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SPD/Germany
Date2005/09/19 18:12 by: SocDemCDU/CSU: 35.2% (225 seats)
SPD: 34.3% (222)
Free Democrats: 9.8% (61)
Left Party: 8.7% (54)
Greens: 8.1% (51)
Thus are the results of the recent German election. I have a few questions regarding the election and the circumstances behind it. What is this new Left Party and what are its policies (how do they differ from the SPD)? in your opinions what can the SPD do to shore up its losses? What is causing the painfully slow growth rates in Germany and its high unemployment? What would the CDU do as far as reforms go? Thanks. -
Re:SPD/Germany
Date2005/09/20 18:21 by: GermanInternationalistHi comrade,
i'd be happy to inform you.
As you probably heard we got some problems now, cuz no camp – the conservatives consisting of CDU and the liberals (!! = libertarians) and the left-wing consisting of Social Democrats and the Greens – has the required 50%+ majority of the congressional seats. The majority congressional faction as we call it, elects the chancellor and forms the so called chancellor majority in order to pass the legislation that the government seeks to enact. Without a congressional majority, the chancellor is basically powerless, no such thing as executive orders whatsoever.
The new left party is a merger of the post-communist “Party of democratic socialism” and the newly founded WASG (“election alternative work and social justice”) which is basically a separation from the left wing of the SPD consisting mostly of social democrats and union leaders who resigned from the SPD.
Since we have a 5%-barrier for any party to be represented in congress, PDS and WASG merged, to prevent a split of f.e. 4% on each party thus none of them gaining any seats in the congress. The merged party changed its name to Left Party, but 90% of its membership consists of PDS-members.
The PDS used to be the SED (socialist unity party of germany) , the dictatorial soviet-style party in the east german GDR (german democratic republic), and changed its name after unification to PDS.
We in the SPD consider the PDS to be a far left party with an illusory old-style anti-capitalist/anti-market platform, and we oppose cooperating with it on the federal level, also because of its origin. However there are some SPD/PDS coalition governments on the state level, where they’re basically participating in enacting our social democratic platforms.
At the heart of the dispute lies economic and social policy. In 2003 chancellor Schroder announced the “Agenda 2010” which entailed some significant benefit cuts in the social insurances. Since then for instance germans have to pay a 10€ entry fee per quarter if they visit a doctor. Pensions were cut. The payout level of pension is going to drop significantly until 2030 from 70% of income to 45% which shall be compensated by private retirement accounts. This way the government intends to let the pension insurance contributions not rise beyond 20% until 2030 when the demographic wave kicks in. We too have the pay as you go-system, which’ll drive what u call FICA way up til 2030 if retirement benefits arent cut.
But especially controversial was the merger of unemployment help and social help which led to big cuts for those currently on unemployment help. Before the reform we basically had a 3-tier unemployment assitance system. Every employee (and employer) pays into the statutory unemployment insurance. If you got unemployed you first received “unemployment money” which could reach up to a level of 80% of your last income and a duration of 3 years depending on the height of your income and how long you paid in. If you were still unemployed after unemployment money expired you received “unemployment help” which was about 50% of your last income. If after an additional year of unemployment help you were still unemployed, only then would you drop to “social help” aka welfare.
As you can imagine this 3-tier system was quite expensive, especially given the high unemployment rate in east germany of about 18%.
So the Schroder government time-limited “unemployment money” to 1 year and merged unemployment help and social help into “unemployment money 2” at a level below the unemployment help but above social help.
The reasonability criteria were tightened. Until then unemployed only had to accept jobs that met their level of qualification. So an unemployed computer scientist didn’t have to work at wal-mart, but could stay unemployed until he found a similar job to the one he lost. That was changed.
And dismissal protection was loosened. German dismissal protection mandates that employers must prove that the economic situation of the company warrants the laying off of a particular employee, f.e. if the company posts losses. Other than that employers must not lay off people, unless of course for performance reasons or other violations of a labor contract. IF lay offs were permissable, there has to be a “social selection”: Employees must not simply dismiss anyone they like, but they have to lay off those that could get a new job easiest first. That means younger people must be laid off before older people. Employees without families before employees with children in school, college etc.
This dismissal protection used to take effect for companies with at least 5 employees. Smaller companies were not subject to these dismissal restrictions. Schroder loosened the law to take effect only for companies with at least 10 employees. That might not sound much, but already exempts a large part of all german employers from dismissal restrictions.
Against these significant unemployment benefit cuts there was huge opposition and demonstrations especially in the high-unemployment east. Many members left the SPD. The labor unions, a traditional ally of the SPD turn their backs on us and actively campaigned against these reforms of the Agenda 2010.
Finally the WASG was founded.
Schroder instituted these reforms because of the widening budget deficit. But also the social insurances: health insurance, unemployment insurance and pension insurance have rising deficits.
The dispute between the new left and the left wing of the SPD and the centrists in the SPD is now a simple one. The left party and many left-wingers in the SPD are opposed to benefit cuts and instead favor raising taxes, especially on the rich, because it was also the SPD government who enacted huge tax cuts which led to reduction in the marginal income tax rate from 53% to 42% and a huge cut of the coroporation tax. Schroder hoped to stimulate the economy through that. But since he at the same time enacted these sweeping social reforms and benefit cuts and also cut spending to keep the budget deficit below 3% of GDP the stimulus effect was minimal because small and middle class earners felt like the money that they received through income tax cuts into their right pocket was right away taken out of their left pocket through health care benefit cuts, asf.
