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Europe is reaching crisis point
Forget America: the government should be worrying about the situations in France and Germany
Will Hutton
Sunday September 5, 2004
The Observer
With all eyes fixed on the American presidential elections, the scale of the looming crisis in France and Germany has gone largely unremarked. But it may so change the political geography of Europe that British arguments for and against the EU will be made redundant. A pervasive sense of decline in both countries, only partially justified but none the less virulent, is destabilising not just the structures of the EU - but the political systems of France and Germany.
Last week in France, charismatic finance minister Nicolas Sarkozy resigned from the government in order to challenge for the leadership of President Chirac's UMP party, despairing of what is seen in France as a do-nothing regime that is fiddling while the country burns. The economy is mired in low growth and high unemployment; government spending at 54 per cent of GDP can go no higher.
There is universal agreement that France needs decisive action to reverse economic decline; there are rancorous arguments about not just how the economy should be run and society organised but whether the constitution of the Fifth Republic works any more. The socialist opposition wants to limit the President's current powers to allow more pluralism. With two-and-half years to run until the next presidential elections, France is descending into acrimony and division.
In Germany, Gerhard Schröder is presiding over the wreckage of the SPD, once the standard bearer of European social democracy. September sees four key state elections, including the vital election in North Rhine Westphalia, the SPD's historic heartland. Sixteen per cent behind in the polls there, its loss would be a disaster, not just for what it signals about Schröder's standing but because it will mean control that of the German upper house will pass to the conservative CDU and make him a titular Chancellor, governing only within the parameters of what his opponents will permit.
His capacity to continue will be undermined. If he went, an SPD successor would be forced to abandon recasting Germany's unemployment benefit system so that it stops offering what amounts to a generous pension for life and, instead, becomes a means of moving the unemployed from one job to another. This is a vital prerequisite to restoring German economic health, but it is the direct cause of Schröder's crisis. His party can't and won't accept the need for reform and neither does an important swath of public opinion.
Germany is still two countries and East Germans regard any reform of the welfare system as directed against them because more than twice as many East Germans are on unemployment benefit as in the West. They are right. Thus it is no surprise that the 'Monday' demonstrations against the reforms are centred in the great East German cities of Leipzig and Dresden or that the demonstrators echo the fight against communism with their chant of 'We the people'. The protests are a focus for all the resentments of reunification and for the continued feeling among East Germans that they hold a second-class status. Germany and Schröder are in a corner; reform of the welfare state is an imperative, but the reform programme threatens the cohesion of the state.
As in France, the structures of the German political system are now being put in play. Twisting and turning for any kind of electoral advantage, Schröder last week said he was prepared to reverse Germany's 54-year-long ban on the referendum, the populist tool used by Hitler to establish the Nazi regime. Germany could then hold a referendum on the EU constitution. This is a key plank of the postwar constitution being knocked away. For the paradox of referendums is that they are fundamentally anti-democratic, confusing democracy with populism and placing power in the hands of those who can manipulate public opinion for their own ends. Germany's history is testimony to the consequences.
The proximate cause of both France and Germany's political crisis is that they are not generating enough jobs and growth even though both are high productivity economies. Employment in advanced economies today comes from the service and knowledge sectors rather than traditional manufacturing, under assault from low-wage countries in an era of globalisation. Thus German and France need more investment in their universities; in research and development; and in links between universities and business. They also need to change the structures in their labour markets, from wage bargaining to rules on working hours, that inhibit employment growth in the growing parts of their economy while designing welfare systems that support and encourage workers to move from areas of decline into areas of growth. And they need more demand...
and the libs, that want us to be like Europe, are bitch'n cuz our government spending (deficit) is just around 4% of GDP..... go figure.government spending at 54 per cent of GDP
Germany is still two countries and East Germans regard any reform of the welfare system as directed against them because more than twice as many East Germans are on unemployment benefit as in the West. They are right. Thus it is no surprise that the 'Monday' demonstrations against the reforms are centred in the great East German cities of Leipzig and Dresden or that the demonstrators echo the fight against communism with their chant of 'We the people'. The protests are a focus for all the resentments of reunification and for the continued feeling among East Germans that they hold a second-class status. Germany and Schröder are in a corner; reform of the welfare state is an imperative, but the reform programme threatens the cohesion of the state.
theim said:I found a site that really illustrates Germany's predicament.
http://medienkritik.typepad.com/blog/2004/09/schroeders_spd_.html
It seems more and more youth voters in particular are turning to extremist parties instead of the SPD and CDU. The party with the biggest percentage gains last election? The neo-nazi party. It recieved 4% of the vote in one state, just shy of the 5% needed for it to become part of the state legislature
Kathianne said:Germany is still two countries and East Germans regard any reform of the welfare system as directed against them because more than twice as many East Germans are on unemployment benefit as in the West. They are right. Thus it is no surprise that the 'Monday' demonstrations against the reforms are centred in the great East German cities of Leipzig and Dresden or that the demonstrators echo the fight against communism with their chant of 'We the people'. The protests are a focus for all the resentments of reunification and for the continued feeling among East Germans that they hold a second-class status. Germany and Schröder are in a corner; reform of the welfare state is an imperative, but the reform programme threatens the cohesion of the state.
musicman said:The question, "Who are we to offer patronizing criticism of the U.S., where the system WORKS?", seems to have never occurred to these folks. Now, it's barrelling toward them like an oncoming train.
Said1 said:Is it any wonder why they sound like spoiled brats?? 32 months is overly generous. taking less than a 10% cut for a virtual life time of benefits is unfathomable - that's like winning the lottery "WooHooo, I lost my job!! Now were set for life".
There was a time in Ontario when you only need to work for two or three weeks to qualify for unemployment benefits. Those days are long gone, as people tended to take advantage of it.
musicman said:I said pretty much this same thing in another thread, but it applies here as well:
To the everlasting fury and befuddlement of socialists, people insist on being human.
. I think I may move to Germany. I don't speak German which will make me unemployable right? They'll have to give me a cheque and housing. Plus, I have a child, and I'd be an immigrant - I wounder how much extra I could get for that? 
theim said:I found a site that really illustrates Germany's predicament.
http://medienkritik.typepad.com/blog/2004/09/schroeders_spd_.html
It seems more and more youth voters in particular are turning to extremist parties instead of the SPD and CDU. The party with the biggest percentage gains last election? The neo-nazi party. It recieved 4% of the vote in one state, just shy of the 5% needed for it to become part of the state legislature
musicman said:Those idiots who abide by the laws, and get jobs - what assholes!
KarlMarx said:Yes, that is what I'm afraid of too....
High unemployment, bad economic conditions....sounds like the Germany of the 1930s before you-know-who was voted into power.
