Angela Merkel is the world’s most important leader. The latest report showing Germany’s economy growing at a blistering annual rate of nearly 9%, well into recovery from a US-made economic collapse, is just further evidence of the obvious. Despite her carping critics who have bizarrely accused her of dithering, economic malpractice and über-nationalism, Frau Merkel right now is standing head and shoulders above the pack. If we selected a planetary MVL – Most Valuable Leader – she would be it.
The world is facing two immense challenges that too often get lost amidst all the daily headlines. First, how do we identify the institutions and practices capable of enacting a decent quality of life for a burgeoning global population of 6.5 billion people, allowing China, India, Brazil and other countries a place at the table? And second, how do we do all that in a way that does not burn up the planet in a Venus atmosphere of excessive carbon emissions?
In responding to those challenges, Germany is leading the world, led by its female chieftain, the first ever woman chancellor in its history. The shrewd Frau Merkel, with her personable, down to earth demeanour, has displayed steady, effective leadership in five critical areas: the economic crisis, social policy, global warming, foreign policy and, perhaps most importantly, in refashioning capitalism in the face of its near collapse.
Following the economic crisis, Chancellor Merkel and French president Nicolas Sarkozy proposed sweeping regulatory changes, including a redesign of the international architecture of financial institutions. Using the subtle, coded language of diplomacy, they warned the new Obama administration not to block their attempts to crack down on hedge funds and derivatives, as well as on the corrupt rating agencies, outrageous bank bonuses and more. Is there any doubt that the foot-dragging US Treasury Secretary Timothy Geithner would have dithered even more had he not been pushed – shoved, more like it – by the Europeans, led by Merkel?
Keeping in mind that Merkel is the leader of the conservatives in Germany, her defence of ‘social Germany’ has been no less eloquent and thoughtful than that of her Social Democrat predecessor, Gerhard Schröder. During this economic crisis and even before, she reasserted Germany’s desire to ‘retain essential elements of . . . social protection’ and ‘secure the future of the social market economy.’ She has continued to support works councils and worker-elected boards of directors of Germany’s major corporations, and maintained the ‘culture of consultation’ that has become a hallmark of Germany’s social capitalism. You would never catch any Democrat, even President Obama, making such bold declarations or proposals in support of the social dimensions of the US economy. At times, Merkel sounds like the FDR that many wanted Obama to be.
It hasn’t been mere Merkel rhetoric to win votes, either. Rather than twiddling her thumbs while the private sector laid off millions of workers, like the Obama administration has done, Merkel’s government expanded Kurzarbeit, or ‘short-time work’, in which, instead of laying off millions, Germany spread the pain around by having employees work shorter weeks. Most of the workers’ lost wages have been made up from a special fund squirreled away during more prosperous times. In other words, instead of the government paying people not to work, as in US-style layoffs, it paid people to keep working, but at reduced hours.
The impact has been darn near miraculous. According to OECD figures, while the unemployment rate in the US has more than doubled to almost 10%, and the unemployment rate for all OECD countries has increased by 3 percentage points, the unemployment rate in Germany has declined by 0.9 percentage points to 7.0% in May 2010. More Germans have money in their pockets, maintaining levels of consumer spending that drive the economy, and communities and households haven’t been decimated by layoffs like they have been in the United States. Businesses’ workforce has been kept intact, ready to strive for increased production now that the economic recovery has begun. Yet when Larry Summers, one of Barack Obama’s closest economic advisers, was asked why the president didn’t pursue short-time work to stem the economic bleeding, he dismissed the idea, saying the White House wanted to create new jobs, not preserve old ones – as if there is a conflict between those two aims.
