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The Greens are fighting for power

Robert Habeck and Reiner Hoffmann have written a joint essay for the FAZ. It is about public debt and investments, but also about the Corona crisis and tax policy. This essay is equally remarkable from many points of view. It contains a lot of clever and progressive stuff, but it is not really new and has been preached like that by the pages of thought for ages. The essay is also a sophisticated power and party political move. The Greens seek and find the connection to the trade unions, which in turn secure their access to power in a political future without the SPD or even the Left party. At the same time, however, the essay is also a backdoor for the Greens to stand in the way of a progressive tax policy. The greatest weakness of the text, however, is that Habeck and Hoffmann enter to resolve the contradictions of left-wing demands, but get themselves entangled in contradictions.

Let us first come to the positive. What Habeck and Hoffmann write about the issues of public debt and Investments is not only perfectly correct, but also gratifying from their own pen. Yes, debts and loans are not per se negative or problematic; especially if they are used for investments that maintain or better expand the economic base of our economy in a meaningful way and make it fit for the future. Yes, the ideology of black zeros and debt brakes is counterproductive and should be overcome today rather than tomorrow. Yes, in an economic crisis, the state must not “save”, but should take a lot of money in hand in order to cushion the downturn with meaningful investments. Yes, Germany does not have a debt problem, but a dramatic investment backlog. And finally: yes, if we want to solve the economic problems of our time, we must not only squint on the debt, but should actively tackle these problems and now take money in hand. Because debt must always be seen in the context of economic performance and it would be better anyway to see credit-financed investments as investments and not as debts. Last but not least, Habeck and Hoffmann describe the problems quite precisely: the current Corona crisis, the climate targets, the energy transition, the transport transition, renewable energies, restructuring of industry and agriculture and above all social inequality, which according to the authors was also “a major social Problem even before the pandemic”. Very right! For all these tasks, the state needs money and it is important to de-tabulate it, to finance the necessary investments with loans that contradict the prevailing ideology of austerity.

This should not necessarily be new for the normal-thinking person. Apart from the CDU / SPD there are experts and of course your own mind tells you that you can compare state with private, or economic in any way. Progressive economists such as Heiner Flassbeck have also held these positions for ages. Of course, this does not make the essay any worse; on the contrary. It is very gratifying that, with Habeck and Hoffmann, two very influential people in political Germany are now positioning themselves so clearly on progressive macroeconomic statements. In the recent past, the greens in particular had not exactly been noticed by macroeconomic reason, as they openly flirted with austerity policy and, moreover, lost themselves in meaningless phrases of criticism of growth and zero growth. Judging by these green heresies, it is almost revolutionary if your party leader clearly commits himself to the goal of an ecologically and socio-economically oriented growth and here accepts the demands of the trade unions. Some party members will surely jump in the square. Well done!

Perhaps the actual explosive force of the joint essay lies not in the content, but in its symbolism. The Greens are a party of liberal academics and higher earners who have no greater relation to the" normal " working workers and employees. Their political home so far has been mainly the SPD and the Left party and unfortunately more and more also the AfD. If you read the essay by Habeck and Hoffmann, you would almost wish that such clear positions would be put forward by the leaders of the SPD. Just imagine that Olaf Scholz would write an essay on this topic. Especially for the SPD, this rapprochement between the Greens and the DGB is therefore also a blow in the counter, since this clever strategy of the Greens could also make parts of the last voters disenfranchised. Apparently, the greens of the SPD want to take the role as a left-liberal people’s party. This cannot be blamed on them, since the SPD has done everything in its power to make itself superfluous. Unfortunately.

But this approach also represents an extremely clever strategy for the DGB. Until now, party politics had been very much focused on the SPD and – albeit to a much lesser extent – on the Left party, such a partnership broadened its options. Habeck and Hoffmann conclude their essay with the sentence “This is what we need so that the big and necessary changes can succeed”. That already sounds like a common Agenda and that is certainly wise in terms of power strategy. The DGB also seems to have lost hope that the SPD and the Left party will be represented in the federal government in the future. Of course, it is wise to jump quickly onto the train that will make the race in the end. In this way, the DGB secures an open ear for a future ruling party and its political influence.

But let us now come to the points of criticism. Habeck and Hoffmann have come to dissolve a “contradiction” into which, according to the title of the essay, “The Left would have become entangled”. It is about the implicit logic that one – crisis-related-additional expenditure must be compensated by tax increases. And you’re right about that. Especially in times of crisis, it makes no sense at all to siphon off the money that one invests in one place via taxes and levies in another place in the same period. Investments may well be financed by loans, which will only be repaid in later periods. There is therefore no compulsion at the material level to offset higher expenditure in the same period by higher income. So far, so good. But why do the two authors address this to the"left"? At least I don’t know of any well-known left-wing fiscal politician who would establish this connection in this way. It is of course true that both the Left party and many people from the extended left spectrum demand higher taxes; but not to directly finance additional investments.

To put it bluntly: the demand for higher taxes for top earners, a wealth tax or even a wealth tax is not a rejection of loan-financed investments. For example, we currently have a major Problem that the federal states and the municipalities cannot cover their running costs from the revenue from taxes and duties. These are not investments, but consumption expenditure. So if you demand – which would make a lot of sense in macroeconomic terms-that municipalities and states should hire more police officers, teachers, social workers or nurses, then you also have to provide them with the means to do so. And since these are explicitly not investments, but consumption expenditure, they should also be covered by current income and not by loans. But this requires higher taxes. And no, the digital tax thrown into the room by the authors and the financial transaction tax will not be able to close this gap.

Apparently, the two authors also forget the point they have identified as one of the central problems: injustice and ever-increasing social inequality. Thus, the whole Text does not even contain the term “redistribution”. However, in order to stop or even reverse the increasingly massive spread of the income and wealth gap, it is “only” not done with investments. Rather, the state would have to proceed according to the Robin Hood principle and siphon off money at the top end of the income and wealth scale, which it would then distribute again to the bottom end in the most sensible way possible. And that is not possible without tax increases.

In the end, Habeck and Hoffmann do exactly what they want to criticize with their essay – they get entangled in contradictions. And one can certainly assume that this is exactly what is wanted. Progressive tax concepts are a major Problem in view of a coming black-green coalition in the federal government and even more so for the soon-to-begin election campaign. But not only that. With the comparatively wealthy clientele of the Greens, who always also flirts with the FDP, such demands are not particularly well received. The DGB calls again and again for a property tax, but does not pull out a leg, in order to put an exclamation mark on this subject. Both Habeck and Hoffmann are, so to speak, friends of a wealth tax as long as there is no realistic Chance that it could be implemented.

And here one is now building argumentatively. Tax increases and the demand for a wealth tax may not be directly linked to the necessary new debt for investments in macroeconomic terms. That’s correct. However, it is wrong to waive these demands because they are a necessity even without the direct allocation on the expenditure side. The two authors seem to see it differently. And to mask this, they distort the debate. As long as the state has to make higher investments due to the crisis, the higher taxation of large incomes and assets should be waived. At least every SPD politician knows this sentence. This can be made up for when the economy is buzzing again and the investment backlog has been made up; knowing that this will never be the case. Although Habeck and Hoffmann are basically committed to a more progressive tax system, they are postponing this until the end of the day. Although they remain “coalition-capable”, they also betray their own demands for more socio-economic justice and social equality. You could also say that Greens and trade unions are entangled in contradictions.