Daniel Hamilton: So we have a new CDU Chairman. Will a CDU-Green coalition follow after Germany’s federal election?

18 Jan

Daniel Hamilton works in international business consultancy and was a Conservative candidate at the 2017 General Election.

In September, Angela Merkel will step down as German Chancellor after sixteen years in office. Regardless of how one may judge her record, Merkel’s influence over the substance of European governance has been immense; from stamping her mark on EU fiscal rules to her open-doors policy during the migrant crisis to her final ascent for the UK’s post-Brexit deal.

The cast of names that have come and gone during her term in office – Tony Blair, David Cameron, Theresa May, Jacques Chirac, Francois Hollande, Nicolas Sarkozy, George W.Bush, Barack Obama and Donald Trump– is without modern compare.

Partly because of constitutional constraints and partly due to post-war caution and conservatism, stability is a feature of German politics.  Since 1982, Germany has had only three Chancellors.  In the same period, the UK has had seven Prime Ministers.  Italy has had twenty-two.

The Große Koalition between the Christian Democrat Union (CDU) and Social Democrats (SPD) has now largely served in office since 2005.  This has effectively resulted in the two main parties adopting a similar, centrist persona, with disagreements tending to focus on tweaks and cadences of policies rather than fundamentals.

This has arguably hurt the SPD most, whose traditional platform, once grounded in patriotic labour unions and cosy accommodations with big businesses, has fractured as Germany has become more ethnically diverse, more start-up friendly and more ecologist in its views.  The party won 41 per cent of the vote in 1998, yet polls around 15 per cent today.

The CDU has its own problems.  Distinct from what “voting Merkel” meant – centrism, no surprises and the social market, with a strong nod to environmentalism – the CDU’s platform has a rather hollow feel.  It is accepted, for sure, that the party stands for the defence of Germany’s social market economy and a punchy approach to German influence at an EU level, yet its pro-immigration stances and seeming intransigence on tax cuts and deregulation have separately irked working class voters and entrepreneurs.

With the CDU and SPD unable to define their appeal effectively, an opportunity exists for other parties to gain ground.

While the hard-left Die Linke and market-liberal Free Democrats (FDP) are polling well enough to have a respectable presence in the next convocation of the Budestag, it would be wise to follow the public remarks of Die Grünen, Germany’s Green Party.

Overseas perceptions of the Greens are somewhat outdated and tend to revolve around images of the “68ers” – a radical student movement founded on ending the military draft, opposition to the Vietnam war and the modernisation of a stodgy political system still inhabited by the wartime generation.

Their march to the mainstream has, though, been a long one.

The decision in 1998 of Joschka Fischer, a veteran 68er and the country’s Foreign Minister during the Green coalition with the SPD, to advocate NATO airstrikes on Yugoslavia over the Kosovo crisis upended the party’s pacifism-at-all-costs agenda, and led Germany into an overseas conflict for the first time since World War Two.  A Green Minister-President, Winfried Kretschmann, has governed the manufacturing-dominated state of Baden-Württemberg in coalition with the CDU for more than a decade; implementing a pro-business, R&D-friendly agenda that feels more modern than the SPD’s staider rhetoric.

The issue of immigration is as polarising or more so an issue in Germany as in other European countries, yet polling suggests that recent-naturalised Germans and the descendents of the Gastarbeiter generation which moved to the country from Turkey and Yugoslavia in the 60s and 70s lean strongly towards the Greens.  This offers the party another electoral advantage over the SPD.

There is much to dislike – or even, given the party’s more extreme factions, fear – in the Green Party’s platform, but the fact remains that the party appears to be on the verge of stitching together arguably the most electorally-appealing platform in German politics today.

With the CDU on course to win roughly a third of the vote when September’s elections come, the Greens on upward or around 20 per cent of the vote and all other blocks trailing far behind, the prospect of a CDU-Green, Schwarz-Grüne coalition is a distinct possibility.

The election of Armin Laschet as the new Chairman of the CDU on Saturday morning would, on the face of it, appear to represent a “safe” choice for the party.  Coverage of his victory has focussed on his jolly nature, centrist political brand and stewardship of North Rhine-Westphalia, one of Germany’s most important manufacturing hubs.

A debate will take place in Germany during the coming months as to whether Laschet will be the party candidate for Chancellor (he faces a potential contest including the guttural Bavarian Governor, Markus Söder, and the liberal Health Minister, Jens Spahn), yet this is a battle he is likely to win.  The fact he was able to see off the socially-conservative, immigration-sceptic Friedrich Merz and media-friendly Norbert Röttgen to win the top job suggests the party is looking for stability, not revolution.

There is little debate about whether the CDU and its Bavarian affiliate, the Christian Social Union, will win the plurality of votes in September.  With Laschet as their candidate, a Große Koalition with either the rump remainder of the SPD or resurgent Greens would appear to be both mathematically and politically possible.

CDU/CSU voters have proven to be a loyal block, yet their combined 45 per cent vote share in 2013 is a distant memory.  They now poll 35 per cent.  The price of such a fall in support is that no clear path exists for Laschet to pursue a coalition with the CDU’s traditional partners, the liberal FDP.  His only options are on the left.

Given the recent momentum of the Greens, it is not beyond the realms of possibility they could further erode support from the SPD and Die Linke, leading to an electoral percentage showing in the high twenties.  In this scenario, the pressure from both Green insiders and those on the left, battered by sixteen years of losses, for a leftist GroKo may be insatiable.  The price of such a coalition, particularly for Die Linke, would likely be the shelving of Green moderation in favour of a distinctively leftist agenda.

