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Of monsters and presidents

by DoDo Tue May 20th, 2008 at 05:14:59 AM EST

As Fran reported in the Salon, Horst Köhler, Germany's figurehead President, gave a much-noted interview to weekly magazine Stern, in which he attacked financial capitalism head-on, speaking some quite sharp words:

stern-Interview: Köhler nennt Finanzmärkte 'Monster' stern-Interview: Koehler calls financial markets 'Monster'
Bundespräsident Horst Köhler hat die Banker dazu aufgefordert, sich zur Schuld an der Finanzkrise zu bekennen. Er vermisse noch immer "ein klar vernehmbares mea culpa", sagte Köhler im Interview mit dem stern. "Jetzt muss jedem verantwortlich Denkenden in der Branche selbst klar geworden sein, dass sich die internationalen Finanzmärkte zu einem Monster entwickelt haben, das in die Schranken gewiesen werden muss."Federal [representative] President Horst Köhler has called upon bankers to confess their guilt for the financial crisis. He is still missing "a clearly audible mea culpa", Koehler said in an interview with stern. "By now, it must have dawned on everyone who thinks responsibly in the industry that international financial markets have developed into a monster, which must be contained."

On your knees, bosses! But wait, it gets better - he names some of the insanities of the Anglo Disease we discuss on ET:

Die Branche habe "kaum noch Bezug zur Realwirtschaft. Dazu gehören auch bizarr hohe Vergütungen für einzelne Finanzmanager." Die Finanzwelt habe sich "mächtig blamiert".The industry has "barely any relationship to the real economy remaining. Part of this are also bizarrely high compensations for individual financial managers." The financial world has "disgraced itself mightily."

Let's have a closer look at what this was all about.


Köhler continued by, gasp, demanding regulation.

Zur Kontrolle der Weltfinanzmärkte forderte der Bundespräsident, der früher Geschäftsführender Direktor des Internationalen Währungsfonds (IWF) und Präsident des Deutschen Sparkassen- und Giroverbandes gewesen war, eine "strengere und effizientere Regulierung". Der Bundespräsident forderte zugleich eine strategische Überprüfung des deutschen Finanzsektors. "Die meisten Landesbanken haben offensichtlich kein tragfähiges Geschäftsmodell", sagte Köhler. Er habe daher schon vor seiner Zeit als Bundespräsident für die beste Lösung gehalten, dass die sieben beherrschenden Landesbanken zu einer Zentralbank der Sparkassen fusioniert würden.To rein in the world financial markets, the Federal President, who used to be executive director of the International Monetary Fund (IMF), as well as president of the Association of German Savings Banks, demanded a "stricter and more efficient regulation". The Federal President also called for a strategic review of the German financial sector. "It's obvious that most state banks [German states have their own banks] have no viable business model," said Koehler. Therefore, already before his time as Federal Presiden, he thought the best solution would be if the seven dominant state banks wold be merged into a central bank for savings banks.

The second half of this is not about private banks, and Martin ask me to emphasize that the savings banks whose association he headed earlier are vehemently anti-privatisation, but it must be noted that some of these banks played rather fast and loose with money, and burned away a lot on US financial markets.

In the full (paper) version of the interiew, Köhler also says that there was a real danger of global financial meltdown, and proposes that the IMF be given the power to regulate global financial markets.


Now, of course, the captains of financial capitalism and their propagandists were none too pleased. You already read some of it in the latest FT editorial deconstructed by Jérôme. In Germany, none less than Deutsche Bank's Swiss boss, Josef Ackermann weighed in with a reply. With full denial.

Finanzmärkte ein ,,Monster"?: Ackermann widerspricht Köhler Financial markets a "monster"?: Ackermann contradicts Köhler
,,Es wäre schädlich für unser künftiges Wirtschaftswachstum und unseren Wohlstand, Finanzinnovationen generell zu dämonisieren", sagte Deutsche-Bank-Chef Josef Ackermann der Frankfurter Allgemeinen Sonntagszeitung: ,,Nur ein kleiner Teil des Finanzsystems hat den Markttest nicht bestanden", fügte Ackermann hinzu."It would be detrimental to our future economic growth and our prosperity, would financial innovations be demonised in general", Deutsche Bank chief Josef Ackermann said to the Frankfurter Allgemeine Sonntagszeitung newspaper: "Only a small part of the financial system failed to pass the market test", added Ackermann.