Leading European conservatives like Merkel and French president Sarkozy support the notion that corporations have social obligations. For all intents and purposes, the conservatives of Europe are now social democrats, even if not Social Democrats. The European political parties of the centre-right, and in many ways even the far-right, are to the left of the Democratic Party in the United States. Germany is not the land of Citizens United, that horrible recent US Supreme Court decision that expanded the jurisprudence that says corporations have individual rights like people do, further undermining the social dimension of America’s political economy. Indeed, when Volkswagen, which is the largest carmaker in Europe and is 20 percent owned by the German state government of Lower Saxony (where Volkswagen is based), wanted to abolish Lower Saxony’s blocking minority rights, Merkel sided with the state government, a position that would be anathema to an American conservative, or even most Democrats.
Merkel’s economic stewardship has steered Germany further away from the American path of Wall Street’s casino capitalism. In particular, the Germans believe that a manufacturing economy with strong stakeholder rights is the best hope for getting away from a type of capitalism that is over reliant on financial speculation and has led to such catastrophic bubbles. Merkel was once asked by then British Prime Minister Tony Blair what the secret was of her country’s economic success, which includes being the world’s largest exporter and running substantial trade surpluses in recent years. She famously replied, ‘Mr Blair, we still make things’. In Germany, manufacturing still dominates finance because Deutschland capitalism didn’t succumb to the financialisation of the economy that swept the United States and Britain in the 1980s under Reagan and Thatcher. In the US, this led to a tripling in the size of the financial sector as a percentage of both the overall economy and of corporate profits, as well as a loss of millions of manufacturing jobs. Werner Abelshauser, an economic historian at the University of Bielefeld in Germany, says the European way of running the economy ‘is fundamentally about a banking system based on patient capital and firms that emphasise high-quality products and long-term relationships between suppliers and customers’.
At this point, the results speak for themselves. The smart policies of the shrewd Frau Merkel’s government have contributed to Germany’s recent economic success, while the timid policies of the Obama administration so far have led to a lacklustre economic recovery.
Leading the way on climate change
In the midst of an economic crisis, it’s easy for the world’s leaders to take their eyes off the looming challenge of global climate change. But led by Merkel, Germany and Europe have quietly stepped into the role of global trailblazer. More of a pragmatist than an ideologue, Merkel has maintained, and even expanded, many of the best policies of the previous Social Democratic government, ensuring that Germany continues to have the largest solar and wind power industries in the world, with Spain, Portugal and Sweden also making gains. When European unity was in doubt on this issue, Chancellor Merkel used her considerable powers of persuasion and coercion to corral an agreement from the heads of all 27 European Union nations to cut carbon emissions by 20 percent and to make renewable energy sources 20 percent of the European Union’s energy mix by 2020 (up from a 6.5 percent share, which was already twice that of the United States).
Europe already is halfway towards achieving the goals of its 20-20-20 Plan, even as the ‘filibuster gone wild’ US Senate continues to drag its feet. Displaying an important principle that will be crucial to any global climate agreement, the richest European nations – led by Germany – agreed to contribute a greater share toward combating greenhouse gases and climate change. Meanwhile the US, which is by far the world’s largest per capita polluter of greenhouse gases, has refused to move forward until China does, even though China has a GDP per capita one-twelfth of America’s ($3700 versus $46,000). Considering that the European Union has the largest economy in the world, this climate protection agreement is nothing less than epochal in its impact. With half million ‘green jobs’ having already been generated, and with its continent-wide carbon emissions, electricity use and ecological footprint half that of the United States for the same standard of living, European governments and companies are demonstrating that action on global climate change can bring tremendous economic as well as environmental benefits.
Cautiously multilateral
In foreign policy, Merkel has correctly steered Germany away from any further entanglement in America’s follies in the Middle East, while maintaining a rhetorically supportive posture toward Europe’s transatlantic ally, including in negotiations with Iran over its nuclear plans. Merkel’s Germany has mostly been a voice of calm and reason, preserving the attitude of a good multilateral team player in the transatlantic alliance, while not allowing the White House – whether controlled by Democrats or Republicans – to bully it into pouring more fuel on the flames of the Middle East. Along with Sarkozy, Merkel has deployed a good cop–bad cop routine toward China, such as when Merkel pull
Angela Merkel is the world’s most important leader. The latest report showing Germany’s economy growing at a blistering annual rate of nearly 9%, well into recovery from a US-made economic collapse, is just further evidence of the obvious. Despite her carping critics who have bizarrely accused her of dithering, economic malpractice and über-nationalism, Frau Merkel right now is standing head and shoulders above the pack. If we selected a planetary MVL – Most Valuable Leader – she would be it.
