Hoover Daily Report

Angela Merkel's Gilded Status Quo

via Wall Street Journal
Tuesday, September 24, 2013

By German standards, Angela Merkel scored a landslide victory in Sunday's election. But remember Midas, the mythical Greek king, who faced starvation because his touch turned everything—food and drink included—into gold. Chancellor Merkel appears to have the same touch. She pulled in 41.5% of the vote, nearly eight points more than four years ago—and the best showing for her Christian Democratic Union in 20 years. But her golden bowl is empty. Five seats short of an absolute majority, she will have to pass it around and beg for help from a coalition partner.

Of course, she will find some friendly souls. The Christian Democrats have two possible coalition mates, the most likely being the center-left Social Democratic Party (SPD), which brought in just under 26% of the vote on Sunday. A far less promising candidate would be the Green Party, with around 8%. Yet both options spell trouble, presaging long and complicated haggling and perhaps a shaky government down the line. Sustainable victories are made from different stuff.

The SPD ruefully remembers the last time when it got into bed with Mrs. Merkel. Sharing the government with her after 2005 turned out to be a deadly bet. At the end of the term, the SPD was trounced at the polls in the 2009 election—with 23%, their worst take in postwar history. The notion of a "Grand Coalition 2.0" now foreshadows a treacherous marriage, sure to have the SPD stubbornly fighting for its identity and independence.

At the same time, Mrs. Merkel's junior partner would be tortured by temptation. Though Sunday's election marked a victory for the Christian Democrats, the poll also delivered a slight majority of Bundestag seats to the combined parties of the left. Theoretically, the SPD, the Greens and the hard-left Die Linke party could govern as a threesome. In practice, they can't—not yet, at least. For the SPD, Die Linke is anathema. The heir of the East German communists, Die Linke has pulled in all those alienated Social Democrats who loathed their former party's so-called "right-wing deviationism."

Naturally, the SPD looks none too fondly at these renegades. But who knows? Like money, power talks. And life with Mrs. Merkel will grate. So somewhere in the future, perhaps in 2015, the Social Democrats might swallow their hatred of the hard-left and bolt to form a government with Die Linke and the Greens. The very prospect, dim as it is right now, will make for a rocky marriage between the Christian Democrats and the Social Democrats.

Then there is the Green option—possible, though not likely. It all depends on how quickly the Greens can manage to get rid of their double-headed leadership consisting of Jürgen Trittin and Katrin Göring-Eckardt. The Greens lost 2.3 points on Sunday compared to the 2009 election, after the joint-leadership duo dragged the party sharply left. They promised what politicos should never promise: higher taxes, especially for married folks with two incomes. Their environmentalist clientele—largely well-heeled urban professionals and public servants—were not amused.

If the Greens were now to downplay their nanny-statism, social engineering and soak-the-better-off strategy, they might make a tolerable match for Mrs. Merkel. But they would have to do it quickly and credibly—and without tearing the party apart.

The deeper meaning of this strange election, triumphal as it was for the once and future chancellor, is of a watershed in postwar German history. For the first time since 1949, the liberals—the Free Democratic Party—will not be represented in the Bundestag, having failed to clear the 5% hurdle. Not to put too fine a point on it, the ejection of the FDP (which fell from a 15% showing in 2009) leaves Germany with a parliament of Tweedledums and Tweedledees. Gone is the one and only party that is supposed to stand for free-market economics, low taxes and small government.

Germans are left with four parties in power that range from pale-pink (the Christian Democrats) to the reddish (the Social Democrats and Greens) to the deep-red (Die Linke). They all—even the Christian Democrats—add up to a wall-to-wall social-democratic consensus. The hallmark of this consensus is an all-providing state that taxes, spends and regulates.

The differences between these parties are not about principles, but about numbers: how much child support, how high the minimum wage, how many taxes, how much redistribution? In other words, Europe's richest and most successful country has opted for a kind of gilded status quo. The unspoken message is: Spare me the risk, toil and trouble, never mind rampant technological change and the chaos just beyond Europe's borders.

Entering her third and probably last term, Mrs. Merkel perfectly represents this view—this is why she reaped her fantastic victory. Optimistic souls in the German commentariat think that she will put her triumph to good use and hope that the chancellor will now out-Schröder her predecessor Gerhard with a new reform agenda.

Yet why should she, given that her mandate is not a transformational one, but a vote for the status quo? Germany in 2013 is a happy country, better-run and far better-off than Europe's other major countries: Britain, France, Italy and Spain. Happiness is what economists call "Pareto optimality"—you don't gain by moving off course.

So the odds are that Mrs. Merkel will stay the course, with a couple of degrees to the left or the right. She will speak and act softly on the European project. She will tinker with the economy but not reinvent it, though plenty of trouble lurks beneath the shiny surface.

Unless, deep in her heart, Mrs. Merkel realizes in this moment of her historical victory that nothing fails like success.

Mr. Joffe is editor of the German weekly Die Zeit and a fellow at the Institute for International Studies and the Hoover Institution, both at Stanford University.