Germany’s election. Vote for my professor

Series Title
Series Details No.8443, 10.9.05
Publication Date 10/09/2005
ISSN 0013-0613
Content Type ,

A controversial economist is both an asset and a liability

“AS EXPECTED.” No German newspaper actually used this headline for the television debate on September 4th between Chancellor Gerhard Schroder and his challenger, Angela Merkel. But it would have been fitting. Mr Schroder, a television pro, performed better; Ms Merkel was less eloquent, but did a bit better than many had feared. As expected, most pundits called her the relative winner, while pollsters put Mr Schroder ahead (50% of viewers, on average, found Mr Schroder “more convincing”, a view that only 30% held of Ms Merkel). And, as expected, the debate made a grand coalition of her Christian Democrats (CDU) and his Social Democrats (SDP) a bit more likely. (As further evidence for that theory, at least one poll now shows that the CDU and the Free Democrats can no longer be sure of a combined majority.)

Still, in two ways, the event was memorable. In her final statement, Ms Merkel repeated almost verbatim the question put by Ronald Reagan in his debate with Jimmy Carter in 1980 - asking whether “our country is better off than it was seven years ago”. More remarkably, the discussion focused less on the election than on one man: Paul Kirchhof, an ex-judge who wants a 25% flat tax. Mr Schroder spoke of “this professor from Heidelberg” bent on ruining Germany's social-market economy. Ms Merkel likened him to Ludwig Erhard, father of Germany's economic miracle. A journalist asking questions made the slip of calling her “Ms Kirchhof”.

This episode suggests that Germany's election campaign has at last found its big issue, in the person Ms Merkel has recruited as her future finance minister. Hardly a day passes without his making the headlines. How many tax loopholes and subsidies does he want to get rid of to finance his flat tax? (He says 418.) Will he really get this crucial job? (Although Ms Merkel insists he will, there are doubts.)

Why this Kirchhof craze? The man himself is part of the answer. The 62-year-old stands out now merely because he is so tall. He is professorial in a good sense: a bit stiff and long-winded, but intellectually inspiring, not wonky. He likes to paint the big picture with broad gestures and vivid language. To him, German tax law is a fast-growing weed that has covered the “garden of freedom”. Previous reform efforts tried to fix “a car that is beyond repair”.

Although only a quarter of Germans understand Mr Kirchhof's reform plans, politics has made him the star of the campaign. Ms Merkel needed him not just to make people forget the weak start of her campaign, but to give her shadow cabinet some economic competence. Mr Kirchhof has served her as a floater of trial balloons; he can say things she would never dare to. Conversely, government politicians (as well as Ms Merkel's rivals in her own party) have started to use the professor as a punchbag in an effort to hurt her.

Until the debate, the political benefits of using Mr Kirchhof had outweighed the costs. But the balance has now begun to tip. The professor, who has little political experience, has proved a loose cannon. Although his flat tax could not take effect before the next election in 2009, because Ms Merkel wants an intermediary reform first, he keeps talking about the tax privileges he wants abolished. In one interview, he also called for the privatisation of public pensions, causing another stir. Ms Merkel reportedly told him to mind his mouth.

Even if Mr Kirchhof became a political liability, he is unlikely to throw in the towel before the election. But there are growing doubts whether he has the political skills for the finance portfolio, the hardest of the lot, given a budget deficit put at €60 billion ($75 billion) next year. Were he to go back to Heidelberg that would raise questions about Ms Merkel's reformist drive. Yet it could spare her the problem of having to change finance ministers.

A speedy departure might also save Germans from another disappointment. His flat tax is elegant (“beautiful”, he says), but he is naive about its prospects. He may share the fate of another non-political expert hired to solve a big problem: Peter Hartz. The ex-personnel chief at Volkswagen, who headed a commission to “modernise the labour market”, became a symbol first of Mr Schroder's drive to cut unemployment, then of its failure.

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