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The Idol Totters
by Michael Kratke and Georg Rammer
Monday Aug 5th, 2019 3:59 AM
Economists oppose the austerity religion and demand investments. Germans ardently believe in economic fairy-tales, that the 2007/2008 world financial crisis was a result of excessive state indebtedness, that state debts burden future generations, and that state debts always led to hyper-inflation. This only happened in a few special cases.

Austerity Religion: The Debt Brake Triggers Criticism. Economists Demand Investments

By Michael Kratke

[This article published in Freitag 14/2019 is translated abridged from the German on the Internet, Dear State, Spit out and don’t only devour!]

In Germany, the economy is a matter of faith. Morality, good and evil are involved. People speak of “the market economy” instead of capitalism. Everything that has to do with money, credit, banks and financial markets is deemed disreputable. The belief that debts are bad and state debts are the mortal economic evil stands over everything.

In Germany, the savings-pressure has had a constitutional rank for ten years. The debt brake was resolved by the German Bundestag and the Bundesrat with two-thirds majorities… It took effecting in the federal German budget in the 2011 fiscal year. The first states followed: Saxony in 2014 and Hamburg in 2019. The debt brake will be obligatory in Meeklenburg-Vorpommern, Bavaria, Bremen, Hesse, North Rhine-Westphalia, Rhineland-Pfalz and Schlesswig-Holstein in 2020. The last deviators from the virtuous economic path are Baden-Wittenberg, Berlin, Brandenburg, Saarland, Thuringen and Lower Saxony.

If it were up to German chancellor Angela Merkel, the countries of the Euro zone would
have made the debt brake into a virtue long ago. Switzerland and Germany now share the same fame of being master-pupils of neoliberalism. The idea is old; neoliberal economists have preached it for a very long time. The only economic- and financial policy that makes people blessed must be anchored in the constitution. Fickle politicians can only be hindered this way from driving the state to waste and unnecessary social spending and to exert pressure on the many covetous voters. Thus, the anti-democratic core of the neoliberal ideology is striking in the idea of a constitutional debt restriction: voting and party politicians should not be trusted. The Austrians seem to have recognized this since they blocked the 2017 attempt of the Black-Blue to introduce a debt brake according to the German model. Similar attempts already failed in the EU. What Merkel and her finance minister could not block, the austerity or savings-pressure, was dragged in through the backdoor of the fiscal pact.

Whoever in Germany dares to doubt the debt brake can expect furious resistance. Germans ardently believe in economic fairy-tales, firstly in the fairy-tale that the 2007/2008 world financial crisis was a result of excessive state indebtedness. The state indebtedness in all crisis countries first rose after the outbreak of the crisis thanks to massive bank bailouts. Secondly, people believe the very ancient fairy-tale that state debts in every case led to hyper-inflation. That only happened in a few, very special cases.

The fairy-tale that state debts burden future generations and therefore are unjust is the most effective. This is no longer true since the invention of the “perpetual state debt” a few centuries ago. A burden for future generations occurs through misguided investments and missing investments of the state. The kind of financing only plays a trifling role. The grandchildren who must live with rotted, antiquated or non-existent infrastructures and chronically understaffed or underpaid public services will not celebrate zero deficits.

When the debt brake was introduced, German state debts amounted to over 80% of the GDP. In the meantime, the debts of the country and the states have fallen thanks to low- and zero-interests for German state bonds and surging tax revenues. In 2019, German state debts are under the 60% mark of the Maastricht treaty. On this background, the debt brake almost seems like a success – as long as the striking lack of German public investment in ignored.

Slight opposition means all the economic dogmas is slowly stirring in Germany. Michael Huether, the director of the Institute of the German Economy in Koeln – and hardly suspect of leftist ideas – says “demonizing debts is no longer contemporary,” as he formulated in his 32-page paper at the end of March 2019. Huether pleads for an “innovation- and growth-oriented opening of the debt brake.” As the reason for the change of mind, German state debts are automatically shriveling thanks to the low-interest policy of the German Central Bank because the interest on German state bonds are below the growth rate of the GDP. Simultaneously, there is an enormous need for investment in the whole public sector. The debt brake must be loosened to escape the stagnation without massive tax increases. The limit of 0.35% of the GDP for all structural deficits according to the German Basic Law must be raised – and the corresponding provisions in the state constitutions changed. In the current period of rapid technological change, Germany needs massive future investments that could easily be financed on credit at the moment.

Stifled Thinking

While the way of thinking underlying the debt brake remains, a first step in the right direction is occurring. A series of conservative economists see the debt brake as excessive and rigid. It narrows the decision-possibilities of the government and parliament. A growing number of dissidents dare to question the wisdom of the zero-deficit and the debt brake. Before the neoliberal furor, the amount of state net credit borrowing should decide over the volume of public investment. Since public investments that are rightly planned and executed stimulate and stabilize economic growth, repayment of these debts is unproblematic. There can be no talk of an unjust burden on future generations. The only question is whether the generation of politicians who grew up in the neoliberal cage can escape.


