Angela Merkel’s Legacy Is One Of Chaos

by Kai Weiss

“Germany has plunged into unprecedented political chaos,” a headline dramatically proclaimed in the prestigious international Foreign Policy magazine in the wake of the German elections in fall 2017. As different parties negotiated for months to find a majority to govern, the writer of the piece, Paul Hockenos from Berlin, felt that the bad results for the conservative Christian Democratic Union (CDU) showed that “Merkel’s train wreck raises the question of her ability to lead the party and the nation.”

It is a question that even after the CDU agreed to a renewed coalition with the Social Democrats (SPD) – another “Grand Coalition” between the two grand old parties of the country, was asked again and again. An unstable government with historically low popularity numbers drifted from one crisis to another, almost collapsing seemingly every other month – like in June 2018, when the Bavarian sister party of the CDU, the CSU, threatened to end the coalition over the governments’ refugee policy. At times, Germany, of all countries, having always been immune in years past to political chaos, seemed close to getting the politics that states like Italy, Greece, or France, have had to bear with for a long time. Indeed, German society was as polarized as ever, as parties on both the far-right as well as the far-left (or, the “far-Green”) were gaining steam.

And so Merkel stepped down. After taking major beatings in state elections in Bavaria and Hesse earlier last fall, the 13-year-chancellor of Europe’s largest economy announced that she would leave her position of CDU party leader in December and would sooner than later retire as head of government as well. But as her successor, Annegret Kramp-Karrenbauer, or most often called simply “AKK,” was crowned at the party congress, one thing became ever clearer: with AKK, who is also known as “Merkel 2.0,” little would change. Instead, Germany looks into an uncertain future, which possibly has even more chaos, political disruption, and societal discord in store.

How did we get here? After all, just a few years ago, everything seemed just fine for Merkel and her left-wing conservatism that AKK wants to adopt, too. In contrast to most other European countries, Germany escaped the economic crisis of 2008 and the subsequent euro crisis of 2012 relatively unscathed, instead scoring solid economic growth and decreasing unemployment numbers ever since. On the world stage, Germany became a voice again that others listened to, both economically – as the home of industry and as export champion, as well as socially, being open to outsiders, and politically, as a defender of the liberal democratic order. No one has forgotten when Merkel proclaimed in 2015 that “Wir schaffen das” (“We can do it”), as refugees from the Arab world were rushing in in (hundreds of) thousands. No one will either forget when in the wake of the U.S. Presidential elections in 2016, some dubbed the chancellor as the new leader of the free world.

Much was deceiving, though. Economically, for instance, it is tough to praise Merkel for Germany’s success, considering it was the important reforms of her predecessor, the Social Democrat Gerhard Schröder, which put the country back on the path of success. Schröder – not Merkel, received the “Ludwig Erhard Prize” in 2016 for the pro-market policies he implemented, like his tax cuts both on corporate as well as income taxes, reductions in unemployment benefits as well as a decrease in pension benefits. When Merkel succeeded him in 2005, Germany was finally competitive again in Europe when it comes to labor costs.

Merkel, meanwhile, did very little for the German economy – except making it tougher to do business as well as find a job. Instead of lowering taxes even further like she promised, the German government introduced a minimum wage (and has increased it several times since), even decreased the pension age despite the system being in trouble already and the redistribution from the young to old having been in earnest for way too long, and conducted a costly energy transition – deciding to slowly pull out of nuclear energy production for massive subsidies in renewable energies. Electricity prices for households doubled from 2000 to 2017, and in total, the “Energiewende” could cost the country up to 1.1 trillion euros until 2050. And, perhaps most significantly, Merkel was the conductor of the drama which saw Germany bail out Greece at the height of the euro crisis, regardless of how much the population rebelled.

One can say then that Angela Merkel has become Germany’s economically most left-wing chancellor in post-war history. And as the now 64-year-old pursued this path, she alienated the business community and a big chunk of her supposedly conservative party with every day. In the battle of who would replace her, Friedrich Merz eventually came in second after AKK, only closely losing by 52 to 48 percent. The success of Merz, a strong pro-market voice who has been active in the financial industry for over a decade and even co-founded a think tank promoting the market economy, showed the split that is going through the CDU on where the biggest party of the country should head.

