On September 24, the Germans will head to the polls to elect a new Bundestag(the German parliament). Here are the five things you need to know about this race:
1. Angela Merkel is set to dominate once again
The reasons for Angela Merkel’s popularity are numerous, and it’s difficult to cease to be amazed by her political career. Not only is she actually a scientist with a Ph.D. in physical chemistry, she also grew up in communist East Germany (with all the disadvantages that entails) before being set to become Germany’s first female Chancellor in 2005.
However, many political commentators have pointed to the refugee crisis and Merkel’s permissive immigration policy as a reason for upset in the general public. Interestingly, while polls reportedly showed repeatedly that Germans are discontented with the way things are going in terms of the admission of asylum seekers, and are even blaming the Chancellor specifically, she is suffering little political consequences from it. Her Christian-Democrat CDU/CSU party is polling between 36 and 40 percent of the vote, which is only slightly below its result in 2013. This would set up Angela Merkel for a fourth consecutive term in Berlin.
How Merkel is so apt at sustaining her seemingly flawless political career is debatable. However, a few things can be derived when it comes to the behavior of the German electorate. This contains, for instance, the desire for political stability: multiple Chancellors have served long terms. For example, Konrad Adenauer was in office for 14 years, Helmut Schmidt served for 8 years, and Helmut Kohl for full 16 years. Merkel is now in her 12th year, with no sign of a loss of momentum. It seems almost that “Strong and Stable,” the campaign slogan of the UK’s Conservative Party which was met with little enthusiasm, applies in a grandiose way to Germany.
2. Merkel’s most important competitor is having a hard time
He was the Social Democratic Party’s new hope. Their chance of taking over in Berlin. Martin Schulz, the 62-year-old former president of the European Parliament, was the one to beat Merkel. He was a fresh face – he’d never run for parliament in Germany – and had proved to be a witty voice in the Brussels machine of power.
Back in March, the headlines were talking about the Schulz effect as the new leader convinced thousands to join the Social Democrats and seemed to be a convincing challenger to Angela Merkel, who has been leading Germany since 2005. The Social Democrats’ new leader – securing all 605 votes in the leadership election – was a far cry from those usual dull SPD bureaucrats, such as former nominee Peer Steinbrück or Vice-Chancellor Sigmar Gabriel.
The party of Merkel-opponent Martin Schulz intends on a so-called “spending offensive” to boost the economy by “encouraging” companies to invest. The party’s manifesto goes into very little detail on this proposal and provides little insight on changes regarding fiscal policy. The only insight on corporation tax is a chapter regarding tax evasion, which the SPD wants to fight more vehemently through the OECD.
Martin Schulz’s nomination gave these anxious Social Democrats hope, yet failed to deliver. The Schulz effect is hot air: the SPD is polling at its 2013 result of around 25 percent. The public often sees Schulz as too loud and arrogant: another sneery Eurocrat with an ego problem. Turns out that doesn’t sell well anymore.
3. Market liberals are back in the game
The moves of the liberal democrat Free Democratic Party are increasingly interesting. This is not only because the party has been known to be favorable towards more free markets, but also because, while polling up to 8 percent at this stage, it could become a coalition partner of Merkel’s CDU/CSU. This is becoming increasingly likely the more the SPD clashes with Merkel’s center-right over issues like gay marriage, as happened recently.
In 2013, the FDP did not even meet the 5 percent threshold necessary to enter the Bundestag, despite having consistently backed the reduction of the deficit and debt and opposed multiple market interventions.
These liberal democrats couldn’t be more different from their British counterparts. Rather than promoting themselves as a centrist force for moderate politics steeped in compromise, the German liberals shout loudly in defense of their free market ideals. The party’s leader, Christian Lindner, who is open about his membership in the German Hayek Society, delivers flamboyant speeches about freeing the market from the shackles of socialism. In 2015, the party’s congress even decided to support a renewed call for a flat tax as a fairer alternative to the abhorrent progressive tax scheme.
After all, if you have nothing to lose, you might as well be open about your philosophy. And this new unbuttoned approach seems to be working. Last week, the FDP signed a coalition agreement with the CDU in the state of North Rhine-Westfalia, after winning 12 percent of the vote in the local parliamentary election. Federally, the FDP is polling between 8 and 9 percent.
This sort of aggressive voice for liberty-leaning reforms is appealing: Angela Merkel is easily swayed by public opinion, and seeing her flip-flop back from intrusive labor laws towards tax cuts would certainly be welcome.
4. Germany sees political consequences of the rise of a new Right
The vote on September 24th is likely to see one new party entering the German parliament: the Alternative für Deutschland (Alternative for Germany) stands for a new kind of conservative politics that has been the target of much criticism in the country.
In 2012, a group of German conservatives and classical-liberal economists who had defected from Angela Merkel’s center-right and the traditional liberal-democrat party found themselves associating with independent-voter groups in order to run for office on the local level. Soon these conservatives, who were heavily critical of the European Union’s economic interventionism and especially the European common currency, found themselves alienated by these existing platforms, and in 2013 they founded the AfD.
Soon after its creation, the party began to struggle with internal disagreements about the priorities of its political message: the classical liberals were keen on developing a German brand of Euroscepticism – which, relative to the Anglo-Saxon brand, would appear less aggressive and more academic – while nativists and the religiously inspired pushed for more nationalism and social conservatism on issues like gay marriage (which remains illegal in Germany).
The AfD has taken a very worrisome turn.
In 2015, one the AfD’s most controversial high-ranking members, Björn Höcke, co-authored the Erfurter Resolution requesting a major policy shift in the party. According to this manifesto, the new focus of the AfD should be “a movement of the German people against the social experiments of the past decades (like gender-mainstreaming, multiculturalism).”
The party’s moderates, appalled by the support behind the nationalist takeover, defected from the AfD and splintered into insignificant groups.
The now-radicalized right-wing party quickly backed off of any economic liberalism. The new chairwoman, Frauke Petry, performed complete U-turns on major policies. For instance, while she had previously called the newly introduced minimum wage a product of “neo-socialism” and loudly suggested abolishing it, today the AfD insists on its existence in order to “protect workers.”
5. What the country actually needs
Regardless of the outcome, Germany needs to continue to innovate. If we look at debt to GDP and the government’s balance sheet, we might be led to believe that Berlin isn’t doing all that badly. However, the tax collector’s overperformance is easily explained by the German economy, which is outperforming all of its continental competitors.
The next step for Germany is to get back to respecting the convergence criteria of the 1992 Maastricht Treaty, bringing public debt to GDP from 68 percent to 60, and securing a long-term strategy to rid the country of its debt. It is crucial that the Bundesrepublik chooses the right role models when it comes to its governmental philosophy. A consistent approach to free market economics through deep-rooting deregulation could make an immense difference in the age of Brexit. With some financial institutions announcing that they are intending to move, Frankfurt, Germany’s financial hub, cannot allow itself to be burdened by more regulations or by socialist proposals like the financial transaction tax.
The question shouldn’t be who will govern Germany for the next four years, but who will least get in the way of hard-working Germans who want to improve their living conditions.
This article was first published by the Foundation for Economic Education.
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