Thanks, Gerd

Wasn’t Gerhard Schroeder fun? Didn’t Germany, maybe more than any other big country in Europe, need a leader who enjoyed things? Hasn’t public life gotten just a little grayer this late November Tuesday?

The election in ’98 showed that Germany could actually change governments at the ballot box, and not just through parliamentary maneuvers. One more doubt about German democracy laid to rest. The red-green government changed the terms of public debate about immigration, for which I am personally grateful. And I saw the difference in treatment at the local foreigners’ office in downtown Munich. For this honesty, Germany is better off. The SPD and the Greens sent German armed forces into combat in Europe, and on to missions in Afghanistan and elsewhere. Germany is shouldering its responsibilities as a major nation. For that, all of Europe is better off.

Sure, there were missed opportunities and many things still need to be done in Germany for it to really be ready for the 21st century. But the achievements of the last seven years are not small, and they will not be short-lived.

UPDATE: Another thing. By calling the election a year early, Schröder ensured that her opponents in the CDU would not have time to push Angela Merkel out of the top position. Thus we will not have the insufferable Roland Koch as Chancellor. For the historic first of having a woman as German Chancellor, thanks Gerd.

This entry was posted in A Fistful Of Euros, Germany and tagged , by Doug Merrill. Bookmark the permalink.

About Doug Merrill

Freelance journalist based in Tbilisi, following stints in Atlanta, Budapest, Munich, Warsaw and Washington. Worked for a German think tank, discovered it was incompatible with repaying US student loans. Spent two years in financial markets. Bicycled from Vilnius to Tallinn. Climbed highest mountains in two Alpine countries (the easy ones, though). American center-left, with strong yellow dog tendencies. Arrived in the Caucasus two weeks before its latest war.

19 thoughts on “Thanks, Gerd

  1. Did you ever get to hear the Steuerong? The one that was to the tune of the Ketchup Song? There’s a good line in there where Schroeder’s voice says in the background, “How about a hair-dye tax? Nah, not really..”

  2. You forgot to mention the fact that Gerd was able to get the unemployment rate up to the post-WWII high. This was no small achievement. It took a great deal of time to come up with policies as bad as his.

  3. “You forgot to mention the fact that Gerd was able to get the unemployment rate up to the post-WWII high.”

    Current official unemployment rate Germany: 10,5% – 11,5 %

    Current unemployment rate Spain: 12%

    Current unemployment rate Italy: 10%

    Current unemployment rate France: 10,5%

    Now imagine one of these countries mentioned aboved “obliged” to annex a population, a territory and a “wrecked” industry like that of the former East-Germany?

    (Without forgetting the increasing role played by the Global-Players)

    What would the result be?

  4. For our casual overseas visitors, Germany annually transfers the equivalent of the entire Marshall Plan into the former GDR. Much better investment than occupying a desert in Asia.

  5. Yes, but East Germany was annexed 15 years ago! When will this stop being used as an excuse?

    Germany is by no means the only problem country in Europe. However, the other countries mentioned have not annexed any other countries. Could the real problem be the socialist model followed by most of Europe instead of the annexation of East Germany?

  6. Well, for Germany the incorporation of East Germany is still a significant source of economic dislocation. Few people like to say it, but Germany is in important ways a post-Communist country–like Hungary, like Poland, like the Czech Republic, etc. Look at a map of regional unemployment levels in Germany and it’s clear: except for some parts of the Ruhr, all of the really high unemployment is in the east. The west is not exactly booming, but it is ticking along quite reasonably. (One aspect of denying that it’s a post-Communist country means that the measuring sticks are all wrong. Instead of saying eastern Germany is richer than any other transition economy, it gets compared with the very wealthiest regions of Europe and looks rather shabby by comparison.)

    One troubling item is that unlike every other post-Communist capital I can think of, Berlin is not booming. In Hungary, for example, measure an area’s proximity to Budapest or its proximity to the Austrian border and you will have a rough and ready index of prosperity without having to look at any economic statistics. The capitals are the motors of the economies. Not so Berlin. That’s one place to work improvements that would probably be catalysts.

