The Triumph Of Angela Merkel

The Dire Long-Term Consequences Of Sunday's Vote

By Doug Bandow

The world’s most watched elections occur in America.  The world’s most boring election just occurred in Germany, characterized by debate over such critical issues as meat-free days in government cafeterias.  As expected, Chancellor Angela Merkel was effectively reelected.

The Federal Republic of Germany is the world’s most admired nation and one of the globe’s most vital trading states.  It possesses Europe’s largest economy and has bankrolled the bail-out of the European Union’s crisis states.  Berlin’s political and economic stability is the envy the EU.

Merkel has served as Chancellor for eight years.  “Mutti,” or “Mummy,” as she is known, is a skilled political infighter who has dispatched every potential rival and even knifed former Chancellor Helmut Kohl, her political benefactor, on her way to the top.  But she exudes confidence and competence; there is no firmer guardian against radical experimentation.  Former CDU defense minister Karl-Theodor zu Guttenberg said her approach to politics is:  “First, keep all options open but do it decisively.  Second, hesitate vigorously.”

Germans rewarded her Christian Democratic Union, and its sister  party, the Christian Social Union, with 41.5 percent, well ahead of the more left-wing Social Democratic Party, which garnered a bit under 26 percent.  It “is a super result,” she said.  However, the CDU/CSU fell five seats short of a parliamentary majority.  And her current coalition partner, the Free Democratic Party, failed to receive the five percent necessary to be represented in the Bundestag.

Commentary on the election has focused on Merkel’s triumph.  It is the biggest electoral victory since Kohl was reelected in 1990 in newly reunified Germany.  There is no doubt that she will remain Chancellor.  The only question is the identity of her coalition partner—and what price she will have to pay for that party’s support.  (In theory the SPD, former communists, known as The Left, with 8.6 percent, and Greens, with 8.4 percent, could join forces with a tiny majority, but the first two have ruled out joining with the latter.)

Ironically, policy isn’t likely to change very much even if Merkel revives the “grand coalition” with the SPD, which seems most likely.  A decade ago the last SPD government (joined by the Greens) made tough economic reforms liberalizing Germany’s labor markets, sparking its current success.  Her predecessor, Gerhard Schroeder, was far bolder than Merkel.

Indeed, she has steadily pulled her party leftward.  She once was called Germany’s Margaret Thatcher, but the latter believed in economic liberty and fought for it even when the odds seemed long. In 2005 Merkel ran as an advocate of “freedom” and suggested trimming back the welfare state.  Her party barely finished ahead of the SPD.  Since then, rather like most Republican Presidents, she adopted the economically interventionist policies of her political opponents.

Her governments subsidized improvident nations across the EU, resisted tax cuts, supported the minimum wage, imposed gender quotas for corporate boards, implemented intrusive government “family” policies, and condemned all nuclear power plants for closure.  All of these positions came from her opponents.  Berlin-based Paul Hockenos wrote in Foreign Policy that “although there are still differences between the CDU’s family policies and those of the Social Democrats … they are ever fewer.”  Cem Ozdemir, co-chairman of the Green Party, which had campaigned against nuclear power, complained that the chancellor “becomes Green when it helps her and becomes a Social Democrat when that’s beneficial too.”

Before agreeing to a new grand coalition the SPD undoubtedly will demand more economic intervention more quickly.  In fact, one unnamed Merkel aide complained to Reuters that “There are bigger differences than in 2005.”  But the policy endpoints look similar.  She “is a leader without any trace of ideological commitment,” said Jan-Werner Mueller of Princeton.  Her overriding objective is to stay in power.

Alas, her policies helped wreck the FDP.  The Free Democrats were created in 1949 and have served in the Bundestag ever since.  They spent 46 of 64 years in government, supporting both CDU/CSU and SPD administrations.  In 2009 they made their best showing ever, 14.6 percent.  Now, with just 4.8 percent of the vote they are out of the Bundestag.  Said party chairman and Economics Minister Philipp Roesler:  Sunday was the “most bitter and saddest” night in party history.

The Free Democrats are liberals in a classical sense, for free markets and social tolerance.  They fit well with the early post-war CDU/CSU, which orchestrated the “economic miracle” which restored German prosperity.  However, as the conservatives embraced the welfare and regulatory state, the FDP looked ever more like an anachronism.  The party often held the balance of political power, but had little policy impact.

