December 04, 2002
Schröder is leading Germany to disaster
Rosemary Righter
Complacency and inefficiency are the legacy of the post-war golden days
Germany is in shock. It is not just that times are bad, bad enough for the
sulphurous leftwinger Oskar Lafontaine to have scored a rare and palpable
hit by comparing Gerhard Schröder to the hapless Heinrich Brüning, the
Weimar Republic Chancellor whose ruinous policies sent Germany into a
tailspin that paved Hitler's road to power. It is not even that virtually
every German voter reckons that the Schröder Government deliberately lied
before the September elections, concealing a ?15 billion hole in public
finances in order to squeeze back into power. It is an altogether deeper
sense that the abyss has opened.
People are angry in a society that takes pride in being slow to anger. Small
wonder. The economy, having never really emerged from the last recession, is
headed south again. Tax revenues in this insanely overtaxed country are
slumping and, with Germany's top companies shedding labour at home and
shifting investment elsewhere - and 45,000 firms bankrupted this year - more
misery is on the way. People are not spending; but they are not saving much
any more either. Even West Germans feel poor; and they will feel poorer
still when the new "wealth" tax cuts in on assets, for a family of four,
above £600,000 (house included).
Just about the only thing that is growing in Germany is unemployment,
standing at four million at least and, according to one German economist,
nearly six million if hidden unemployment is factored in. That, too, will
get worse, because although it is evident that labour costs need to be
radically reduced, Herr Schröder is levying an extra £90 a month in payroll
contributions to state pensions that he ought to be overhauling, but will
not. He refuses, too, to touch the rigidly protective labour laws beloved of
Germany's fat controllers, its overmighty union leaders.
Revolt is in the air. The most, perhaps the only, popular people in Germany
are its satirists; and German satire, when it gets going, is robust verging
on nasty. The "shirt game" is gentler, but its message is unmistakable. In
response to the 48 different tax increases, on everything from flowers to
fuel oil, announced since September by a Chancellor who only last July
declared that "tax rises make no economic sense" in a slump, the web
designer Christian Stein suggested that people should solve Herr Schröder's
financial worries by sending him the "shirts off their backs". The response
has been such that he predicts that the Chancellor, compared in one of the
less vitriolic epithets around to a bad case of athlete's foot, will have
50,000 of them in his wardrobe come Christmas.
The Germans also want their deutschmark back. It turns out - as became known
when C&A, in an inspired bit of marketing, invited Germans to spend their
"useless" marks in all its branches this week - that they hated surrendering
the currency so much that they still have ?8.8 billion stashed under their
mattresses. The euro - and, by extension, "Europe" - is becoming equated
with national disaster.
There is a queasiness about that goes beyond the dyspepsia induced by this
particular winter's discontents. That could be a good thing if it means that
a truth evident to others for some time is finally sinking in. This is that
the postwar German system, in which this most systematic of nations has
placed its trust, is not just in need of a tonic but is fatally diseased.
Not only that, but the quack medicines being administered will make its
eventual demise a messy, expensive, and needlessly, humiliatingly, miserable
business.
Tombstone imagery is everywhere, with the cover of one business paper
proclaiming, simply: "Germany - the obituary." The wave of new taxes has
been compared to "carpet bombing". Everyone, apparently except the
Chancellor, sees the writing on the wall.
Yet the danger even now, for Germany and for Europe, is that revolt will
spend itself in satire, and the indispensable debate about where Germany
went wrong and what it must now do will, yet again, be submerged in a
generalised, purposeless angst.
Germans do not yet want to see where, in the bit of the recent past they are
proudest of, their troubles originated: with the 1940s compact between
unions and employers. At first it created the incentives that made the
Wirtschaftswunder generation rich, but it ended by draining the vitality out
of Germany.
The lavish social benefits, secure jobs and cushy retirement incomes that
went with "Rhineland capitalism" made for complacency and - whisper who
dares - pervasive inefficiency. Germans came to view sick leave as an
additional holiday entitlement; free massages, health spas and even
daughters' first communion dresses were standard perks. The public sector,
too, became so cosseted that a staggering 42 per cent of all budget spending
this year will go on civil service pensions.
By 1990 Germany was rich, and constipated. The "social state" was in dire,
though still disguised, need of reform. Instead, Germany got unification, a
political triumph but - when East Germans rapidly received similar wages and
benefits that priced them overnight out of the labour market - an economic
disaster. The gigantic subsidies that flowed, and still flow, eastwards have
been staggeringly unproductive. After a short post-unification boom, German
growth stalled, averaging 1.5 per cent a year. The prognosis for 2003 is 0.4
per cent.
What should worry all of Europe is that there is no real sign of the
"paradigm shift" in thinking that the Greens, alone among Germany's
political parties, are demanding. The breakdown is not just economic, but
political. The election turned not on hard facts about the economy, but on
Herr Schröder's crude manipulation of anti-Americanism. Germans have turned
on their own man for now, but the less able they are to face facts, the more
tempting it will be to hunt scapegoats outside Germany. That would be the
most alarming development of all. |