The world is facing two immense challenges that too often get lost amidst all the daily headlines. First, how do we identify the institutions and practices capable of enacting a decent quality of life for a burgeoning global population of 6.5 billion people, allowing China, India, Brazil and other countries a place at the table? And second, how do we do all that in a way that does not burn up the planet in a Venus atmosphere of excessive carbon emissions?
In responding to those challenges, Germany is leading the world, led by its female chieftain, the first ever woman chancellor in its history. The shrewd Frau Merkel, with her personable, down to earth demeanour, has displayed steady, effective leadership in five critical areas: the economic crisis, social policy, global warming, foreign policy and, perhaps most importantly, in refashioning capitalism in the face of its near collapse.
Following the economic crisis, Chancellor Merkel and French president Nicolas Sarkozy proposed sweeping regulatory changes, including a redesign of the international architecture of financial institutions. Using the subtle, coded language of diplomacy, they warned the new Obama administration not to block their attempts to crack down on hedge funds and derivatives, as well as on the corrupt rating agencies, outrageous bank bonuses and more. Is there any doubt that the foot-dragging US Treasury Secretary Timothy Geithner would have dithered even more had he not been pushed – shoved, more like it – by the Europeans, led by Merkel?
Keeping in mind that Merkel is the leader of the conservatives in Germany, her defence of ‘social Germany’ has been no less eloquent and thoughtful than that of her Social Democrat predecessor, Gerhard Schröder. During this economic crisis and even before, she reasserted Germany’s desire to ‘retain essential elements of . . . social protection’ and ‘secure the future of the social market economy.’ She has continued to support works councils and worker-elected boards of directors of Germany’s major corporations, and maintained the ‘culture of consultation’ that has become a hallmark of Germany’s social capitalism. You would never catch any Democrat, even President Obama, making such bold declarations or proposals in support of the social dimensions of the US economy. At times, Merkel sounds like the FDR that many wanted Obama to be.
It hasn’t been mere Merkel rhetoric to win votes, either. Rather than twiddling her thumbs while the private sector laid off millions of workers, like the Obama administration has done, Merkel’s government expanded Kurzarbeit, or ‘short-time work’, in which, instead of laying off millions, Germany spread the pain around by having employees work shorter weeks. Most of the workers’ lost wages have been made up from a special fund squirreled away during more prosperous times. In other words, instead of the government paying people not to work, as in US-style layoffs, it paid people to keep working, but at reduced hours.
The impact has been darn near miraculous. According to OECD figures, while the unemployment rate in the US has more than doubled to almost 10%, and the unemployment rate for all OECD countries has increased by 3 percentage points, the unemployment rate in Germany has declined by 0.9 percentage points to 7.0% in May 2010. More Germans have money in their pockets, maintaining levels of consumer spending that drive the economy, and communities and households haven’t been decimated by layoffs like they have been in the United States. Businesses’ workforce has been kept intact, ready to strive for increased production now that the economic recovery has begun. Yet when Larry Summers, one of Barack Obama’s closest economic advisers, was asked why the president didn’t pursue short-time work to stem the economic bleeding, he dismissed the idea, saying the White House wanted to create new jobs, not preserve old ones – as if there is a conflict between those two aims.
