Mrs. Merkel's CDU/CSU Trounces Rivals
Political scientists in Germany call it the '' – as German news magazine Der Spiegel writes:
“Germans like their quiet. Should a couple raise their voices such that they can be heard in the courtyard of a city apartment building, it is a sure bet that before long, the phrase "Ruhe da!" ("Quiet!") will come ringing out of an open window. Even in big metropolises like Berlin, most flat seekers yearn for silence and tranquility, far removed from the chaotic noise emanating from the busy streets.
Angela Merkel, more than any other politician on the campaign trail this year, has understood her flock's desire for calm.
The chancellor has even gone so far as to directly appeal to the electorate's longing for quiet. As Reuters correspondent Alexandra Hudson noted in a recent article, the election manifesto for Merkel's party includes the assertion: "One in two Germans feels troubled by noise" and suggests that her party would seek to improve the situation.
[…] a chancellor who prefers to wait before making decisions and a leader who is sometimes difficult to pin down. It has also helped propel her popularity to dizzying heights. Her followers have taken to affectionately calling her "Angie." The German press has dubbed her "Mutti," the word children in Germany use to address their mothers.”
Not even the Economist managed to derail Merkel with its recent cover promising 'One Merkel Rule' for all of Europe:
In spite of its well-earned and powerful reputation as a reliable contrary indicator, not even the Economist was able to derail Mrs. Merkel with this cover story
Angela Merkel delivered the biggest victory for her party since Helmuth Kohl's post-reunification heyday, and only barely missed attaining an absolute majority of parliamentary seats (although her party only gathered 42% of the vote, up a respectable 8.2% from the last election according to initial estimates, parties that fail to take the 5% hurdle won't get any seats).
And herein lies the problem. You may be wondering why we are claiming that 'socialism was the real winner', given that a nominally conservative party clearly won the election. We explain the reason below.
Sole Voice in Favor of Free Market Capitalism Gone
It would be an exaggeration to equate the FDP with classical liberalism, but as far as German politics goes, it is the party that comes closest to its ideals. It definitely was the sole advocate of free market capitalism in the German political landscape. While it has always been a small party, it was a famed 'kingmaker' through most of the post WW 2 era, managing to influence both social democratic and nominally conservative governments by entering into coalitions with them.
For the first time in the post war period, the FDP failed to garner enough votes to climb above the 5 percent hurdle mentioned above and so won't even be in opposition in parliament. In fact, the result attained by the anti-euro party AfD was slightly better than that of the FDP, which lost more than two thirds of its electoral support. Here are the initial estimates by Germany's two large public broadcasters regarding the distribution of votes:
Both the conservatives and the social democrats gain, the FDP crashes into oblivion, the AfD proves to be the biggest force in terms of new parties, but fails to cross the 5% hurdle as well – click to enlarge.
Although the socialist party gained about 3%, leftist-authoritarian movements overall have lost some support, as the Greens and 'Die Linke' ('the Left', the 'democratic' successor party of the former communist East German SED) have together lost more than the SPD gained.
And yet, the new parliament will now consist only of leftists parties and the nominally conservative bloc. We say 'nominally', because Germany's conservatives are really a left-wing party too, at least from our perspective. What does one call a party that recently came out in favor of minimum wages in spite of their well-known destructive economic effects? There is therefore a very good chance that a grand coalition with the SPD will be the result of this election outcome, although the latter is allegedly extremely reluctant. It is rightly fearing that as the junior partner in such a coalition, it will lose support (the FDP's fate is a stark warning in this respect). On the other hand, the SPD has always ruled out a coalition with 'Die Linke', since that would likely prove even more poisonous for it, and it does crave power. The main alternative to a grand coalition will be new elections.
The Historic Role of Free Market Capitalism in Germany
It should be noted though that not only has the FDP hit the skids, but the parties of the left have together still garnered a larger percentage of the vote than the conservatives. So what does Germany's relationship with the free market actually consist of? The best analysis is still the one written by the late Professor Hans Sennholz in the 1960's:
“[…]it may come as a shock to libertarians to learn that the "miracle" of Germany's revival was not the result of a conscious rejection of socialism, but was rather an accident of political and social conditions. There is evidence, too, that the current market economy of Germany is in grave danger of being destroyed by the very people who built it up.
In 1947, when millions of Germans were starving and living in incredible poverty, and when the full threat of the Morgenthau Plan was upon it, there certainly was no general demand for the free market. Rather, the popular majority was for what its principal advocate, a socialist party leader by the name of Dr. Agartz, called the "new kind of socialism." This called for the ownership and operation of the tools of production by workers under the supervision of government. It amounted to politically controlled producers' cooperatives.
