The Brief — Germany’s economic consensus shifts to the left – EURACTIV.com
German economic thinking has long had a reputation for being conservative. Austerity, debt reduction and fiscal discipline are the buzzwords that many Europeans associate with Germany. However, the consensus of German economists has shifted increasingly to the left of late.
A typical example is today’s report from the so-called “five wizards of economics” – or Wirtschaftsweisen– a body of experts that advises the German government on all economic matters. The body is traditionally considered a beacon of conservative economic thought and has been frequently criticized for its neoliberal line of thinking.
However, in today’s report, they were surprisingly progressive.
The recommendation currently making the most waves in Germany is their call to raise taxes on the wealthy to fund the current crisis – a stance that has drawn much outcry from the centre-right.
CDU politician Gitta Connemann, for example, claimed in the German newspaper Handelsblatt that the plans were “unrealistic and toxic”.
Experts also attacked plans – by the government and in particular the liberal FDP party – to adjust the tax system to inflation in order to relieve citizens of higher tax rates and proposed a more flexible approach to reform EU debt rules.
While the position of Wirtschaftsweisen does not encapsulate the whole of German economic discourse, their reversal when it comes to these economic policy topics is indicative of a broader shift that is taking place.
The liberal FDP, which generally has nothing but praise for the economic assessment of the body of experts, has found itself under serious pressure to react to recommendations that run counter to almost everything the FDP stands for.
And indeed, shortly after the report was released, the FDP made it clear that it would not authorize any additional taxes in any form.
“The position of the FDP is clear: we will not charge extra. This is how we agreed in the coalition agreement,” party deputy chairman Johannes Vogel told RedaktionsNetzwerk Deutschland (RND).
When Liberal Finance Minister Christian Lindner appeared before reporters today, the first topic he broached was not the proposed reform of EU debt rules which has been published today, but its response to the Wirtschaftsweisen – another sign of the importance of their opinion for the national political discourse.
He tried to discredit their proposals and made it clear that the government would not introduce the additional taxes for high-income earners as demanded by the experts.
However, it seems that the tides of the German expert community have changed as the liberal and conservative parties are now trying to refute their own economic consensus while the Greens and the SPD are gaining support from the (traditionally conservative) expert community. ).
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The views are those of the author.
[Edited by Zoran Radosavljevic]