A year ago, German Chancellor Angela Merkel was in the final phase of her election campaign. The incumbent, Gerhard Schroeder, lagged so far behind her Christian Democrats (CDU) in public opinion polls that she thought she would win a landslide victory and could therefore afford to expound the cruelties of the liberal austerity program delineated in her electoral campaign. She even announced a value-added tax increase (which her new government has, indeed, decided to implement next year).
But German voters did not appreciate her honesty. When she named the law professor Paul Kirchhoff, who advocated a flat tax, as her candidate for finance minister, Merkel's electoral cakewalk turned into a nightmare. She lost nearly her entire lead, and in the end won by only a tiny margin -- a margin too small to form her preferred coalition with the liberal Free Democrats.
Instead, she had to form a coalition with Schroeder's Social Democrats (SPD), though without Schroeder himself.
Merkel's first year of government will soon be over. It has been successful in terms of international relations. She won the respect of her EU partners and managed to salve Germany's damaged relationship with the US. Her unpretentious manner and intellectual capacity (she holds a doctorate in physics) quickly won her the respect of many, even of Russian President Vladimir Putin, whose language she speaks fluently.
However, Merkel has disappointed everyone who hoped that she would continue and even expand Schroder's domestic economic reform agenda. While her party program speaks of opening union contracts, relaxing job protection, and, in particular, overhauling the incentive structure of the welfare system, her government has been mostly silent about these issues. The cautious steps toward wage subsidies that her government has taken are mere window dressing and cannot be taken seriously.
Thus, Merkel has so far dampened any hope that the important and hard reforms that she announced during her campaign and that Germany urgently needs will be carried out under the CDU-SPD "grand coalition" government. To be sure, she has put healthcare reform and a reform of company taxation on the agenda, but the plans presented so far give no indication of a major breakthrough.
This stagnation in policymaking has been heavily criticized by the media and the influential Wirtschaftsrat (Economic Council), an association of entrepreneurs who sympathize with the CDU. Even Germany's Christian Democratic president, Horst Kohler, has continually reminded the government of the need to press ahead with economic reforms in order to pave the way for sustainable growth.
So why does Merkel not dare more? Why is she not sticking to the announcements she made during her campaign?
The superficial answer is that her coalition partner, the SPD, is not willing to go further. But if this is the explanation, the next question is why the SPD is unwilling to continue Schroder's reform course.
Such questions lead to the real explanation of Germany's political stagnation: there is simply no popular majority in favor of liberal reforms, because in the near term such reforms would create too many losers. Germany's extensive welfare system spends 31 percent of the country's GDP for entitlement programs operated by the government sector. No less than 41 percent of the voting-age adult population lives primarily on government transfers such as state pensions, full-scale public stipends, unemployment benefits, disability benefits, and social assistance (in East Germany, the figure is a whopping 47 percent).
Among those adults who vote, recipients of public transfers form a clear majority. Indeed, the upper 10 percent of income recipients pay more than 50 percent of aggregate income tax revenue, and the upper 20 percent pays about 80 percent, while 40 percent of income recipients pay no income taxes whatsoever. Small wonder that a huge majority of the population -- and even a slight majority of CDU voters -- prefer a strengthening of the welfare state to a more market-oriented system.
The SPD learned about these preferences the hard way, when Schroder's liberal reforms, as cautious as they were, prompted an internal revolt and induced his predecessor as party chairman and temporary former minister of finance Oskar Lafontaine to desert the SPD and found a new party. Lafontaine now plays directly on the preferences of public transfer recipients and firmly occupies the left margin of German politics, dreaming the dream of the everlasting welfare state that can draw on unlimited resources.
Indeed, after Lafontaine's "The Left" party merged with eastern Germany's ex-communists, it secured a firm base among voters, changing the political equilibrium in the country. Faced with the prospect of losing members and voters to the new party, the SPD simply cannot afford to continue Schroder's reform agenda.
Many Christian Democrats may be dreaming of the next election, and a new coalition with the Free Democrats -- and perhaps the Greens -- that would carry out the necessary welfare and labor market reforms. But the reality is that the CDU leadership is re-orienting the party toward more socialist attitudes in order to attract a larger share of the electorate, making postponement of the necessary reforms all but inevitable. In the midst of such political machinations, Germany is gradually losing its future.
Hans-Werner Sinn is the director of the Ifo Institute for Economic Research in Munich.
An outrageous dismissal of the exemplary Taiwanese fight against COVID-19 has been perpetrated by the EU. There is no excuse. I presume that everyone who reads the Taipei Times knows that the EU has excluded Taiwan from its so-called “safe list,” which permits citizens unhindered travel to and from the countries of the EU. As the EU does not feel that it needs to explain the character of this exclusive list, perhaps we should examine it ourselves in some detail. There are 14 nations on the list that have been chosen as safe countries of origin and safe countries of destination for
Filmmakers in Taiwan used to struggle when it came to telling a story that could resonate internationally. Things started to change when the 2017 drama series The Teenage Psychic (通靈少女), a collaboration between HBO Asia and Taiwanese Public Television Service (PTS), became a huge hit not just locally, but also internationally. The coming-of-age story was adapted from the 2013 PTS-produced short film The Busy Young Psychic (神算). Entirely filmed in Taiwan, the Mandarin-language series even made it on HBO’s streaming platforms in the US. It is proof that a well-told Taiwanese story can absolutely win the hearts and minds of hard-to-please
Drugged with sedatives, handcuffed and wearing a bright orange prison tunic, British fraud investigator and former journalist Peter Humphrey was escorted by warders into an interrogation room filled with reporters, locked inside a steel cage and fastened to a metal “tiger chair.” Humphrey recalls: “I was completely surrounded by officers, dazed, manacled and with cameras pointing at me through the bars. I was fighting for my life like a caged animal. It was horrifying.” Footage from the interrogation was later artfully edited to give the appearance of a confession and broadcast on Chinese state media. While this might sound like an
If anyone had harbored hope that Chinese Nationalist Party (KMT) Chairman Johnny Chiang (江啟臣) was to bring about much-needed reform to his party, those hopes have now been dashed. The pathetic publicity stunt of the KMT’s short-lived “occupation” of the Legislative Yuan on Sunday and Monday last week failed on so many levels, it is difficult to know where to start. Seeing Chiang at the scene was disappointing and raises the question of why he allowed it to happen. The farce began when KMT legislators barricaded themselves into the legislative chamber. However, they were kicked out only 19 hours later, just in