Capitalism Debate in Europe

There is currently a big debate in Europe about the merits of capitalism. In particular, Deutsche Welle has reported that Franz Muntefering, of the Germany’s ruling SDP party, recently made reference to international investors as “locusts.” This of course brings up several questions regarding not only the validity of these statements, but perhaps the timing as well.

Could this be just another case of “Blame America First” by the Germans? We all know that when used in a derogatory tone, the term “capitalist” is code for American companies whom invest in Germany. This is done as some sort of camouflage / smokescreen to the real ills of the German economy. The politicians in Germany know precisely what the real ales are, but they are too gutless to address them. The social entitlements in Germany, combined with poor domestic consumerism and low birthrates are choking out their vaunted entitlements system.

We don’t see an ongoing debate among Germans about the ills of their socialist system. This is because the Herr Schroeder cannot get re-elected by speaking these truths. He has been half-heartedly trying for a couple of years to institute structural reforms. However, an unmotivated electorate that is far too accustomed to social handouts make it impossible for these much-needed changes to be implemented. In my opinion, Germany today is enduring a malaise of low expectations similar to that of America in the late 1970s. What is desperately needed is the adoption of business-friendly tax reforms so that domestic investment can stimulate the overall situation.

Does the timing of this debate have anything to do with lagging poll results for the current coalition government? We all remember how an infusion of good old Anti-American rhetoric drove the current government to re-election in 2002.

Germany…Stop looking for scapegoats and make the necessary reforms that everyone knows are way overdue!