So the Left Party bascially wants to repeal the Schroder tax cuts and instate higher taxes on corporations and the rich and repeal all the social benefit cuts, something which I basically favor also.
What can the SPD do to shore up its losses? Stop being a CDU light by favoring tax cuts and benefit cuts to save the economy. Of course in order to answer the question whether tax cuts or tax hikes benefit cuts or deficit spending is the remedy to get our economy going again, one has to analyze why our growth is so low and unemployment so high.
The supply side says growth is slow, because taxes are too high and there’s too much regulation.
I don’t believe that, because inspite of our regulation and taxes, we’re the worlds biggest exporter. No one sells more products abroad than germany, so obviously we are highly competitive despite our high taxes and regulation.
But our domestic demand has been lagging now for a decade. Real wages in 2004 were actually LOWER than in 1995. Germans have less and less money in their pockets because the neoliberal economists and politicians keep hammering for wage cuts in order to get “competitive” again and bash unions for demanding wage growth in line with productivity growth. But everybody knows if wages grow slower than productivity, excess capacity is inevitable. And excess capacity leads to lower prices and lay offs and that leads to lower wages = vicious cycle. If we wanna get this economy growing again we gotta do big deficit spending and hike wages. Tax cuts are an excellent way to keep domestic demand and thus the economy expanding, IF they’re time-limited and “by far the vast majority goes to those at the bottom, instead of the top”. On top of our dismal wage growth rates Germans save twice as much as Americans do, also in part because of all the reform scare “you gotta take care of yourself-we’re cutting the welfare state”. In the 50’s and 60’s the time of the economic miracle germans saved 5% of their income, now their saving 15%. All this leads to a congestion in the money cycle, which leads to stagnation. Unless expansionary measures are taken, domestic demand will keep falling behind supply and create a recipe for continued stagnation. If we just had 3 years of growth like US in 1995-1998 our unemployment rate would come down significantly. However a large part of the east german unemployment is simply structural, because east germany, like the other former communist countries, simply did not have a competitive manufacturing sector. And when that sector was exposed to trade and foreign competition it crumbled logically. So I don’t think there’s a quick solution to that. Building a manufacturing and service economy from scratch is a tough process. -
Re:SPD/Germany
Date2005/09/21 00:58 by: SocDemGermanInternationalist, amazing analysis! May I ask, do you have a PolySci or Econ degree. I knew about the PDS-left SPD connection but not much. I hope my original comments didn't make me seem ignorant, I just wanted to cover all the bases (if that makes sense). I now know a lot more about Germany. I really appreciate your comments. The situation in Germany with the SPD seems similar to the US Democrats. They've gone to far to the right in both cases, acting like CDU and Republican lite respectively. You seem to favor an increase in taxes and less pension cuts, how does that position you within the SPD? Is the Left Party's anti-capitalism unappealing? I too am upset with the neoliberal policies that the Dem have prosued recently (i.e. Clinton) but the Democratic Party seems my only option. Most other parties to the left of it seem to extreme and unviable like Worker's World, Socialist Party (not the DSA) etc. I think for both of us the solution is to work to bring our respective parties back from the center right to the center left where it belongs. You also presented a great arguement against the privailing (il)logic that neoliberalism is the way to grow the economy, whereas in reality the social-democratic model works better and more equitably. Thanks again.
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Re:SPD/Germany
Date2005/09/25 18:03 by: GermanInternationalistThx dude,
i have none of those degrees, but i've done some extensive hobby research if you will, because the economy is THE number one issue in germany now and the neoliberal hammering for Reagan-ization is gaining significant traction in the media. Luckily not with the voters yet, but the majority of our so called "economic experts" pretty much trumpets day in, day out, that we gotta do away with our social order and welfare state if we wanna achieve any growth again.
Yes I do favor raising taxes and a repeal of the recent benefit cuts (except maybe for the tightening of the reasonability criteria). That puts me in the left-wing of our party. The current leadership opposes raising taxes and defends the trimming of the welfare state as necessary, it also is a staunch opponent of deficit spending programs.
The left-party’s approach however I think goes to far in terms of anti-business sentiment and benefit and tax increases. As much as right-wingers are prone to ignore or shrug off social injustices and inequities, left-wingers might tend to underestimate the importance of private enterprise and self-serving initiative to advance growth and prosperity.
I agree about the neoliberal policies of the dems in recent years. MM called Clinton “the best republican president, we’ve ever had”, right?
Yet I think there is only one organization for a left-winger to engage in, and that’s what we call a people’s party in contrast to small clientele parties.
The democratic party is THE left-wing people’s party in the US, which has a most diverse membership representing all societal strata and milieus. There is no substitute for convicing you fellow humans that your opinions are worth becoming implemented. If you cant even convince your own party, you’ll never convince the voters out there. People who leave left-wing people’s parties like the democratic party simply don’t want to deal with political reasoning and convincing others, but prefer a sectarian splinter group of yes men, where everyone agrees with one another in their little bubble world.