But economic control is not possible without political power, and the "new kind of socialism" had to be deferred. Throughout the postwar period the German political parties concentrated on attacking the occupation powers for the severity of their controls. To libertarians in this country the German call for freedom sounded like a demand for a free market. This was not so. What most Germans meant by freedom was liberation from foreign occupation and, above all, freedom to impose their own controls.”
As Professor Sennholz noted, resistance against the occupation automatically meant resistance to American New Deal policies and British socialism. So the extent to which a free market was adopted was for one thing out of sheer necessity – there was 'nothing left for the socialists to redistribute or ration' after the war – and for another due to resistance to the political philosophy embodied by the occupying forces, which at the time was thoroughly socialistic. As a result of the success of the market economy, Sennholz noted that classical liberal thought finally managed to get a little bit of recognition in Germany. We wonder what he would have said about today's Germany?
“Professor Wilhelm Röpke of Geneva became the intellectual spokesman of the new era. It was mainly through him that the German public became aware of the fundamental changes of policy. His interpretation of the economic comeback as the inevitable outcome of capitalist policies found increasing acceptance. Today there exists a German school of political and economic thought for freedom and free enterprise which has its roots in the writings of Professors Röpke, Eucken and others.”
However, readers will surely be surprised to learn how Professor Sennholz characterized Ludwig Erhard, the father of the so-called 'social market economy', who is today widely regarded as a paragon of the free market. As Sennholz wrote:
“Secretary of Economy, Ludwig Erhard, the world famous inventor of "Professor Erhard's social market economy," is about to introduce a new economic bill of his liking, one that would give him power to regulate prices wherever he deems them "unreasonable." The bill is to replace a similar provision in the German Police Order which the Bundestag recently revoked against the ardent opposition of Professor Erhard. This brilliant politician, who certainly is no champion of capitalism, stubbornly clings to foreign exchange control, the most formidable means of government control over the economy.
It appears logical to Professor Erhard to threaten businessmen with severe penalties for "unjustified" price increases and simultaneously to raise the price of agricultural products by way of government restrictions on imports.”
In short, even the conservative politician whom most Germans would today regard as a supporter of the free market par excellence was in reality 'no champion of capitalism'. The same holds for the conservative party as a whole, especially its modern-day incarnation.
This is why we say, the real winner of Germany's election is socialism. We can expect the EU 'centralization and harmonization' project to be pursued with fresh vigor, and both the regimentation of the economy and taxation are set to continue to increase across Europe – presumably until there is once again 'nothing left to redistribute or ration'.
Chart by: Der Spiegel
You may have noticed that our so-called “semiannual” funding drive, which started sometime in the summer if memory serves, has seamlessly segued into the winter. In fact, the year is almost over! We assure you this is not merely evidence of our chutzpa; rather, it is indicative of the fact that ad income still needs to be supplemented in order to support upkeep of the site. Naturally, the traditional benefits that can be spontaneously triggered by donations to this site remain operative regardless of the season - ranging from a boost to general well-being/happiness (inter alia featuring improved sleep & appetite), children including you in their songs, up to the likely allotment of privileges in the afterlife, etc., etc., but the Christmas season is probably an especially propitious time to cross our palms with silver. A special thank you to all readers who have already chipped in, your generosity is greatly appreciated. Regardless of that, we are honored by everybody's readership and hope we have managed to add a little value to your life.
Bitcoin address: 1DRkVzUmkGaz9xAP81us86zzxh5VMEhNke
One Response to “Germany Elects Mama – The Real Winner is Socialism”
Most read in the last 20 days:
- Gold Sector Update – What Stance is Appropriate?
The Technical Picture - a Comparison of Antecedents We wanted to post an update to our late December post on the gold sector for some time now (see “Gold – Ready to Spring Another Surprise?” for the details). Perhaps it was a good thing that some time has passed, as the current juncture seems particularly interesting. We received quite a few mails from friends and readers recently, expressing concern about the inability of gold stocks to lead, or even confirm strength in gold of...
- Don’t Blame Trump When the World Ends
Alien Economics There was, indeed, a time when clear thinking and lucid communication via the written word were held in high regard. As far as we can tell, this wonderful epoch concluded in 1936. Everything since has been tortured with varying degrees of gobbledygook. One should probably not be overly surprised that the abominable statist rag Time Magazine is fulsomely praising Keynes' nigh unreadable tome. We too suspect that this book has actually lowered the planet-wide IQ –...
