on “social justice,” and should get closer to the Left Party, potentially even for a future coalition government. “We have failed to address the negative sides of globalization,” she said in September. “The SPD once again has to learn how capitalism works, and, if necessary, criticize it viciously.” Obviously, the SPD could learn how capitalism works – but under Nahles, it’s likelier that only the fallacious critique remains, and in a worst-case scenario, that the SPD turns into a Jeremy-Corbyn-style Labour party.

This government, however, doesn’t just spell trouble for Germany, but perhaps even more so for Europe. The EU is already missing the sound voice from across the pond – no, not the US, but the common-sense Brits – but the skeptical, lukewarm voice from Germany could be history now as well. Angela Merkel, who suddenly looks like the right-wing part of the government (which should make it clear how dire the situation is), is probably in the final years of her tenure as Chancellor. She will intend to make a statement – and nowhere is this better possible than concerning the EU.

This is why she will be much friendlier to the idea of a “United States of Europe,” already endorsed by Martin Schulz on Twitter a few weeks back, who demanded it to be implemented by 2025 (just like that). Reform plans put forward by Macron, Juncker, Verhofstadt, and other EU federalists should find much more support from Germany – these include for example a European Monetary Fund, a more intense cohesion policy (i.e. more direct redistribution from rich to poor member states), more cooperation on defense, regulatory and tax harmonization, maybe even a European-wide social safety net, and just overall – how could it be any other way – more power to Brussels (also by possibly easing majority voting in the Council to mum the “dissidents” from Poland, Hungary, the Netherlands, or Denmark for instance). The coalition agreement is extremely vague on which EU the German government actually wants to see – but be assured, if anything it is starkly pro-EU, and will favor more integration.

Thus, the question remains if there are any good news at all – and thankfully there are, though they will be hard to notice at first. In parliament, now with another Grand Coalition, but two new parties, the opposition will be much stronger. With the liberal FDP, and the right-wing AfD – which both have their own problems, but do bring a breath of fresh air in favor of slightly more liberty-oriented policies, there will be loud opponents to the status quo.

More importantly, though, the two ruling parties have just shifted their problems forward another four years. Judgement day will come nonetheless, and will just be worse. Germans are fed up by the CDU and SPD, which is why the two parties were the biggest losers in the last election. Germans are fed up by the Merkel’s and Schulz’. Let’s hope – and it admittedly may be naïve – this translates to a major political turnaround in the near future, regardless of inside the ruling CDU, where a conservative rebellion against the left-wing Merkel wing is ongoing, or outside, with new faces coming in. Today’s news will not change anything on that. It can only postpone it.

UPDATE, February 9: The German political scene was thrown into chaos once again today, when Martin Schulz announced that he actually doesn't want to be Minister of Foreign Affairs after all. Tension inside the SPD has been growing since the announcement two days ago that he would break his promise to never enter a Merkel-led government, which culminated yesterday in heavy attacks by Sigmar Gabriel, the Minister of Foreign Affairs up to now, who surprisingly was completely excluded from the SPD gift giving of ministries, calling Schulz at one point the "man with the hair on his face." Who will replace Schulz remains to be seen, but if Gabriel pulls it off to return to his position the improvement over Schulz would be minute. For instance, at a conference on the EU budget at the Commission a month ago, Gabriel said that actually, Germany is not a net payer to the EU, since "we are all winners as regards European integration!" If Gabriel is just unable to do math, or caught himself in some EU fanaticism was not evident.

Kai Weiss is an International Relations student and works for the Austrian Economics Center and the Hayek Institute. He is a Mises University alumnus.

Note: The views expressed on Mises.org are not necessarily those of the Mises Institute.
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