Kapitalismus II

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.

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About Edward Hugh

Edward 'the bonobo is a Catalan economist of British extraction. After being born, brought-up and educated in the United Kingdom, Edward subsequently settled in Barcelona where he has now lived for over 15 years. As a consequence Edward considers himself to be "Catalan by adoption". He has also to some extent been "adopted by Catalonia", since throughout the current economic crisis he has been a constant voice on TV, radio and in the press arguing in favor of the need for some kind of internal devaluation if Spain wants to stay inside the Euro. By inclination he is a macro economist, but his obsession with trying to understand the economic impact of demographic changes has often taken him far from home, off and away from the more tranquil and placid pastures of the dismal science, into the bracken and thicket of demography, anthropology, biology, sociology and systems theory. All of which has lead him to ask himself whether Thomas Wolfe was not in fact right when he asserted that the fact of the matter is "you can never go home again".

5 thoughts on “Kapitalismus II

  1. Why would a defeat of a party whose leader has spoken against further reform, if you may call it that, represent a vote against reform? The current opposition in that state is running on a platform of budget cuts.

  2. “represent a vote against reform?”

    Oliver, I’m not exactly saying this. I’m saying that the electoral defeats can have a longer term consequence on the SPD. Hans Werner Sinn suggests that 40% of the German electorate now depend on state welfare benefits in some form or another. Given this it becomes increasingly difficult to convince people of the need for painful reforms.

    It could be easier to suggest that the problems come from ‘unfair competition’ from Central Europe, globalisation and international financial markets (as demonised in the form of hedge funds)etc.

    I am not convinced, given that in the end it also has an electoral base to satisfy, the CDU/CSU will be any more reforming than the SPD. Certainly there will be little serious room for eg tax cuts and other traditional agenda items.

    So then we could have an SPD challenging for re-election towards the end of the decade with a rather radical, and effectively ‘head in the sand’ like programme.

    This would be worrying, since the window of opportunity here is limited.

  3. I’m saying that the electoral defeats can have a longer term consequence on the SPD.

    Rather worry about the Greens. For them this is turning into a wipeout.

    It could be easier to suggest that the problems come from ‘unfair competition’ from Central Europe

    Some form of rising nationalism is likely, yes, but that’s not the end of the world. Unless you feel strongly about Turkey’s chance to join the EU.

    SPD challenging for re-election towards the end of the decade with a rather radical

    They might but would lose. Reversing such things is much harder than opposing them beforehand.

  4. I don’t want to sound alarmist Oliver, but when I say you have a window of opportunity, I mean it. The demographics indicate that if you haven’t turned all this round by the beginnings of the next decade you could get into a very vicous circle indeed. So time is pressing.

    “Unless you feel strongly about Turkey’s chance to join the EU”.

    In principle I’m in favour, but as I’m arguing on another post, not so strongly as to want to risk tearing the EU apart with the issue. The German case is another one however.

    Turkey needs to accept the Armenian genocide, and Germany needs to accept Turkey. You have become historically ‘paired’. If Germany can’t rise to the challenge of cohabitation with Turkish culture, then I don’t see you climbing through that window I’m talking about. It’s as direct as that.

  5. “I don’t want to sound alarmist Oliver, but when I say you have a window of opportunity, I mean it. The demographics indicate that if you haven’t turned all this round by the beginnings of the next decade you could get into a very vicous circle indeed. So time is pressing.”

    Then, frankly, the state of the SPD is not important. There isn’t much time left until the next federal elections.

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