The SPD and a possible new Grand Coalition government in Germany

It's good to see that there is active resistance within the German Social Democratic Party (SPD) to the proposed Grand Coalition, a new government that would still be headed by current Chancellor Angela "Frau Fritz" Merkel with the SPD as the junior partner to Merkel's CDU/CSU (Christian Democratic Union/Christian Social Union).

I'm coming more and more to think that Frau Fritz is the last revenge of the DDR (Deutsche Demokratische Republik), the former Communist East Germany, where Merkel grew up and lived until German unification. She has practiced a style of leadership that is more than a little reminiscent of Leonid Brezhnev's manner of running the Warsaw Pact, though without the military intervention but also with less economic support. Although her model for running the European Union and the eurozone probably has more to do with her understanding of how West Germany absorbed East Germany after unification.

Even the new proposed Grand Coalition, which still must approved by the SPD base in a national vote, reminds me a bit in the current situation of the DDR's ruling Socialist Unity Party (SED). The SED was in reality the ruling Communist Party, but technically it was a party formed from a unification of the Communist and Social Democratic Parties in East Germany. Although the DDR held Potemkin elections, they were not competitive elections in which real policy alternatives were debated.

That's obviously not the case in a literal sense. But the establishment of a Grand Coalition government now is likely to have far-reaching negative consequences, including the end of the eurozone as it's now constituted and severely damaging the possibility for a continuation of the European Union. I've often quoted leading economists and economics journalists here explaining why the eurozone in its current form is unsustainable, including Jamie Galbraith, Paul Krugman, Wolfgang Münchau, Mark Schieritz, Joe Stiglitz and Yanis Varoufakis. It's not often discussed clearly in the US or German mass media, apparently, but it's not that challenging at a broad concept level; it's basic macroeconomics of depressions and currency zones.

Schieritz recently give his first take on the Grand Coalition agreement that the CDU/CSU concluded with the SPD leadership in Die Knauser-Koalition Zeit Online 27.11.2013. A general impression of the deal is that Angie and the SPD decided on ways to give out a lot of money to their clients while pulling back from neoliberal "reforms" to weaken unions, reduce wages and salaries, and ease regulations on Big Business.

One thing the coalition did agree on is to establish a national minimum wage. No, Germany doesn't have one. The "social partnership" under which labor and capital have operated since the establishment of the Federal Republic in 1949 lalrgely mitigated the need for it. Now, under some of the Agenda 2010 "reforms" passed by the red-green coalition government under SPD Chancellor Gerhard Schroder - a classic neoliberal undertaking very much in the spirit of what we in America call "bipartisanship" - there is far less job security and many more low-paying jobs. So now a minimum wage is needed to put some kind of floor under the long-term deterioration in German wages and living standards as a result of previous neoliberal "reforms."

Schieritz says bluntly what is far too seldom expressed directly in American political and media conversations on the minimum wage: "Unternehmen, die nur mit Hungerlöhnen überleben können, haben kein Geschäftsmodell und sollten vom Markt verschwinden." ("Enterprises that can only survive with hunger wages have no business model and should disappear from the market.") Sounds right to me.

But Shieritz points out that the supposed doling out of money isn't so impressive, with a budget surplus projected for Germany until at least 2017. But what the eurozone as a whole needs to pull out of the current depression, and therefore one of the essential things the euro needs to survive in its current form, is for Germany to pursue an aggressively stimulative policy, which is not compatible with those budget surpluses, however virtuous the Very Serious People on both sides of the Atlantic may find them to be. He calculates the increased spending as amounting to about 0.14% of German GDP per year; its stimulative effect in pretty negligible even for Germany, in other words. For the eurozone as a whole, effectively nonexistent. And, as Shieritz notes, the coalition agreement doesn't foresee taking on new debt during the next four-year government period. In his view, the coalition's plan scarcely meet the need of maintaining current infrastructure, much less investing in the future, that favorite (and increasinly empty) neoliberal platitude.

Heinrich Brüning economics in a depression! Awesome. And it worked out so marvelously last time. (NOT!)

Assuming the likely course of the eurozone economic crisis under the continued Angie-nomics to which the SPD leadership has cheerfully agreed, the most likely loser among the German political parties will be the SPD itself.

Austria has had a Grand Coalition government of the Christian Democratic and Social Democratic parties for much of the postwar period. It has serious deficiencies because it leaves the national government without a normal opposition party. In the Austria case, that means that the third-largest party, the FPÖ (Freedom Party), an illiberal Liberal party, as the main opposition. And while its democratic commitments have never been sterling, since 1987 its national leadership has consistently relied on scurrilous demagoguery.

