Mr. Felbermayr, after the AfD's election victory in Saxony-Anhalt, it is now said that the federal government has explained its policy too poorly. Does Germany have a problem with political communication or a problem with a lack of reform?
It is the job of politicians to explain conclusively in just a few sentences why a reform is necessary. But communication is not limited to reading notes. You have to start by openly naming mistakes that have happened in the past. And we would also have to create the conditions for the population to willingly support reforms.
Please give an example.
I think that people should talk about civil service in Germany. The people who have a significant say in decisions and decisions about reforms are politicians, ministerial officials or consulting university professors. They are all part of a social security system that is, on the face of it, not the issue at all. They talk about the health system and are all on private health insurance. They talk about pensions, but they have their retirement plans. Something like this is also part of communication: creating the conditions for the reforms to be credible. So that you don't get the impression that an elite is making a comfortable living somewhere and the others have to foot the bill. Credibility of reform agents is necessary in order to be able to communicate successfully.
Do you want to transfer civil servants to the normal social security systems to increase credibility?
In principle, I would try to reduce civil service, which is so widespread in Germany, as is the case in almost all other countries in the OECD. Prosecutors, judges, financial representatives and so on will always be civil servants. But the fact that teachers, university professors or clerks have to be civil servants in the Ministry of Agriculture and that there is always the suspicion that they are doing it themselves and prefer to burden others is a difficult situation. Communication also includes not giving the impression that you are preaching water and drinking wine. The savings pen should be used at least as heavily in government-related areas as in others. You have to be able to say credibly that we have really increased efficiency in the state system and trimmed away the fat; now we are moving into the other areas. This would be necessary for the credibility of politics.
They said you also have to admit past mistakes. What errors do you mean?
This includes setting the course in energy policy, phasing out nuclear energy and some funding programs. There are also some excessive implementations of European regulations. The former Green Party Economics Minister, Robert Habeck, once said, shortly before he left office, that they had taken a wrong turn with the Supply Chain Due Diligence Act. Something like this needs to be corrected. To some extent this is already underway. This often happens via Brussels, via the omnibus legislative packages. More of that is needed. There is a lot of symbolism in saying that before we talk about money, about increases in taxes and contributions, before we impose cuts in services, we have really eliminated everything that exists in terms of other obstacles to growth or the efficiency of public administration.
Are you thinking about returning to nuclear energy?
Others will have to think about whether it makes economic sense to reactivate nuclear power plants. But sincere communication involves addressing these things and then correcting them. It's similar in university politics. One has to ask oneself whether positions have been filled or created in the last ten years in such a way that they serve broad social interests. Or whether it was more of a fad, now that you can see that there is actually no money for such flowers.
What do you mean by that?
For example, I am thinking of many gender professorships. Do these really serve gender equality? Was it right to direct resources where we have great needs elsewhere? Nuclear research has been scaled down in Germany and expanded elsewhere, not just in the gender area. Was that right? We are now too late again when alternative forms of nuclear energy production that are safer, produce less waste or none at all become established in China or elsewhere. Germany is so left behind. Have you set the right priorities? The same is true in foreign policy. There is also the question: Have we too often alienated our trading partners with very moral statements without simply cooperating for mutual benefit.
The discussion in Germany is now about whether more attention should be paid to social justice and redistribution in order to support the reforms. Do you think this is the right path?
If you think about it very consistently, yes. There are many social policy programs in Germany that simply fail to achieve their goal and where the social policy goal could be achieved accurately with significantly less resources. A prominent example is Clemens Fuest's proposal from the summer to abandon the reduced VAT rates. There is a socio-political calculation behind it, not to make products cheaper, but to help people who really have little income with transfer payments. It is probably possible to save around 80 percent of the state revenue lost by reducing VAT rates without reducing social accuracy. The money saved could be used to improve effective social accuracy. Or reduce non-wage labor costs and thus improve net income across the population, including in vulnerable groups.
Do you see the tax-free “pension at 63” as a mismanagement?
Even when you retire at 63, there are a lot of people who accept the offer, even though there is actually no need. An exit from the easily available pension at 63 and in return well-equipped, low-threshold hardship provisions is better.
Why are reforms for more growth so difficult for Germany? Are Germans still doing too well economically?
I think more and more that demographics are the mother of all difficulties. A society in which the average voter, the median voter, is well over 50 is less willing to reform than a society with a median voter who is 35 years old. Because everyone asks themselves how long they will benefit from reforms that improve efficiency but are unpleasant in the short term. You would think that you would also think for the children. But many of the people in the relevant electoral groups have few or no children. In addition to demographics, there is a very pronounced risk aversion in Germany, among the population, in the ministerial bureaucracies and in politics. A promise that the economy will suddenly grow after a reform does not give you 100 percent certainty. But in Germany you have 100 percent certainty that there will be a failure on the way to these reforms.
