Monday, May 7, 2018

The Heroic German Finance Minister

Olaf Scholz
Financial Times columnist Wolfgang Münchau provides the details:
Olaf Scholz, Germany’s new Social Democratic finance minister, has proposed a budget with the following characteristics: a nominal cut in investment; a reduced ratio of defence spending to gross domestic product; a freezing of funds for development aid at 0.5 per cent of GDP; and a lower contribution to the next EU budget than what he himself had previously suggested.
The budget fulfils two narrow goals...It ensures that the government will run a fiscal surplus through the 2019-2022 budget period. And in 2019 Germany’s debt as a percentage of GDP will fall below the 60 per cent threshold set out in the EU’s Maastricht treaty.
Mr Scholz’s ambition is to push the budget into a surplus of 1 per cent of GDP or higher. Such a surplus would, over time, eradicate all public debt.
Münchau, himself, objects to this heroic plan to
keep German government spending under control. He is concerned about other EU members who are running reckless government spending programs and who will be exposed by Scholz's responsible budget management. Münchau also seems to advocate the Trumpian style of mad government spending to counter what he deems are Trumpian-style "problems" he sees emerging when the government does not spend more on defense, infrastructure, and macroeconomic central planning of the tech sector. He writes:
There is a rather simple solution to all of these problems: run a moderate fiscal deficit, say 2 per cent of GDP, invest in the restructuring of the country’s military capacity, replenish public infrastructure and encourage high-tech projects. 
Of course, Scholz is likely to ignore Münchau and other complainers of his ilk in the same manner that the then-German economic minister Ludwig Erhard, after World War II, ignored the dictates of Allied occupiers and brought on the great German Economic Miracle.

It may be tougher though battling the globalists, in the worse sense of the term, like Münchau who provides his commentary on German budget policy via a salmon-colored English-language paper than it was for Erhard to battle mere occupying generals.

-Robert Wenzel  

1 comment:

  1. "salmon-colored English-language paper" -> high end fishwrap ?