But how much the Austrian case tells us about German politics is highly dubious. For one thing, it's a small country of about 8.5 million people, smaller than numerous US states and metropolitan areas. Size matters, and in a country that size good-ole-boy consensus politics is more feasible than in a much larger one like Germany. Austria also has a geographical/political difference that has no real parallel in Germany. Vienna is by far the country's largest city, and it has been known since the 1920s as "Red Vienna" because of the dominance of the Social Democrats there. The conservative Christian Democratic Party is more prominent in the rest of the country. That's not to say the Grand Coalition is generally desirable, just that Austria's example offers only limited insight into Germany's.

The first Grand Coalition government in Germany was in 1966-69, with the CDU as the senior partner under Chancellor Georg Kiesinger and the SPD junior partner under Willi Brandt. That coalition had its own democratic-deficit problems. The tiny far-right NPD party surged in popularity, and the militant New Left also emerged during that period. But it was politically beneficial for the SPD, as Brandt had hoped. The SPD was still tainted in the eyes of many as not quite patriotic, an attitude which the CDU under the long Chancellorship of Konrad Adenauer happily encouraged. The SPD in 1969 elections won first place for the first time in the Federal Republic, and Brandt was able to form a government with the Free Democratic Party (FPD) as junior partner. The SPD could reasonably conclude that their participation in the Grand Coalition had strengthened them as a party and given them renewed credibility.

The second Grand Coalition was also headed by the CDU with Angela Merkel as Chancellor and served from 2005-2009 with the SPD as a willing and all-too-cooperative junior partner. In 2009 elections, the SPD saw a dramatic drop in its vote percentage. It's hard to see how the SPD's participation in Angie's first Grand Coalition government was any kind of net benefit to the SPD. As the largest center-left party, the SPD theoretically would have been able to take political advantage from the post-2008 economic conditions had they been in opposition.

Now, the SPD leaders have agreed to enter a new Merkel Grand Coalition government, now after four years of demonstrably destructive Merkel economic policies in the eurozone, policies which the SPD has meekly supported even in opposition. The handling of the euro crisis and the future of the euro was really not even an issue in the coalition negotiations. The SPD just agreed to support Frau Fritz' draconian, nationalistic policies.

If the SPD were consciously attempting to put themselves on the road to minor party status, this is a good way to go about it. At the end of this Grand Coalition, whether its at the end of a normal four-year term or before, the Greens and the Left Party will have the best opportunity of their existences to replace the SPD as the second-largest party. Maybe even become the second and third largest parties, with the SPD in fourth place? Since Merkel with the cooperation of the SPD is pursuing economic policies in the spirit of the "Hunger Chancellor" Heinrich Brüning, it's probably relevant to recall that his tenure as Chancellor in 1930-32 coincided with some rather dramatic shifts in German politics.

So it's good for the SPD that there is significant opposition within their own party to the new Grand Coalition agreement. The Jusos (Young Socialists) are the youth organization of the SPD, "youth" in this case basically meaning up to mid-30s. Jusos are expected to show their value to the Party by being more sharply partisan than their elders. But even taking that into account, the level of opposition to the Grand Coalition being voiced by today's Jusos is notable. SPD Chair Sigmar Gabriel faced a relatively hostile reception at the Jusos' national convention in Nuremburg this past week. (Lenz Jabosen, Der Gegner in den eigenen Reihen Zeit Online 08.12.203) The Jusos formally voted against the coalition agreement and elected as their new leader a Bavarian social democrat, Johanna Uekermann, who is vocally opposed to a new Grand Coalition.

Euronews reports on the Jusos' rejection, Germany's young SPD Social Democrats reject Merkel coalition 12/08/2013:

The Jusos' opposition is scarcely decisive. But it's also significant. Opposing a key national national policy of the SPD leadership like this is no small thing for ambitious young SPD politicians. (Wolfgang Wittl has a biographical sketch of Uekermann, Adams Zankapfel Süddeutsche Zeitung 25.10.2013) And Christoph Hickmann writes, "Die Jusos sind der harte Kern des sozialdemokratischen Widerstands gegen die große Koalition." ("The Jusos are the hardcore of the Social Democratic resistance to the Grand Coalition.") (Im Herzen des Widerstands SZ 07.12.2013)

Johanna Uekermann, new Juso leader and opponent of the Grand Coalition agreement

In a Juso Blog post, Andro Scholl warns, "Europe is going kaput and the Grand Coalition will do nothing about it!" (Stell Dir vor Europa geht kaputt und die Große Koalition ändert nichts dran! 25.11.2013)

The Grand Coalition, Große Koalition in German, is known as "GroKo" for short. These kinds of short names are common in German politics.

It's hard to imagine the SPD base rejecting the Grand Coalition outright. There is enormous pressure for them to approve it. But a rejection by the base is probably the best thing that could happen to the SPD politically right now. Even though conventional wisdom holds that the new national election that would be the likely result will strengthen Merkel's CDU/CSU. The SPD going into a second Merkel-headed Grand Coalition looks a lot like political suicide.

Tags: angela merkel, austerity economics, eu, euro, european union, johanna uekermann, spd