Tuesday, November 19, 2013

Lowest Common Denominator

Germany still does not have a new government. The talks between Merkel's CDU/CSU Union and the social democrat SPD are stalling. In fact, the only real agreement seems to be on a a quota for women on corporate boards. But, the discussions about a minimum wage (the SPD wants €8.50);  mothers' pension (for mothers of children born before 1992); or the toll for foreigners on the Autobahn that the CSU wants are going nowhere. This weekend the CSU leader Horst Seehofer hinted at new election as an option. Only two things seem certain: this will be the longest time Germany has ever been without a new government; and the next government will likely be one based on the lowest common denominator.

There was some hope that the SPD would bring a change to the European policy of Merkel and this is one of the areas where the parties already seem to be in at least a general agreement:
  • There will be a little less austerity
  • Euro-bonds are not an option
The Bavarian CSU is additionally in favor of giving "countries which are unable to fulfil the Maastricht criteria" the "opportunity to temporarily leave the eurozone". Neither the CDU nor the SPD support the plan. But, as can be seen the likely policy for the next four years will be more a little less of the same in Europe.

This lack of vision is something that affects all areas of the discussions. For example, there is a general agreement that something needs to change in our renewable energy law, but other than reducing electricity taxes and the number of companies exempted there are no suggestions, there is no plan as to what they want the energy mix to be in four years and how to get there without the unintended consequences which have been a feature of the last ten years of attempted energy transition.

Instead of a vision, we get every single party trying to push through their core election promises. For the SPD that is the minimum wage and life achievement pensions; for the CSU their freaking stupid toll; and for the CDU the mothers' pensions . Additionally, since taxes cannot go up without slashing spending somewhere (expansionary policy seems very unlikely), many plans seem to involve increasing social insurance contributions or taking money out of the associated funds. Something that has already lead to a joint(!) letter of union, social insurance and some employers' officials (the last in the function as social insurance controllers) denouncing those plans.

In fact, the only person with a plan was the current Minister of the Interior Friedrich, who was in favor of massively increasing surveillance. But, his vision only lasted for a few overs after it was published.

It is not even sure that the compromise reflecting the lowest common denominator will be accepted in the end, since the SPD opted to let the party base decide. So, there is a possibility that after the talks are done it is back to square one.That is still an unlikely scenario, though - as are new elections or the possibility of Merkel forming a coalition with the Greens - still the longer this drags on and the less results it yields in the end the more plausible these become. Currently the plan is to re-elect Merkel as Chacellor.

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