The 2009 poll gave the FDP an opportunity to make a difference.  The Free Democrats campaigned for tax cuts and a freer economy.  However, instead of claiming the Finance Ministry as the price for its support, the FDP landed the Foreign Ministry—a prestige posting traditionally given to the coalition partner, but unrelated to the party’s signature political issues.  Moreover, the party chairman who filled that post, Guido Westerwelle, turned out to be remarkably unpopular.  Within a year the FDP’s political support had hemorrhaged, with the party’s poll rating dropping by two-thirds.  Within another year he was dumped as chairman—but retained his ministerial post, daily reminding the German people why they were unhappy with the FDP.

Worse, the Free Democrats failed to deliver policy change.  There were no tax cuts, but big Euro bail-outs, nuclear plant closures, and a range of other actions inconsistent with their program.  At the same time, Chancellor Merkel claimed credit for economic prosperity and stability.  Germans could be forgiven wondering:  what was the purpose of the FDP?

The party’s political fortunes collapsed.  Out of seven state elections, it fell below the five percent threshold in five.  A week before the national vote the FDP dropped out of the Bavaria state legislature, winning just 3.3 percent of the vote.  At the time the leading FDP candidate, Rainer Bruederle, said “There is no cause for panic.”

However, as the September 22 vote loomed the FDP was reduced to begging for the second vote (for party, as opposed to for specific candidates) from CDU/CSU supporters.  Bruederle incongruously argued:  “If you want Merkel, vote FDP.”   In essence, the party requested that its opponents support it so it could join in coalition with its opponents to put its opponents back into power.  There was political sense to the argument—had the FDP gained another .2 percent of the vote, Merkel would have an easier time forming a governing coalition.  But it is not a very compelling appeal for a political party.

And it obviously didn’t work.  Concluded Financial Times columnist Wolfgang Muenchau:  the FDP has “gone slightly mad.  Its election manifesto was rampant with conspiracy theories about the coming hyperinflation.  It led a soulless, tactical campaign to frighten Merkel-supporters into voting FDP because a People’s Front of the Left would otherwise take over the country and destroy capitalism as we know it.”

Bruederle bravely argued:  “This does not mark the end of the party.  It will be tough but we will keep working.”   While it is premature to write the FDP’s obituary, its future looks dim.  Even when articulating market principles and possessing a sizable Bundestag contingent the party had little impact on policy.  Genuine classical liberals may ask in the future:  why bother?”  Moreover, the FDP fall-back argument—vote for us to keep the CDU/CSU in power—also has lost credibility.  Having fallen out of the Bundestag, no voter can be sure that it will reenter next time.  Why waste your vote?

Worse, the FDP faces a principled competitor, the Alternative for Germany, or AFD, which is more likely to shake up the existing power structure.  The newly created AFD, which campaigned against the Euro, the common European currency, matched the FDP’s vote total, falling just short of the magic five percent.  The German people have been far more skeptical than their politicians about the wisdom of shoveling billions of dollars into the coffers of their effectively bankrupt neighbors.  While a few FDP Bundestag members voted against the bail-outs, the party backed Merkel’s policy.

So the AFD has the field to itself in resisting Berlin’s ever more expensive commitment to the Euro.  The party could lose its raison d’être if the Euro crisis dies down, but if the AFD broadens its approach—its economist founder appears to hold a classical liberal philosophy—the Alternative might become the most, and perhaps only, effective challenge to the CDU/CSU’s slide to the left.

Although the AFD lacks the FDP’s venerable heritage, the former has an extraordinary opportunity.  The AFD apparently drew its greatest number of votes from previous non-voters who did not feel represented.  The party’s second biggest pool of support was disaffected FDP members.  The Alternative helped push the FDP from third to sixth place.

The big winner in Sunday’s German election was Angela Merkel.  Nineteen other European government leaders have been defeated since 2010.  But the German people are the losers.  Their government seems destined to grow more expensive and intrusive.  And the one party which traditionally advocated free markets and individual liberty will disappear not only from government, but also parliament.

The FDP’s collapse may seem of little import beyond Germany’s borders.  In the short-term Berlin is likely to remain stable, prosperous, and the reluctant dominatrix of Europe.  However, in the longer term the diminished voice of classical liberalism in the Bundestag likely will impoverish debate and policy in the continent’s most important nation.  The consequences could be serious and long-lasting.