- Incrementum Advisory Board Meeting, Q1 2017 and Some Additional Reflections
Looming Currency and Liquidity Problems The quarterly meeting of the Incrementum Advisory Board was held on January 11, approximately one month ago. A download link to a PDF document containing the full transcript including charts an be found at the end of this post. As always, a broad range of topics was discussed; although some time has passed since the meeting, all these issues remain relevant. Our comments below are taking developments that have taken place since then into...
- What is the Best Time to Buy Stocks?
Chasing Entry Points Something similar to the following has probably happened to you at some point: you want to buy a stock on a certain day and in order to time your entry, you start watching how it trades. Alas, the price rises and rises, and your patience begins to wear thin. Shouldn't a correction set in soon and provide you with a more favorable buying opportunity? Apple-Spotting – a five minute intraday chart showing the action in AAPL on February 1, 2017 - an...
- Trump and the Draining of the Swamp
Swamp Critters BALTIMORE – The Dow is back above the 20,000-point mark. Federal debt, as officially tallied, is up to nearly $20 trillion. The two go together, egging each other on. The Dow is up 20 times since 1980. So is the U.S. national debt. Debt feeds the stock market and the swamp. What’s not up so much is real output, as measured by GDP. It’s up only 6.4 times over the same period. Debt and asset prices have been rising three times as fast as GDP for 36 years! Best...
- Gold and Silver Divergence – Precious Metals Supply and Demand
Gold and Silver Divergence – Precious Metals Supply and Demand Last week, the prices of the metals went up, with the gold price rising every day and the silver price stalling out after rising 42 cents on Tuesday. The gold-silver ratio went up a bit this week, an unusual occurrence when prices are rising. Everyone knows that the price of silver is supposed to outperform — the way Pavlov’s Dogs know that food comes after the bell. Speculators usually make it...
- When Trumponomics Meets Abenomics
Thirty Year Retread What will President Trump and Japanese Prime Minister Shinzo Abe talk about when they meet later today? Will they gab about what fishing holes the big belly bass are biting at? Will they share insider secrets on what watering holes are serving up the stiffest drinks? [ed. note: when we edited this article for Acting Man, the meeting was already underway] Japan's prime minister Shinzo Abe, a dyed-in-the-wool Keynesian and militarist, meets America's...
- The Great Wailing
Regret and Suffering BALTIMORE – Victoribus spolia... So far, the most satisfying thing about the Trump win has been the howls and whines coming from the establishment. Each appointment – some good, some bad from our perspective – has brought forth such heavy lamentations. Oh no! Alaric the Visigoth is here! Hide the women and children! And don't forget the vestal virgins, if you can find any... You’d think Washington had been invaded by Goths, now...
- Receive a One Percent Gift When Buying or Selling a Home
How to Save Money When Buying or Make More When Selling a Home In your professional capacity and perhaps also in your private life, you may be closely involved with financial and commodity markets. Trading in stocks, bonds or futures is part of your daily routine. Occasionally you probably have to deal with real estate as well though – if you e.g. want to purchase an apartment or a house, or if own a home you wish to sell. The people who took this photograph probably want to...
- Silver Futures Market Assistance – Precious Metals Supply and Demand
Silver Is Pushed Up Again This week, the prices of the metals moved up on Monday. Then the gold price went sideways for the rest of the week, but the silver price jumped on Friday. Taking off for real or not? Photo credit: NASA Is this the rocket ship to $50? Will Trump’s stimulus plan push up the price of silver? Or just push silver speculators to push up the price, at their own expense, again? This will again be a brief Report this week, as we are busy...
- Unleashing Wall Street
To Unleash or Not to Unleash, That is the Question... LOVINGSTON, VIRGINIA – Corporate earnings have been going down for nearly three years. They are now about 10% below the level set in the late summer of 2014. Why should stocks be so expensive? Example of something that one should better not unleash. The probability that a win-lose proposition will develop upon meeting it seems high. It wins, because it gets to eat... Image credit: Urs Hagen Oh,...
- Boondoggles for the Swamp Critters
Monster or Mozart? BALTIMORE – Investors seem to be holding their breath, like a man hiding a cigarette from his wife. It’s just a feeling, and it’s not the first time we’ve had it... but it feels as though it wouldn’t take much to send them all running. Actually, they're not going anywhere yet... but there is a lot of overconfidence by those who were very worried when prices were a lot better - click to enlarge. Meanwhile... we’re coming to a deep...