Just the markets in action, nothing to see, move on! As for Köhler's demands for a mea culpa:

,,Ich fühle mich da nicht angesprochen", sagte Ackermann: ,,Schon im vergangenen Sommer habe ich gesagt, dass die Banken Fehler gemacht haben - inklusive wir selbst." Ackermann bestreitet zudem die Aussage Köhlers, im Verlauf der Krise habe die Gefahr des Zusammenbruchs der Weltfinanzmärkte bestanden: ,,Davon kann keine Rede sein." Und er ergänzte: ,,Ich sehe keine Anzeichen für eine neue Weltwirtschaftskrise." Die Auswirkungen der Krise auf die Realwirtschaft nannte er ,,erträglich"."I don't feel addressed by it", Ackermann said: "I said last summer already that the banks made mistakes - including ourselves." Ackermann also denies Köhler's claim that during the crisis, there was a [real] risk of the collapse of world financial markets: "That's out of the question."And he added: "I see no signs of a new global economic crisis." He named the impact of the crisis on the real economy "bearable".

Just a hiccup.


Now, though he attacked high manager compensations before, Köhler is anything but an anti-capitalist. His previous office was head of the IMF.

Even before taking office, Köhler broke the unofficial rule to not take part in daily politics - and ever since, he is an on-the-loose advocate of "reforms". He thinks Schröder's Agenda 2010 reform package (of which the Harz IV labour law is most well-known; and which was partially undone recently) didn't go far enough. Just a month ago, the sub-title of a Stern profile of Köhler quoted him calling for "reforms, reforms, reforms". Even in the interview, he calls for the abolition of EU (and US) agrarian subventions "to alleviate world hunger" (huh? no hunger because South American agrobusiness can sell on European markets?...).

It must also be said that the media had great success in establishing his image as an outsider and contrarian; and then in spinning his popularity as one earned by his "reform" advocacy -though, no doubt, his popularity owes not just a little to his youthful appearance.

German Federal President Horst Köhler with fans in and beyond the media. from Bremen's City if Science exhibition site.


So, what's this sudden activism? It's election time.

Köhler stands for re-election in just about a year. German Federal Presidents are elected by a joint session of the Bundestag and delegates of the regional parliaments. Köhler is again the candidate of Chancellor Merkel's Christian Democrats (CDU) and their Bavarian sister party the Christian Socialists (CSU; the two together are called "Union"), but that's not enough for a victory. So the Union was lobbying hard for the support of its Grand Coalition partner, the Social Democrats (SPD).

And now Köhler himself. Indeed he voiced another SPD-firendly opinion in his interview: he supports the German exit from nuclear energy, citing final storage and safety concerns (though he thinks the transition from nuclear+coal to regeneratives will take longer than "we wish today", thus giving a positive signal to his CDU backers too).

Indeed the Union soon used the interview to put pressure on the SPD, whose left wing openly criticised Köhler's activism. Enter Günther Beckstein, Bavaria's arch-conservative PM (also see "Immigrant youth crime"...), in a SPIEGEL interview:

Präsidenten-Streit: Beckstein verlangt von SPD-Spitze Bekenntnis zu Köhler Presidential controversy: Beckstein demands commitment to Köhler from SPD leadership
"Es ist der Würde des Amtes des Bundespräsidenten unangemessen, dass die SPD-Spitze tatenlos zusieht, wie Hinterbänkler aus den eigenen Reihen den amtierenden Bundespräsidenten auch in seiner Person in Frage stellen", so Beckstein zu SPIEGEL ONLINE."It is incommensurate to the dignity of the office of Federal President that te SPD leadership looks on without action as backbenchers from its own ranks question the incumbent Federal President also in his person", Beckstein said to SPIEGEL ONLINE.

