Red-Green Coalition Agreement

This piece appeared in the December 2002 edition of the ZEWnews.

Super

Wherever we go, we see superstars and super products. We have a super minister, a super spokesman, a super president; supposedly, there is even someone who is super wise. But we have not yet reached the end of the flagpole. Some drivers use “Super Plus” to fuel their cars, and we hear of a supernova. This opens new perspectives – and let’s not forget the Super-GAU. The coalition agreement between the German Social Democratic Party and the green party Bündnis 90/Die Grünen from 16 October 2002 certainly does not lack superlatives. “With the full implementation of the commission’s proposals ‘modern services in the labour market’, we begin the biggest labour market reform of the post-war era”.
This is a strongly worded statement, especially if we take its meaning literally that we are only at the beginning of drastic labour market reforms. When designing these reforms, the government doesn’t have to reinvent the wheel; rather, it will be able to draw on the numerous and almost unanimously agreed upon recommendations made by experts from Germany, abroad, and institutions with high reputations. We can already look forward to seeing the coalition’s performance record at the end of the legislative period. Moreover, wage policy should take into account the following aspect of the coalition agreement: “Reducing non-wage labour costs also contributes to more growth and employment”. While this is true, the same argument applies to the overall wage costs. Labour costs are and will be labour costs. With regard to education policy, the agreement states: “In ten years, we want to be one of the leading countries in the field of education ...”. It goes on to say: “We want to turn universities and research institutions in the new federal states into ‘beacons’ of the science with international appeal”.

These education policy objectives certainly aren’t timid. But apart from a statement noting that a large part of education will fall under the responsibility of the federal states, the coalition agreement remains silent with regard to how these ambitious targets should be achieved. Education policymakers would therefore be well-advised to make as much use as possible out of market-based instruments. Functioning competitive markets will solve many, if not all problems. The central office for the allocation of study placements would then become as obsolete as the Standing Conference of the Ministers of Education and Cultural Affairs.

The coalition agreement further states: “We will continue to pursue our ambitious climate protection objectives. We want to and indeed will take a leading role in Europe and worldwide”. Couldn’t the coalition party have chosen smaller goals? One can only hope that this leading role in the field of climate policy does not result in Germany taking on a similarly pioneering role when it came to job cuts due to the fact that the respective companies had to close down or move their locations to less ambitious countries when they could not compete in international markets. There is no reason why we should not pursue an effective climate policy; but many arguments speak against employment losses, which is why harmonising climate protection policy, at least within the EU, seems to be a better alternative. Some of the proclamations made in the coalition agreement even prompt a feeling of cheerful melancholy among the readers. “Our financial policy plays an important role for boosting today’s growth and employment and takes precautions for tomorrow.” I agree that the tax reform of the previous legislation period was – despite the criticism concerning some of its details – an important step towards the right direction. It does, however, prove better than its reputation. But how did it go again? Going green for pension funds (i.e. ecological tax), smoking for the inner security (i.e. tobacco tax increase) and dying for education (proposed increase in the inheritance tax). Does all of this fall under “precautions for tomorrow”? Everything really is super, isn’t it?