Germany’s president. In praise of economists

The case for Horst Kohler

IT WILL hardly be news when Horst Kohler, the former boss of the International Monetary Fund, wins the German presidency on May 23rd. His political sponsors, the opposition conservatives and liberals, have a big majority in the electoral convention. More interesting is that he will be the first economist to occupy the job. Admittedly, the presidency comes with little power. But it offers a platform from which to exert real influence, mainly through weighty speeches. And Mr Kohler comes highly recommended. “He has more economic brains than Germany's entire political class,” according to Helmut Schmidt, a former chancellor who considers himself something of a leading economic light.

Even if Mr Schmidt exaggerates, it is a good moment to have an economist as president - because Germans need a dose of economics to help them grasp the need for painful reforms to boost their economy. Knowledge of economic concepts is as dismal as the science, say opinion polls. In one, only 5% of respondents passed basic financial tests. More than half did not know the difference between a credit and a debit card, or between shares and bonds. Among young Germans, 69% either had not heard of the concepts of supply and demand, or could not describe them correctly. Some 59% had “no idea” what happens on a stock exchange.

Such ignorance may have mattered little during the years of Germany's Wirtschaftswunder, when a booming economy underpinned a generous welfare state that took many financial decisions for citizens. But with the country's welfare system in chronic crisis, Germans - like other Europeans - will increasingly have to take care of such matters themselves. What is more, many Germans have a deep-rooted dislike of things economic. To many, market forces smack more of selfishness than of freedom to choose, because they are thought to turn social humans into grasping egotists. That is one reason why so many are suspicious of Anglo-American-style reforms. Gesine Schwan, the Social Democrat running against Mr Kohler, expressed this view when she gave warning against an “economisation of all of life”.

Mr Kohler could use his bully pulpit to enlighten not just fellow citizens, but fellow economists. Academic economists in Germany tend to fixate on rules and targets, such as the arbitrary limits on budget deficits set by the euro-area's stability pact, itself a prime example of German thinking. Similarly, many monetary experts still insist that the European Central Bank should focus on controlling the money supply, just as the German Bundesbank did. In both cases, their American and British colleagues have come to espouse less rigid aims.

Mr Kohler has already said that he will throw his weight around to promote the cause of economic reform. But there is a risk that he himself could turn out to be too much of a dry academic. For Germans need encouragement as well as lessons in economics. The country has fallen into a collective depression that may itself be harming prospects of recovery. This is partly because bashing the country has become such a popular sport. As Johannes Rau, the outgoing president, put it in his last big speech on May 12th: “I know of no country in which so many in office or in charge take such great delight in talking so negatively about their own country.”

Horst Köhler is the first economist to become President of Germany.

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