While the economy is one of the main reasons why the CDU is split, there is little doubt that cultural issues are the decisive factor in the increasing polarization in German society. Here also Merkel’s decisions are mainly responsible. It is, after all, her refugee policy which has caused so much dismay among voters and the rise of the first solidly right-wing party since World War II. The Alternative for Germany (AfD), which at this point is most often polling above 15 percent (sometimes closing in on twenty), has overtaken the Social Democrats and is battling with the Greens for the second spot behind the weakened CDU.

While the AfD was originally founded as a party rebuking Merkel’s economic policy and the euro as a currency in principle, it has shifted farther to the right continuously since the refugee crisis began in 2015. Germans, of course, are also enraged about the economic consequences of the refugee crisis, which will cost, as some estimates put it, $86 billion only from 2016 to 2020. Not only that, though, as the incentives for incoming refugees are particularly macabre, as they are forbidden to work until their refugee request is approved, which can take years in extreme cases. Instead, they have to spend day-in, day-out in refugee centers in boredom, meanwhile taking in large amounts of money from German taxpayers.

There is little doubt, however, that the main issue German voters see in the refugee crisis is a cultural one. With more than one million Arabs and North Africans entering the country in 2015 alone (and many more, though less quick, ever since), the cultural change has been as disruptive and rapid as ever before. Far-right voices from the AfD to the anti-immigrant Pegida, a group which has been protesting the refugee policy especially in the Eastern German city Dresden ever since the crisis commenced, often focus on the phenomenon of the so-called “Rapefugees,” i.e. higher crime rates and especially rapes by refugees. It is a phenomenon which seems to be more of a populist invention than reality outside of the shocking incident in Cologne, when mass sexual assaults by Arabs occurred on New Year’s Eve 2015.

In general, the anger of many Germans seems to stem more from the deep cultural change Germany has experienced in a matter of less than five years, with (much) more to come (refugees in general have more children than German citizens). Some call it “Islamization,” which is exaggerated, and headline producing cases like the small village of Sumte, which had one hundred inhabitants until 700 refugees where moved there, are extreme and rare. Nonetheless, there are new challenges Germans have to deal with. People who have lived in their community for decades are suddenly confronted with many newcomers who they do not know, whose culture they have never been in contact with and which they often see as dangerous, all the while those very newcomers are not very well integrated yet.

But the debate goes deeper than that: it is a debate on the very core of both liberalism as well as the nation that is called Germany itself. It is a debate on how open or closed the country should be. What is more important? Having a cosmopolitan society or finding one’s identity? And finding one’s identity it truly is in the German case, as today’s Germans never had the same sense of national identity as almost any other nation on this planet. Rather, Germans, due to the country’s dark past, have had to deal with what went down as “German guilt,” and were never allowed to develop their own national identity and culture, in fear that the ghosts of the 1930s would come back to haunt them. In this sense, today’s debate goes to the heart of what it means to be German.

Merkel’s policy then has brought a discussion to the forefront which was brewing underneath the surface ever since the great wars of the last century. But by ignoring – or sometimes even ridiculing, and more often bedeviling, one side of the debate, the chancellor might have created exactly what she was so determined to prevent: the revival of the far-right. This might be Merkel’s biggest contribution in the end. The “leader of the free world,” who has been horrific on economics, who bailed out other countries on the back of her own, who led a monumentally expensive energy transition, and who failed to follow her predecessor in liberating the German economy, was close to fall many times over the years – and for those very reasons.

What would ultimately lead to her downfall, however, was that she – as almost everyone else in the political establishment – did not give a fair hearing to those that those that did not necessarily wanted everything to stay the same it had been, but those who simply did not want their entire surrounding to change from one day to another by the government’s hand. And to those who, regardless of whether rightfully or not, were alienated by the multiculturalism and political correctness that dominated German society – a society in which, for instance, flying a German flag outside your house could easily lead to you being deemed a fascist.

Her successor, Kramp-Karrenbauer, will in all likelihood find no solution to this. She, who is called “Mini-Merkel,” will provide more of the same. More of the same is the least anyone wants right now. And so Germany is looking into a future in which two visions – “open” versus “closed,” multiculturalists versus localists, “anywheres” vs “somewheres,” are pitted against each other, one side accusing the other of bigoted nationalism, and the other side accusing the one of cultural suicide. The only thing that is sure about this future is that it will be one of uncertainty, of chaos, and ever greater polarization.

Kai Weiss is a Research Fellow at the Austrian Economics Center and a board member of the Hayek Institute.


The views expressed on austriancenter.com are not necessarily those of the Austrian Economics Center.

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