Kristian Niemietz Blog

published on the Institute of Economic Affairs (IEA) blog, September 2009

Germany’s federal election yesterday resulted in a stable majority for a “black-yellow” coalition of Conservatives (CDU) and Liberals (FDP). Is this the starting shot of a free-market reform programme in Europe’s largest economy?

Probably not. Remember the last federal election, in 2005? In the months prior to Election Day, it all looked like a done deal. Opposition leader Angela Merkel would win a landslide victory and become a continental Margaret Thatcher. In her four years in office, if anything, she has been more of a continental Edward Heath. How did this happen?

In 2005, the CDU led all the polls by huge margins – not because of, but in spite of its platform, which, by German standards, was daringly reform-minded. Voters were so fed up with Gerhard Schröder’s red-green coalition that Merkel could have proposed a ban on football and beer and would still have become federal chancellor. But when she appointed Professor Paul Kirchhof, a known supporter of the flat tax and of private pension provision, as shadow finance minister, this last straw broke the camel’s back.

Social Democrats (SPD), Greens and Socialists set a shrill campaign in motion, surfing on popular fears of “neoliberalism” and “Anglo-Saxon capitalism”. But this was not surprising. After all, this was the height of an election campaign, and for his opponents, Kirchhof was godsend. However, in Merkel’s own CDU and even in the FDP, more and more whistle-blowers craved for a slice of public approval and attacked Kirchhof. The CDU’s poll ratings deteriorated fast, and on Election Day the party came out so low that it was forced into a “grand coalition” with the SPD.

Merkel had learned her lesson: Never ever try free-market reforms on the German electorate again. In the coming four years, Merkel proved her zeitgeist -adaptability, concentrating on green policies, free childcare, and benefit increases. The nation’s standing in the Economic Freedom of the World list dropped from a mediocre 17th to an embarrassing 27th rank.

To readers familiar with Hayek’s The Intellectuals and Socialism , none of this will be surprising. As long as sixty years ago, Hayek convincingly explained that what matters is not the political personnel of the day, but the broader climate of ideas, which is ultimately driven by a nation’s intellectuals. As Hayek put it,

“once the more active part of the intellectuals has been converted to a set of beliefs, the process by which these become generally accepted is almost automatic and irresistible.”

Keeping Hayek’s words in mind, note how SPIEGEL journalist Jan Fleischhauer describes Germany’s intellectual landscape:

“I am part of a generation in Germany that knows no other reality than the dominance of the left. [...] Go to any theatre, museum or open-air concert, and you’ll quickly realize that ideas beyond the mindscape of the left are unwelcome there. A contemporary play that doesn’t critically settle scores with the market economy? Unthinkable. [...] In the business of opinions, where I earn my money, there is practically nothing but leftists.”

Then notice how Dirk Maxeiner and Michael Miersch , two famous journalists and book authors, describe mainstream thinking:

“In the late 1970s, the Greens succeeded in merging [...] anti-capitalist ideology and conservative opposition to progress [...] Today, all parties are green; this attitude has taken over nearly the entire society. No technological innovation has been welcomed in Germany since the colour television .”

Any opinion survey confirms these descriptions. Has there ever been a more effective proof of Hayek’s theory?

The incoming black-yellow coalition deserves the benefit of the doubt, and it will certainly represent an improvement over the standstill coalition of the past four years. But if a genuine market-oriented reform agenda was put into place, it would, in the Hayekian framework, represent a short-cut. Politicians would consistently have to go against the grain of a nation’s intellectuals and the general zeitgeist . Are you aware of any historical example where this has ever happened? Me neither.