Heiner Flassbeck – Germany: Political Amateurs and the Intelligentsia

We all knew that German politicians from Merkel’s Union and the Social Democrats could walk the Zombie Walk, but could they talk the Zombie Talk? Of course they can, and did, explains Heiner Flassbeck.

Heiner Flassbeck is an economist, as well as publisher and editor of  “flassbeck economics international

Originally posted in German at flassbeck economics international

Translated and edited by BRAVE NEW EUROPE

Complaining about amateur players in politics is easy. Doing something about it would be the job of all those who have been trained and rewarded for their intelligent contributions. But they are either too precious, too distracted or too ideologically biased to criticise politics.

The SPD will decide next week who will lead the party in the future after its predecessors, Andrea Nahles and Martin Schulz, who failed in every respect. Olaf Scholz, who with his double partner was able to win the nationwide vote among the party members, is likely to win. After all, he was able to win about 10 percent for himself (with a turnout of 50 percent).

Anyone who wants to know more about Olaf Scholz should read the speech he gave a few days ago during the budget debate in the Bundestag (to be found here). It was probably the worst speech ever given by a finance minister on such an occasion. He neither mentioned that Germany was in recession, nor that Europe (for which he is directly responsible within the government) is still in the most difficult crisis imaginable. For Olaf Scholz simply ignores the central question for the finance minister: whether the development of interest rates on German government bonds (again in negative territory this week) has anything to do with the federal government’s debt policy.

In the CDU, the chairwoman elected a year ago at the party conference has just made it through the ranks again with a kind of vote of confidence. However, the speech with which she tried to convince the party convention was so unimaginably banal (to be found here) that one wonders in view of the frequent applause whether there is still a critical mass of thinking people in the CDU at all. I don’t want to get too close to anyone, but the 80 lawyers in the Bundestag faction mentioned by AKK are obviously a huge burden.

But Angela Merkel herself put a finishing touch to the confusion. First she distinguished herself in the budget debate with the observation that one cannot “see any good in investments when they just cause debts” and then – in a threefold mental somersault – come to the only ingenious justification for this sentence. “If one is already in debt in times of low interest rates,” said the Chancellor, “one does not even know what one should do in times of normal interest rates, for instance more debt?” You have to listen to this (only a few seconds long) sequence of a Federal Chancellor acting in full flight (here) in order to really understand what is wrong in this state and in Europe. The applause from the plenary should also be consciously noted and appreciated.

The intellectual decline of politics …

In the media and in science such a mental aberration is no longer even noticed, because one is not aware of the consequences. Most of our political-economic debates simply suffer from the fact that many participants feel themselves to be pure intellectuals and have never tried to get involved in politics and try to change things for the better on the ground (in Berlin and Brussels).

One has to imagine very concrete policy in such a way that at the next European Council the Chancellor throws this sentence – which she obviously finds incredibly good and important – into the European arena with the same fervour as in the Bundestag. Almost all the other heads of state will be amazed and impressed by this crystal-clear economic analysis and the nod their heads in approval. Ursula von der Leyen’s officials will certainly have been informed in advance of the Chancellor’s findings by the officials in the Chancellery and will have recommended her “spontaneous” approval. Valdis Dombrovskis, Vice-President of the Commission, is probably enthusiastic because he hears something that agrees with his prejudice about debts. Paolo Gentiloni, the Commissioner responsible, is confused because he intuitively feels that the statement sounds different to what his officials have explained to him, but he prefers to remain silent because he really does not understand the argument.

Christine Lagarde will search her speech notes for an answer, but will probably only find one instance that sounds very different from what the Chancellor said. However, she will not spontaneously throw it in, but when it is her turn to do so after a long wait, she will read her speech notes out completely. Macron will say something that also sounds different, but will stress the importance of Franco-German co-operation and thus cover up all criticism. The Heads of State and Government, after all their notes have been read out, will laugh as they go their separate ways, quite sure that they have once again taken Europe a step forward.

… but also the failure of intellectuals

What does that tell us? It shows that politics cannot be expected to change its rituals, especially those at European level, and to discuss the problems seriously. With a totally failing press, only those who can see things free of ideological bias, and know that the Chancellor is speaking humbug, can change anything. If, at the beginning of next week, 50 to 100 economists from all over Europe and quite independently of one another were to go public and accuse the Chancellor and her entire cabinet of serious ignorance of the most important economic interrelationships, politics would certainly not be able to ignore this.

But that isn’t going to happen, and the reasons are obvious. Many economists who hold university chairs simply don’t care about the real problems of business and politics. They tinker with their equilibrium models or “check” such irrelevant models with high-sounding econometric methods and completely refrain from observing and criticizing politics. Others have to take care of the famous “third-party funds”, most of which come from the political sphere. There one criticizes the politics not so gladly, openly, and loudly, because one is directly dependent on political decisions.

This applies directly in Germany to the research institutes, which have been made virtually silent in their criticism of politics through academisation on the one hand and through their dramatic dependence on third-party funding on the other. And then there are the deep ideological rifts that seem to put a stop to many economists’ criticism of a Chancellor from the CDU. The Chancellor’s confusion in matters of economics, regardless of the direction one takes, deserves to be criticised.

Anyone who wants to change these terrible conditions must, on the one hand, work to ensure that plurality of doctrines at the faculties of economics and within the institutes becomes the norm. There has been some progress on the side of students here, because they increasingly understand the one-sidedness of the economics on offer. Next week alone, I am invited to three faculties (Rostock, Chemnitz and Nuremberg) to present and discuss new approaches. On the professors’ side, however, the phalanx of neo-liberals and neo-classicists is far from broken.

On the other hand, the dependence of universities and research institutes on external funding must be significantly reduced. But that is not enough. Direct financing by the state must also be designed in such a way that the institutes do not run the risk of having to consider party-political interests or even have to adapt from the outset. Even an institute in Munich must be allowed to represent progressive opinions.

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