Leading European conservatives like Merkel and French president Sarkozy support the notion that corporations have social obligations. For all intents and purposes, the conservatives of Europe are now social democrats, even if not Social Democrats. The European political parties of the centre-right, and in many ways even the far-right, are to the left of the Democratic Party in the United States. Germany is not the land of Citizens United, that horrible recent US Supreme Court decision that expanded the jurisprudence that says corporations have individual rights like people do, further undermining the social dimension of America’s political economy. Indeed, when Volkswagen, which is the largest carmaker in Europe and is 20 percent owned by the German state government of Lower Saxony (where Volkswagen is based), wanted to abolish Lower Saxony’s blocking minority rights, Merkel sided with the state government, a position that would be anathema to an American conservative, or even most Democrats.
Merkel’s economic stewardship has steered Germany further away from the American path of Wall Street’s casino capitalism. In particular, the Germans believe that a manufacturing economy with strong stakeholder rights is the best hope for getting away from a type of capitalism that is over reliant on financial speculation and has led to such catastrophic bubbles. Merkel was once asked by then British Prime Minister Tony Blair what the secret was of her country’s economic success, which includes being the world’s largest exporter and running substantial trade surpluses in recent years. She famously replied, ‘Mr Blair, we still make things’. In Germany, manufacturing still dominates finance because Deutschland capitalism didn’t succumb to the financialisation of the economy that swept the United States and Britain in the 1980s under Reagan and Thatcher. In the US, this led to a tripling in the size of the financial sector as a percentage of both the overall economy and of corporate profits, as well as a loss of millions of manufacturing jobs. Werner Abelshauser, an economic historian at the University of Bielefeld in Germany, says the European way of running the economy ‘is fundamentally about a banking system based on patient capital and firms that emphasise high-quality products and long-term relationships between suppliers and customers’.
At this point, the results speak for themselves. The smart policies of the shrewd Frau Merkel’s government have contributed to Germany’s recent economic success, while the timid policies of the Obama administration so far have led to a lacklustre economic recovery.
Leading the way on climate change
In the midst of an economic crisis, it’s easy for the world’s leaders to take their eyes off the looming challenge of global climate change. But led by Merkel, Germany and Europe have quietly stepped into the role of global trailblazer. More of a pragmatist than an ideologue, Merkel has maintained, and even expanded, many of the best policies of the previous Social Democratic government, ensuring that Germany continues to have the largest solar and wind power industries in the world, with Spain, Portugal and Sweden also making gains. When European unity was in doubt on this issue, Chancellor Merkel used her considerable powers of persuasion and coercion to corral an agreement from the heads of all 27 European Union nations to cut carbon emissions by 20 percent and to make renewable energy sources 20 percent of the European Union’s energy mix by 2020 (up from a 6.5 percent share, which was already twice that of the United States).
Europe already is halfway towards achieving the goals of its 20-20-20 Plan, even as the ‘filibuster gone wild’ US Senate continues to drag its feet. Displaying an important principle that will be crucial to any global climate agreement, the richest European nations – led by Germany – agreed to contribute a greater share toward combating greenhouse gases and climate change. Meanwhile the US, which is by far the world’s largest per capita polluter of greenhouse gases, has refused to move forward until China does, even though China has a GDP per capita one-twelfth of America’s ($3700 versus $46,000). Considering that the European Union has the largest economy in the world, this climate protection agreement is nothing less than epochal in its impact. With half million ‘green jobs’ having already been generated, and with its continent-wide carbon emissions, electricity use and ecological footprint half that of the United States for the same standard of living, European governments and companies are demonstrating that action on global climate change can bring tremendous economic as well as environmental benefits.
Cautiously multilateral
In foreign policy, Merkel has correctly steered Germany away from any further entanglement in America’s follies in the Middle East, while maintaining a rhetorically supportive posture toward Europe’s transatlantic ally, including in negotiations with Iran over its nuclear plans. Merkel’s Germany has mostly been a voice of calm and reason, preserving the attitude of a good multilateral team player in the transatlantic alliance, while not allowing the White House – whether controlled by Democrats or Republicans – to bully it into pouring more fuel on the flames of the Middle East. Along with Sarkozy, Merkel has deployed a good cop–bad cop routine toward China, such as when Merkel pull
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