    As to whether Germany needs more flexibility, more entrepreneurial spirit, less bureaucracy and lower taxes, my answer is yes. File under missed opportunities. On the other hand, there’s no political party that stands for those things here, so it’s hard to expect a government that will deliver them. The CDU certainly wouldn’t.

  7. It seems much more than just a missed opportunity. Germany’s export ecomony is doing well. Their problem is domestic demand. One does not get people to spend more money by raising the VAT by 3 percent. I think this is a disaster. The Japanese tried this is the middle to late 1990’s and drove their economy back into recession.

  8. One troubling item is that unlike every other post-Communist capital I can think of, Berlin is not booming.

    To the extent that enterprise can function independently of politics, there is little reason why growth should center on the capital rather than other urban centers. To the extent that enterprise is inextricably linked to politics, there is every reason why growth should center on the capital rather than other urban centers.

    Germany has a federal form of government, while other post-Communist countries have tended towards a stronger central government, and even a strong executive. In other post-Communist countries, the largest firms are former state-owned industries and their successors; this is not so much the case in Germany.

    These things being so, I would expect economic growth in Germany (if it were happening) to be more distributed than it is in other post-Communist economies. I would not expect Berlin to fare any worse than other major German cities, but I would not expect it to experience economic growth out of proportion to the growth of other German cities.

  9. “As to whether Germany needs more flexibility, more entrepreneurial spirit, less bureaucracy and lower taxes, my answer is yes.”

    Absolutely!

    But lower taxes = higher deficits…

  10. Berlin is not the capital. It is the seat of goverment but it is not the economic or cultral heart of German. Prague and Budapest are.

    A high VAT rate is a way to increase the share of locally produced products in total demand. Problem with this methode is that you wont find it back in the statistics because it is mostly in the DIY and black economy

  11. “Berlin is not booming”

    When I was in Berlin a few months ago I saw plenty of construction going on. I also noticed that the plans for that great white elephant, reconstructing the original Stadtpalast are still on (although at a 300-500 mln pricetag it might mean it gets scapped eventually when local politicians find some financial sense). So there’s still money being pumped into Berlin and its surrounding areas.

    The real problem is all those empty buildings with plenty of officespace and a Zu Vermieten sign in front.

    P.S
    I haven’t looked much into the German 3% VAT increase planned for 2007 but apart from products, does it also go for services?

  12. Two points, one of them an extremely ‘silly’ one. The Spanish media has been going on and on about the physical resemblance between Angela Merkela and Anglea Lansbury (in the Latin world appearances are everything), and now I can’t get this out of my head when I see her :).

    Secondly, the VAT issue is a very important one IMHO.

    Firstly this rise in consumption tax has been ‘pencilled in’ for 2007. So the new coalition’s ‘play’ will be to try and really push-start domestic consumption in 2006. Obviously they hope some consumption will be brought forward in order to avoid the tax. If this doesn’t kick-start German domestic consumption, then clearly 2007 will be an a very ‘interesting’ year indeed (in the Chinese curse sense of interesting).

    Secondly, to make this play they really need the ECB to ‘play ball’ and keep monetary accommodation. That is what all the fuss is about right now IMHO (see my posts on Afoe and Afem and the recent Dave Altig post at MacroBlog and my comments). Those interested in the economic ‘nuts and bolts’ of all this would probably want to note that similar arguments about this are also ongoing in Japan right now, between the BoJ and the MoF. I think there is a very interesting parallel here, and few commentators are picking up on it.

    Also we have a real historic change going on here. For the first time since 1923 people are less worried about inflation in Germany, and a French banker – Trichet – is converting himself into an ‘inflation warrior’. Of course in Ireland, Greece and Spain they are also worried about inflation, but this, as they say, is ‘another country’.

  13. Germany isn’t even shouldering responsibility for its own security, much less shouldering responsibilities as a “major nation”. The main reason Germany did not join the coalition in Iraq is because it had nothing to offer in terms of either troops or money. The fact that the German population was against the war just meant that the Schroeder government never had to admit that it actually couldn’t help, even if it had wanted to.

  14. Nah, Germany’s history shows that losing has never deterred it from undertaking military action.

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