"Incommensurate", hahaha!!! And then comes the not so subtle suggestion:

"Frank-Walter Steinmeier und Kurt Beck müssen jetzt zeigen, dass sie noch die Kraft haben, eine peinliche und unsinnige innerparteiliche Diskussion um den Bundespräsidenten zu beenden, indem sie sich frühzeitig für eine weitere Amtszeit von Horst Köhler aussprechen", sagte Beckstein."[Vice-chancellor & foreign minister] Frank-Walter Steinmeier and [party chairman] Kurt Beck must show now that they still have the power to end an embarrassing and senseless intra-party discussion on the Federal President, by speaking out early for a second term of Horst Köhler", Beckstein said.

So fuck intra-party democracy, and the measure of power is... not sending anyone into the race and support the candidate of another party?... Note this comes from a PM whose party's projected losses in the next state elections ( -10-15%, albeit reducing an astronomical 60.7%) could cost the conservatives their majority among the President electors.

These comments might in fact have been counter-productive. For, in the following days, the mostly Köhler-friendly SPD leadership bucked to pressure from within the party, and secretly met the party's 2004 candidate - according to leaks, to ask her if, eventually, she would be willing to stand for election again - and she seemed willing. Publicly, the SPD says they will decide once Köhler himself declares his intentions.

The candidate who could collect the leftist votes, unless the defeatists of the SPD choose to endorse Köhler in the end: Gesine Schwan, head of the Europe University Viadrina in Frankfurt on the Oder (on the Polish border), and a political scientist and a SPD member of long standing. She is a conservative within the SPD, didn't get too high in politics because of a conflict with Willy Brant over her anti-communism, so Left Party votes can't be assumed automatically (though she got it last time).

Gesine Schwan. Photo from her university homepage.

The CDU reacted to this news with ever more growling in Beckstein's fashion.

:: :: :: :: ::

But let's go back from political positioning to bigger issues. Whatever the background, the rhetoric used is clear evidence of one thing: the shift of the Overton Window. However often the SPD manages to undercut itself, the German Left Swing we discuss for two years now goes on.

Two other recent topics evidencing this:

  • There is debate within the Union parties about using the good budget situation for some loosening, which didn't cease even after Merkel said no. In the CDU, it's the employee and middle-class wing that found its voice. But the real push comes from the CSU.

    The CSU's recently elected chairman, Erwin Huber, is a well-known market-liberal. But with elections in Bavaria nearing, he rediscovered the Socialist in Christian Socialist: he presented an €28 billion tax cut plan, which would raise the tax-free income limit for families, reduce the lowest tax bracket, and keep the highest (but, and there is always a but, also raise the lower income limit for the second-highest). (The WSJ's reaction to this was the subject of Jérôme's Head explodes? WSJ against tax cuts in Germany?! diary.)

  • Labour minister Olaf Scholz (SPD) will present the latest poverty report this week. According to an advance interivew, it shows that despite(?) the economic upturn, the poor - as defined by income less that 60% of the median - rose to 13% of the population, with another 13% kept above only by social benefits. Beyond the well-known group of long-term jobless, the report notes especially the high exposure of single parents, and the growing phenomenon of the working poor (who can't rise up despite having a job).

    While the minister announced the report with the header "the social state is effective" (meaning the second 13%) The SPD used the occasion to again warm up a theme they pursue on and off ever since the coalition talks (one running counter of Schröder's heritage): the demand for the introduction of the minimum wage in Germany.

Display:
Here is the latest example of how the SPD insists on shooting itself in the foot. (Or at least how it allows the media to jump on it.)

During the Dalai Lama's recent visit to Germany, foreign minister Franz-Walter Steinmeier (Schröder's one-time confidante, über-centrist) made explicit that he won't meet him "to avoid diplomatic complications". But development minister Heidemarie "Red Heidie" Wieczorek-Zeul, also SPD, met the Dalai Lama for half an hour. This made party boss Kurt Beck (pragmatist power technician) angry, because Red Heidi didn't inform him in advance. Meanwhile, speakers flip-flopped between claiming Red Heidi met the Dalai Lama as private person or as government member. This nice family drama was just what the media was waiting for.