By Georg Rammer

[This article published on July 8, 2019 is translated abridged from the German on the Internet,]

SECURITY is capitalized. Outward and inward security mutate into an all-dominating fixation. Parallel to this mania, threat develops into the central narrative of government. According to the state narrative about the “hybrid threat” from Russia, Vladimir Putin must be a suicide given Russia’s 16-fold arms superiority over the NATO states that virtually encircle his country. As everybody knows, NATO has expanded to Russia’s borders and hopes to bind the Ukraine and Georgia in the North Atlantic front.

We “the West” are in danger and must arm – or arm to our death. While the EU commission accuses Russia – without any evidence – of influencing the EU elections, the New York Times uncovers a US cyber attack on the Russian stream network. The German army prepares to wage an enormous cyber war. Under the heading “Connecting Europe,” the EU earmarks billions for building streets in the East to expand the strategic infrastructure and retrofit the infrastructure for military mobility. The number of military maneuvers near the Russian border increases. On one side, arms control agreements are cancelled and on the other side vast sums are budgeted for rearmament.

Plans spread by the advisor of different US presidents, Zbigniew Brzezinski in his 1997 book “The Great Chessboard, point to the military strategy toward Russia. Russia must be isolated and destabilized in the sense of the geopolitical hegemony of the only superpower US. Integrating all Eurasia from Lisbon to Vladivostok in the unipolar sphere of influence is crucial. The eastern expansion of the EU must accompany the ultimate NATO expansion with the inclusion of the Ukraine and Georgia. As we know, the plan has largely been implemented.

Can this geo-strategically motivated militarism for the “only superpower” and an economically and militarily up-and-coming EU really bring greater security? Quite the contrary, an expansion is carried out under contempt of international law and the UN Charter. The North Atlantic Treaty is wastepaper. In Article 1, members are obliged to settle all disputes so “peace, security and justice among the nations are not endangered and to abstain from every threat or use of force in their international relations.” Is expansion in the interest of the people? What a naïve question in view of the huge numbers of dead and the destruction inflicted on the assailed countries! The imperious imperial expansionism also has fatal consequences in the US since an interest- or lobby politics sees people primarily as an exploitable mass, destroys humanliness and the much-invoked social cohesion.

Therefore, the US fights its own population and not only the cheating world. A massive development of “security” machines is occurring. In his combat-gear, a heavily-armed German policeman is like a combat robot that can hardly move – armed with a cudgel, pepper spray, taser and a pistol. In nearly all German states, the state governments have given the police enormous additional legal powers (online searching, preventive custody, body cams etc) that threaten the rule of law and citizens who dare to protect government policy. A neoliberal policy ensures that apartments are unaffordable; pensions are inadequate for life while the climate, health, the environment and everything else are commodified for profit…

The arms spiral would be incomplete without the expansion of the secret services for excessive surveillance that restricts basic rights. There is never a way back or even an examination of the necessity and effectiveness of the interior minister’s resolutions… The secret services hindered investigations of the murder of the CDU politician Walter Lubcke and any critical questioning of the secret services. Instead, we witness more data collection, more money and more power for the Office of the Protection of the Constitution, new security laws and expanding the powers of the German intelligence service. Building a central office for information technology in the security realm, for eavesdropping software, the use of Trojans, and storage of air traveler data are planned.

The EU Commission published its “Report on the Action Plan against Disinformation.” According to the journalist Hannes Hofbauer, an EU-wide censorship board arose that saw the enemy in the East. The EU view of politics, the economy and society and the simultaneous elimination of critical opinions carry the day.

The claim of the tottering superiority of the West to world rule and the imperial ambitions of an internally-torn EU intent on securing its economic interests (cheap raw materials, sales markets, and trading routes) with military force destabilizes the world. Vast amounts of material, social assets of life together and feelings like empathy and sympathy are destroyed. They rule with fear, threats, war and terror because norm violations have become the international rule. Human rights are despised and NATO should replace international law. When the US threatens Iran with extermination, do the decision-makers realize 80 million people live there?

The power elite have successfully reduced “security” to the military, police and secret services. Social security, the feeling of trust and self-esteem, freedom from exploitation and oppression are part of security in everyday life. The narrative of more security veils the core of imperial power: the rule over persons and nature. “Linked security” has been the model of German security policy since 2006. All military, police and political projects should be bundled. What are the goals? Who should be protected from whom? The escalation of violence and terror threatens if critical, self-confident and empathic persons do not break through the spiral of rearmament and live out alternatives.

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