The first red in the trio represents the Social Democrats. Founded 158 years ago, the SPD is Germany’s oldest political party and was until recently, like its center-left cousins in other European countries, considered exhausted and moribund. But then it nominated Olaf Scholz, Germany’s finance minister, as its candidate to succeed Angela Merkel as chancellor. Bone-dry and uninspiring, Scholz nonetheless avoided mistakes even as his rivals in the other parties kept blundering. Over the summer, Germans decided that he’s the least bad option.
The Greens in the red-green-red palette were founded in 1980 and came out of the anti-nuclear and counterculture movements of the 1970s. These days, however, their hirsute and hippie founding generation has long since made way for chic and woke cosmopolitans such as Annalena Baerbock, the candidate. But she lacks government experience and botched her campaign start.
And then there’s the second and darker hue of red. It stands for The Left, which descends largely from the communist regime that ruled East Germany. Today’s party remains anti-capitalist, anti-American and anti-NATO but pro-Russian. Along with the Alternative for Germany, its populist counterpart on the far right, The Left represents the troglodyte wing in German politics.
Where the left has a point
The three leftist parties make the most sense in wanting to soften or even scrap Germany’s “debt brake,” a constitutional amendment that has since 2009 made government borrowing all but illegal in normal times, thereby crimping public investment. Owing to the pandemic, the law has been suspended, but the conservatives want it back as soon as possible. At a time when the government can borrow at negligible or even negative interest rates and must revive the economy, the lefties have the better arguments here.
With other signature policies, the left is at a minimum not wrong. One such is the minimum wage. Germany only introduced it in 2015, amid warnings from conservatives who predicted, despite academic research to the contrary, that it would cause mass unemployment. That hasn’t happened. The minimum is currently 9.60 euros ($11.34) per hour, which the SPD and Greens want to raise to 12 euros, and The Left to 13. At some point, they really will start pricing some people out of their jobs, but red-green-red has enough wiggle room.
I could also find kind words for a few other left-leaning aspirations, such as the distant goal of merging Germany’s private and public health insurance systems. But there are bigger problems. It’s the left’s overall worldview and governing philosophy that could cause inestimable damage to Germany, Europe and the world.
Where the left is utterly wrong
If H.L. Mencken defined Puritanism as “the haunting fear that someone, somewhere, may be happy,” German leftism is the dread that someone, somewhere, may have money. You can hear it on the campaign: from politicians on The Left especially, but also from the SPD and the Greens. It’s as though the biggest challenge of our time weren’t climate change, digital disruption, China or Russia, but the intolerable existence of prosperity, however earned.
This shows up most obviously in tax policy. At the moderate end — as embodied by Scholz, notably — a left-leaning reform sounds reasonable. He would tax people at the bottom of the income ladder less, simplify the returns for those in the middle, and then slightly raise the rates — already quite progressive in Germany — for those at the top. All that, I support.
But the cadres just behind the moderates are salivating for something different — and they include power players such as Saskia Esken and Norbert Walter-Borjans, the SPD’s firebrand party bosses. They want to reintroduce a wealth tax that was suspended in the 1990s because Germany’s highest court ruled it unconstitutional.
Even if only a minority would owe this tax, lots of Germans would drown year after year in paperwork required to value their assets. Since a huge share of German wealth takes the form of capital in family-owned businesses, some owners would even have to sell parts of their firms to pay the tax, in effect disinvesting and killing jobs. If, however, the government exempted some kinds of wealth, it would run into the same constitutional problems it had in the 1990s.
Overall, a wealth tax would probably raise little more than it costs to administer, while sending a disastrous signal to investors at home and abroad. Why would somebody like Elon Musk, who’s already frustrated with Germany’s red tape, decide to build another Tesla factory in the country, if the talented people he needs to hire from around the world would have to struggle with onerous bureaucratic requirements and tax returns?
Or consider entrepreneurs like Ugur Sahin and Ozlem Tureci. Germans born to Turkish immigrants, as well as husband and wife, they founded BioNTech SE to pioneer the mRNA technology that now powers vaccines against Covid-19 and could one day defeat cancer. In the past year, they’ve saved countless lives across the world and may have launched a renaissance of innovation in Germany. They’re paragons of upward mobility. They’re heroes.
Sudden and unexpected success has also made them extremely wealthy on paper. But they weren’t always rich. For decades, they patiently labored in their labs, struggling to raise the capital they needed to achieve their breakthroughs. In a revealing moment the other day, a German talk-show host asked Janine Wissler, a leader of The Left, why she wants to tax away Sahin’s and Tureci’s’ riches. Wissler didn’t know how to answer. This real-life example didn’t match her Marxist worldview of the rich as exploiting fat cats. Panicking, she retreated to her talking points.