*Lunatic*, n.
One whose delusions are out of fashion.

by DoDo on Mon May 19th, 2008 at 05:07:42 PM EST
..will be bearsternsable' is what he meant to say.

You can't be me, I'm taken
by Sven Triloqvist on Mon May 19th, 2008 at 05:36:04 PM EST
. . . "the impact on the economy will be bearish."  : )
by keikekaze on Tue May 20th, 2008 at 01:28:50 AM EST
[ Parent ]

And now Köhler himself. Indeed he voiced another SPD-firendly opinion in his interview: he supports the German exit from nuclear energy, citing final storage and safety concerns (though he thinks the transition from nuclear+coal to regeneratives will take longer than "we wish today", thus giving a positive signal to his CDU backers too).

Once again we see how the political process avoids facing the crisis of our civilization, tending toward compromise when in certain situations there is none.  That Köhler himself doesn't see the advantage in having the world's export leader use it's already strong advantage in renewables to further cement its position, while at the same time pointing the rest of the globe toward the financial/industrial effort necessary to secure our sustainable future, shows the lack of vision by this banker.  Even in banking terms he should recognize the financial advantage accruing to a globally industrial Deutschland, his prime constituency, but instead leaves the chance to use vision aside, rather pandering to political process.

I'm pleased he's taken a public stance against facets of Anglo Disease, but disappointed that he doesn't yet see what's truly at stake.  Fook man, stand on what Germany's already shown the entire world, and take it farther!

"Life shrinks or expands in proportion to one's courage." - Ana´s Nin

by Crazy Horse on Mon May 19th, 2008 at 05:37:13 PM EST
Of course, i forgot to say i learned from this fine, detailed diary, so Danke.

"Life shrinks or expands in proportion to one's courage." - Ana´s Nin
by Crazy Horse on Mon May 19th, 2008 at 05:41:24 PM EST
[ Parent ]
Actually, he did talk about renewables, what's more, even about significant changes, but he gave a sop to everyone.

"Ich halte es für zwingend, dass Deutschland eine entschlossene langfristige Strategie zur Nutzung regenerativer Energien und zur massiven Verbesserung der Energieeffizienz entwickelt und umsetzt", sagte der Bundespräsident. "Doch es gibt auch ernst zu nehmende Studien, die uns eine Energielücke vorhersagen, mit erheblichen Risiken für Wirtschaft und Arbeitsplätze." Köhler fügte hinzu: "Ich würde nicht ausschließen, dass wir mehr Zeit brauchen, und mir wünschen, dass wir darüber eine Diskussion mit den Bürgern führen: Traut ihr euch eine so tief greifende Umstellung zu? Wisst ihr, welcher Veränderungsbedarf und welche Veränderungsgeschwindigkeit in den Lebensgewohnheiten auf uns zukommen?""I believe it is imperative that Germany develops and implements a firm long-term strategy for the use of renewable energy and for massive improvement in energy efficiency", the Federal President said. "But there are also serious studies which predict us an energy gap, with significant risks for the economy and jobs." Köhler added: "I would not exclude that we need more time, and I would wish that we have a discussion with the citizens: 'Do you dare such a profound changeover? Do you know what demand of change and what speed of change in lifestyle comes at us?"


*Lunatic*, n.
One whose delusions are out of fashion.
by DoDo on Mon May 19th, 2008 at 06:44:45 PM EST
[ Parent ]
[...] it shows that despite(?) the economic upturn, the poor [...]

Not so.
From FAZ
"Der Bericht führt aus, dass bis 2005 die Bruttolöhne gesunken sind und die Einkommensverteilung ungleicher geworden ist. [...]
Das Armutsrisiko für Ältere [poverty risk for olders] ist aktuell berechnet worden. Es ist gering. Ende 2006 haben nur 2,3 Prozent der Alten Grundsicherung bezogen. Die Wahrscheinlichkeit, auf arme Kinder zu treffen ist viel größer als die, armen Rentnern zu begegnen."
The report focuses on numbers until 2005. And until 2005 the economy was very weak, wage increases were low, but the stock market soared despite that... I'm not convinced, that this is too telling about now, at least not that the trend is still the trend today.


