Saturday, July 16, 2005

Meanwhile in Germany

Well, it is not going to happen during the British Presidency. The EU is not going to be reformed and become a liberal-minded, outward looking, free-market oriented collection of independent states.

Actually, we haven’t exactly been promised all the above but we were told by Prime Minister Blair a.k.a. saviour of the world and friend of all moderate Muslims, wherever they may be (unless they are in Iraq or Israel) that his presidency will produce reforms and change the course of history.

It is true that he did not actually specify what those reforms were going to be but they were definitely going to change something or other.

The first hurdle was going to be CAP and its reform or, even, abolition. We know what has come of that. Indeed, French politicians are openly and gloatingly proclaiming that CAP benefits every single citizen of the European Union. So much for outward looking reformism. Most of us haven’t noticed the benefits and there are many people both inside and outside the European Union who have noted some serious disbenefits.

Budget reform was never a starter and institutional reform, the essential prerequisite, was not even mentioned. My own suspicion is that Blair does not understand how the EU works and how its legislation is passed and implemented. If so, he is at one with all members of the House of Commons, many of the civil servants and almost all commentators.

Well, if not the presidency, then maybe the new German government (on assumption that Merkel will get in, forming a CDU/CSU government, possibly with some input by the Free Democrats).

We have already seen that the uninspiring CDU electoral platform with an almost complete lack of serious reform. Maybe, they are thinking of just getting in and introducing reform then, but I am not holding my breath.

Merkel herself has been giving interviews to non-German publications in which she has been enunciating the sort of waffle that would make even Blair proud:
“We in Europe are unfortunately at a point where a great many decisions aren’t being reached, and a standstill is the worst thing for Europe. For me it’s not about the balance of power, but about an effective Europe that can reach the goals it has set itself.”
She did comment that 20 million unemployed is “anything but social” and that is as far as we go with any ideas about change.

Thursday's Wall Street Journal Europe [subscription only] carried an article by the German journalist, Michael Miersch, who with his colleague runs an unusual and self-confessedly “optimistic website”.

Mr Miersch’s analysis of German politics is far from optimistic. He points out that as between the SDP and the CDU the German electorate will have a choice
“… this September between two major tax-increasing parties”.
This is not a pleasing prospect in itself but the situation is complicated by the manoeuvrings of Oskar Lafontaine, erstwhile “Red Oskar”, whose
“…. recipe is protectionism, economic management, and – of course – tax increases”.
Lafontaine has usurped both the socialist left and the nationalist right position. Apart from his emphasis on strengthening the existing state controls, he
“…. calls for reserving German jobs for Germans. In foreign policy, America is the No. 1 enemy. Where Mr Schröder merely manoeuvred strategically, Mr Lafontaine has made his opposition to the Atlantic alliance crystal clear. To top it off, he shows sympathy for Iran, saying it has a right to nuclear weapons because Israel has them too. Functionaries of the radical right-wing NPD have already applauded him. Some of them have already called on their supporters to join the leftist alliance.”
In slightly farcical replay of the gruesome problems of the late twenties and thirties, the political commentators have got it wrong again. They have been looking fearfully for an extreme right-wing figure to play the nationalist card. Instead, it is an extreme left-wing done that does.
“What belongs together is growing together – a movement combining fear of the future and resentent of Anglo-Saxon capitalism and technological progress [a particularly odd one, that for modern Germany] with support for all-around state protection from all the vagaries of life.”
Of course, Mr Miersch does not suggest that Lafontaine will win the election, but he may take a large number of votes from Schröder. This will ease Merkel’s passage to power but at what cost, one wonders. Just how high will be that proportion of votes, especially in the east of the country?
The real problem, however, according to Mr Miersch is that these politicians are largely in tune with the public mood.
“Free trade, a trimmed-down state and strengthening the individual’s rights and responsibilities are generally considered rich people’s hobbies. Make no mistake: Clinging like this to the welfare state is an entirely rational and economic decision. After all, the large nmajority of voters in Germany are paid by the state, whether as civil servants, public sector employees, pensioners, unemployment or welfare recipients. They have no interest in a leaner state. The only question is, who will keep paying them if the productive sector continues to shrink?”
It seems to me that we have little to feel superior about. The situation, as described here, applies to Britain and with news coming in that the public sector employment is increasing with salaries rising well above inflation rate or the rate of salary increase in the private sector, things are not getting better.

At least, there is a good deal of discussion going on in the country (not that the Chancellor is listening). In Germany, Mr Miersch informs us,
“The anti-change consensus is broken only by a few economists and a handful of journalists. Among the smaller parties, the Greens, too, have forced their liberal wing off the stage in this campaign.”
Rather a shame that, as most of us had not realized the German Greens had a liberal wing until it was forced off the stage.

Nor are the Free Democrats benefiting from the political stagnation with a non-changing 7 per cent of the vote.
“Civil society, the educational system and the cultural scene are dominated by a leftist, green ethos. The major media are either left-wing or statist-conservative. Liberal positions appear occasionally in the business secitons, but almost never make it onto the opinion pages that determine the political debate. ‘Hatred of liberalism,’ Ludwig von Mises wrote already in 1927, ‘is the only point on which the Germans are united.’”
This is slightly odd since several of the most important liberal thinkers of the nineteenth century were Germans. What happened to their ideas? Died, it seems, in the way they died in France (Who in that country reads Bastiat?). Sadly, they do not seem to be doing all that well in Britain, either.

Mr Miersch’s explanation is that
“After a short heyday, German liberalism was taken to task by both the Käiser’s faithful Chancellor Bismarck and the Socialist opposition. The derogatory term ‘Manchesterism’, invented by one of the founders of the Social Democratic Party,Ferdinand Lassalle, was applied to anyone advocating free markets and reining in the power of the state.

The demand for free trade was seen as a deception concealing British interests. Eugen Richter, the greate 19th-century German liberal predicted the dire future socialism and the welfare state will bring about more clearly than anyone. But after his death a new generation of liberal politicians began to flirt with ‘centralized economic planning’, in accordance with the zeitgeist of the early 20th century. Some embraced aggressive nationalism. Richter’s liberal legacy was lost.”
Widen that analysis to the whole of Europe, substitute America for Britain, as in this respect modern Britain is not that different from the modern Europe and you have a clear picture of the famous “European model”. A model that is doomed to sit on the creator’s work bench and never take off.

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