The SPD and Greens are less extreme, but all the left parties fail to appreciate entrepreneurial risk-taking, grit and courage, and also to understand the ways venture capital, innovation and rewards work together. These attitudes explain why Germany is the worst laggard in digital innovation among the G7 economies except for Japan, and the worst in Europe but for Albania.
So it goes in all areas of economic policy. In many German metropolises, rents have been soaring because more people want to move there, but bureaucracy — often erected by leftist parties — has slowed the supply of new housing. So the red-green-red government of Berlin waged a populist campaign to cap and lower rents for most apartments in the city. The constitutional court struck that law down, but the three parties now want to pass rent controls at the national level.
The pattern is the same: Leftists don’t recognize rising rents as a market imbalance between demand and supply that should be met with more supply, encouraged by the prospect of good returns. Instead, they conjecture a class war between exploited tenants and rapacious landlords who must be punished. To paraphrase a famous economist, the resulting rent controls may turn out to be the most efficient technique presently known to destroy a country — except for bombing.
This leftist disdain for market economics may also hobble their policies against the biggest challenge of all, climate change. All mainstream parties in Germany see the threat and want to decarbonize the economy. But the conservatives and liberals want to rely mainly on a market mechanism, namely a high and steeply rising carbon price that would send a signal to every actor in the economy to change behavior, innovate and pollute less.
Many on the left, by contrast, emphasize direct bans of some activities and technologies — short-haul flights, say, or combustion engines — and government subsidies for others. In effect, they’re offering central planning through the back door. They also yearn for new bureaucracies. One of Baerbock’s campaign ideas was a new super-ministry with environmental veto powers over other cabinet members. It’s tempting to reply: Yes, Minister.
Leftist ideology also tinges the parties’ views on foreign and defense policy, which should be the biggest concern to Germany’s allies. Since Konrad Adenauer, West Germany’s first postwar chancellor, the conservatives have been associated with “Westbindung,” the anchoring of Germany in a geopolitical West, led by the U.S. through NATO and other institutions. By contrast, the left parties have roots in German anti-Americanism and anti-militarism.
As ever, the most extreme in this regard is The Left, which wants NATO to be dissolved and replaced by a nebulous new “security system” that includes — wait for it — Russia. It opposes all missions of German soldiers abroad, no matter the reason. It wants to take even more money away from Germany’s already underfunded army, in effect demilitarizing the country.
There are big differences in this regard between The Left and the two other parties. The Greens have recently found their moral and geopolitical compass and are paying homage to the transatlantic alliance while calling out Russia and China as strategic threats. Nonetheless, even Baerbock does not accept NATO’s stated goal, agreed by all allies, that members including Germany should spend at least 2% of GDP on their armies.
A red-green-red government of Germany could therefore turn into a disaster — for the economy as for security and the Western alliance. For years, European and North American partners have been demanding that Germany assume more international responsibility and leadership. Under an all-left government, it might instead become an unreliable ally.
How, then, could anybody consider this coalition a serious option? I’m sure that Scholz, the likely chancellor, doesn’t. But he can’t say so, and also may not be able to avert this outcome during the messy negotiations to follow. Unlike the candidates of the Greens and conservatives, he doesn’t lead his own party. And the people who do — Esken and Walter-Borjans — are keeping a door open for The Left.
The better way
The better option is a centrist coalition between the Social Democrats, the Greens and the pro-business and pro-market Free Democrats. In the German palette, this makes the pattern red-green-yellow, which is why it’s called a traffic light. The metaphor fits, because it might prevent some terrible accidents.
The Social Democrats and Greens would be so strong in this coalition that they could still push through many of their soft-left ideas. But the presence of the anti-tax, pro-capitalist and Atlanticist Free Democrats would prevent the leftist excesses I’ve described.
Scholz, Baerbock and the other center-left leaders should acknowledge that this summer’s surprising shift in the polls has nothing to with a sudden yearning by the German population to try socialism. It came about only because the conservatives, exhausted after 16 years under Merkel, picked a weak candidate.
Germany does not want to careen left. It just wants to hand the reins to somebody safe, stable and preferably boring — someone not unlike Merkel, in short. That seems to be Scholz. If so, his first test as leader will be to keep troglodytes out of Germany’s government.
This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.
Andreas Kluth is a columnist for Bloomberg Opinion. He was previously editor in chief of Handelsblatt Global and a writer for the Economist. He’s the author of “Hannibal and Me.”
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