Der Amerikaner ist die Orchidee unter den Menschen
Volker Pispers

by Martin (weiser.mensch(at)googlemail.com) on Mon May 19th, 2008 at 05:55:19 PM EST
OK, so my sources did over-interpretation.

I note that this about data only up to 2005-6 is not in the Bild interview, and the report is not yet up on the BMAS site, but I just found an internet short version on the government site. I quote one interesting graph, showing poverty on the basis of income without social transfers (grey) and with them (blue):

I note critically however that you, like FAZ and the government, picked out positive developments (minimal number of poor old people, halving of the homeless since Schröder took office) while the overall poverty number rose.

*Lunatic*, n.
One whose delusions are out of fashion.

by DoDo on Mon May 19th, 2008 at 07:03:16 PM EST
[ Parent ]
OK. This is so bizarre I could write a separate diary deconstructing it:

Der Anteil der Beschäftigten im Niedriglohnbereich hat von 2002 auf 2005 um 0,9 Prozentpunkte von 35,5 auf 36,4 Prozent zugenommen. Das ist aber nicht nur auf die gezahlten Löhne zurückzuführen, sondern auch auf die Zunahme von Teilzeitbeschäftigung und rückläufige Arbeitszeiten. Während Arbeitslose ein Armutsrisiko von 43 Prozent aufweisen, reduziert es sich bei Erwerbstätigen deutlich auf sechs Prozent. Das zeigt, wie wichtig es ist, Menschen in Beschäftigung zu bringen.


*Lunatic*, n.
One whose delusions are out of fashion.
by DoDo on Mon May 19th, 2008 at 07:06:41 PM EST
[ Parent ]
A lot of relevant information is missing. How do they define low wages? Per hour, or per month? How large is the share of part time workers in this increase in the number of low wage jobs? The percentage of the people who work and are poor is of course lower than the percentage of jobless people who are poor, but that does not need to mean anything. Has there been an increase in the percentage of the working poor?
by nanne (zwaerdenmaecker@gmail.com) on Fri May 23rd, 2008 at 04:05:52 AM EST
[ Parent ]
It may have technical reasons why the poverty number for old people is more up to date than the general number. And its being more up to date was the reason I cited it.

The FAZ article as a whole is of course very selective, e.g speaking of the high share the rich pay of the income tax, despite indirect taxes in the meantime make a higher share. Or speaking of people with incomes around 50000 Euro brutto a year, while this is as well the number, where one can choose a privat health insurance, which is much cheaper for a single (not so for a family, as one has to pay for each family member separatly).
But I think the point that 2005 may not show the whole picture may well be valid and therefore your picture could be slightly to negativ.

However, as I recently complained there would be too few focus on the very poor, I can hardly complain that you focus the view on exactly those poor - as you have done before, but I think with relatively few comments=acknowledgement(?)

Der Amerikaner ist die Orchidee unter den Menschen
Volker Pispers

by Martin (weiser.mensch(at)googlemail.com) on Mon May 19th, 2008 at 07:21:26 PM EST
[ Parent ]
But I think the point that 2005 may not show the whole picture

Yes, I acknowledge that. (As I said, when writing the diary, I didn't realise the data is only up to date to 2005.) But, in the case of Olaf Scholz, he also defends Schröder's reputation.

relatively few comments=acknowledgement(?)

I'm not sure I understand what you mean. Do you mean that when I wrote on such issues, others didn't comment much in my diary? And, you interpreted that as lack of acknowledgement on part of the majority? If that is the case, I note I often got lots of recommends even if I got few comments.

*Lunatic*, n.
One whose delusions are out of fashion.

by DoDo on Tue May 20th, 2008 at 05:49:28 AM EST
[ Parent ]
Ooops, didn't read the New Users guide that well.
I didn't know how to recommend a diary at all until just now.

Der Amerikaner ist die Orchidee unter den Menschen
Volker Pispers
by Martin (weiser.mensch(at)googlemail.com) on Tue May 20th, 2008 at 09:10:52 AM EST
[ Parent ]
Some commentary on that graph of below-60%-of-median poverty in Europe.