The implications of such a centre-left coalition would be profound – for both the UK and EU.

Notwithstanding recent Coronavirus-related speeding, a coalition of this kind would see the abandonment of the ‘Schwarze Null’ fiscal policy that mandates a balanced budget domestically and higher taxes on personal incomes and business.

For a post-Brexit UK, seeking to steer a path as a low-tax, regulation-light economy, a malcontent leftist coalition in Germany would likely serve as a Trojan Horse in the European Council for policies designed to disadvantage and undermine UK interests.

For all the criticisms of Laschet’s unambitious centrism and the gap that exists between British conservatism and the CDU’s social market economy orthodoxies, the preferred outcome for the UK is clear.

Rainer Zitelmann: Wealth taxes would not be popular, or Conservative. Sunak must remember this tomorrow.

7 Jul

Dr. Rainer Zitelmann is a historian and sociologist. The data cited in this article is analysed in detail in his recently published book The Rich in Public Opinion

Over the past couple of weeks, UK Treasury officials have been contacting private bankers to sound them out on how the country’s richest citizens might help pay for the huge cost of Coronavirus relief packages. Ahead of Rishi Sunak’s big speech tomorrow, this should be worrying for many.

Austerity might be off the menu for the state, but it’s definitely the dish that is being prepared by civil servants to be served to everyone else.

Labour are getting in on the act too with Annalise Dodds, the Shadow Chancellor, stepping onto the Sunday shows to explain with zero detail that the burden of higher taxation ought to fall on those with the “broadest shoulders” and that taxes needed to reflect the “increase in income and wealth inequality over recent years.” She’d called for wealth taxes in the preceding week during a speech at the IFS, again with scant information on what this would actually look like.

Now, leaving aside the fact that a lot of income and wealth inequality is mostly a proxy for geographic inequality and restrictions on growth of jobs and homes outside of major centres of population, we should question what brings together the Shadow Chancellor and Civil Service. Especially when it looks a lot like trying to confiscate wealth and punish those that have worked hard to get on in life.

This isn’t Conservative. The Civil Service should be reminded of that fact, and the party should remember the benefit of providing some clear blue water between the reds in Labour and the Tories in power. Rishi Sunak on Wednesday should signal he’s going in quite the different direction to keep Conservatives and the country on side.

In fact the party of a low-tax dynamic free market that in December ruled out an increase in the rates of income tax, National Insurance or VAT – should also remember voters aren’t keen on the state coming for wealth either.

In a poll conducted in 2018 by Ipsos Mori across the UK, France and Germany, voters were asked their attitudes to the rich and to tax asks of them. They were presented with two statements:

The first was: The taxes on the rich should be high but not excessively high because they have generally worked hard to earn their wealth, and the state should not take too much away from them.

Over the UK as a whole, 29 per cent agreed. Of Labour voters, 20 per cent agreed. Of Conservative voters, 46 per cent agreed.

The second: The rich should not only pay high taxes, but they should pay very high taxes. In this way, the state can ensure that the gap between the rich and the poor does not become too great.

Of the UK population as a whole, 38 per cent agree. Of Labour voters, 53 per cent agreed. Of Conservative voters, 21 per cent agreed.

What the survey was designed to reveal is the proportion of the population in a given country that envies the rich (“social enviers”) and compared this with the proportion who do not (“non-enviers”).

While there is a section of the population in Great Britain that envies the rich, the number of enviers in Great Britain is much smaller than in the other countries. Much lower in fact.

The survey data was used to calculate a Social Envy Coefficient – the higher the coefficient, the higher the proportion of social envy.

The coefficient for France is 1.21, which means there are considerably more social enviers in France than non-enviers. Germany’s coefficient is 0.97, which means there is an even balance between social enviers and non-enviers. In the United States, the coefficient is significantly lower at 0.42. But the lowest coefficient is for the UK, at 0.37.

In other words, a clear majority of the British population are not envious of the rich.

There are significant differences between what Conservative voters and Labour voters think about the rich. Conservative voters say that society as a whole benefits from the existence of rich people (e.g. as entrepreneurs who create new products) but just a fifth of Labour voters think the same.

Despite a platform of envy and higher taxes on offer from the most far-left Labour leader in history, the British people decided to plump for the man opposed to them. Instead of thinking of the rich as a cash cow, when asked to describe the rich Conservative voters plucked for the following terms: industrious, imaginative, visionary, bold, intelligent, and ruthless.

Five out of six being positive traits ain’t bad. Labour voters under Corbyn plucked for the alternative, rich people to them were: materialistic, industrious too, ruthless, bold, self-centred, and greedy.

Starmer has done a good job of modernising his party, but he needs to win over Tory voters that thought of the rich as imaginative industrialists, not just pander to a coalition that thinks of them as ruthless greedy materialists that has failed twice to put the party into power.

Like throughout the pandemic, the UK is not the first to encounter the issues at play. When a few years ago the then socialist president François Hollande introduced a supertax on France’s highest earners, many wealthy people left France.

The tax was subsequently abolished. And France’s neighbour Germany found that the bureaucracy associated with levying a wealth tax is simply not worth it. As a result, Germany has waived its wealth tax since 1997.

Treasury officials and Tory strategists should realise: Britain is a low-envy country; a pro-growth country, and one that knows that imposing more envy taxes on wealthier people simply will not work.

Leave this idea to the Labour left and start pushing for growth by removing, rather than adding to, the burden of the state on businesses and families.