  • I said it before, I say it again: despite the antics of the insufferable Václav Klaus, the Czech Republic has been rather modest in terms of 'reforms' until recently. (Klaus himself didn't do much more in his time as PM than the ill-fated coupon privatisation.) So it being both co-best in after-social-transfers poverty, and being one with a broader social support, is less of a surprise to me.

  • On the other hand, all of the Nordic countries are surprisingly uneven pre-social-transfers. What could this mean?

  • Note Slovenia [Slowenien]. Just recently, I was reminded that it is the perfect counter-example to flat tax arguments: it has a very high growth like the the flat tax countries from Slovakia to Lithuania, yet it has much higher wage levels - and a progressive tax peaking above 40%.

  • You see that despite high poverty rates, running against the stereotype, the social state is not at all dead there. Meanwhile, the Mediterraneans - Spain, Italy, and above all Greece - seem to have very ineffective social states. (Either that, or they have lots of social benefits given in nature for free rather than in the form of money transfers.)


*Lunatic*, n.
One whose delusions are out of fashion.
by DoDo on Tue May 20th, 2008 at 06:05:20 AM EST
[ Parent ]
As to your second bullet, I would hazard the guess (and a guess is all it can be without access to the raw data) that severance payments and employer-paid unemployment insurance do not count as social transfers, whereas government-paid unemployment subsidies do. That would take something on the order of five percentage points off the noted difference.

And the incomes that go into the poverty calculation, are they before or after tax? Are all taxes taken into account if the latter? Are employer-paid benefits (health care, etc.) included? If so, are the equivalent publicly funded parts of the Nordic social infrastructure given similar treatment?

In general, I suspect that the pre-redistribution figures say very little about economies like the Nordic ones and are insanely sensitive to the operative definition of "redistribution." It is in many cases very nearly impossible to tell where the government ends and the rest of society begins, making the distinction between income distribution and income redistribution rather unclear.

For instance, the partly labour-union-managed unemployment insurances handle something on the order of 5 % of GDP - better than 80 % of which comes directly from general revenue, making them one of the largest single items on the finance bills. Are they public or private? Are they "redistribution" or "insurance?" I don't know. Does it matter? Not a whit.

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Tue May 20th, 2008 at 06:53:39 AM EST
[ Parent ]
Check for more detailed data on page 21 [pdf!].

*Lunatic*, n.
One whose delusions are out of fashion.
by DoDo on Tue May 20th, 2008 at 07:09:29 AM EST
[ Parent ]
You see that despite high poverty rates, running against the stereotype, the social state is not at all dead there.

I somehow deleted "UK" from that sentence.

*Lunatic*, n.
One whose delusions are out of fashion.

by DoDo on Tue May 20th, 2008 at 07:02:45 AM EST
[ Parent ]
But if 40% tax is rather progressive depends on other questions.
Is capital income taxes by the personal income rate, or is there a special capital income tax? Is there an additional pay roll tax, which is at least partially as well used for redistribution, or not? What's the tax for enterprises? Are there additional wealth taxes or not?

For people with an income close to, but below the health insurance cap, the current marginal tax and social insurance rate in Germany is more than 73%, and before Schroeder's income tax cuts, you could have more than 80% marginal rate (in a narrow but densely populated income band).

Der Amerikaner ist die Orchidee unter den Menschen
Volker Pispers

by Martin (weiser.mensch(at)googlemail.com) on Tue May 20th, 2008 at 09:36:31 AM EST
[ Parent ]
If the band is sufficiently narrow, then talking about marginal tax rates becomes largely a red herring. To take the extreme example, it is possible to imagine a 200 % marginal tax in a band precisely one € wide (I know that this example is ridiculous, but I hope it illustrates the point). The bandwidth is needed if you want to make an apples-to-apples comparison across borders (along with much else, as noted upthread).

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Tue May 20th, 2008 at 04:25:46 PM EST
[ Parent ]
The band is narrow in case of single income households. In case of double income households it can be large, because income tax billing can be done together for married people, while social insurances are bound to the working place.
That means if your spouse earns significantly more than the health insurance cap, for your part of the household income the marginal tax rate maybe (depending on how much your spouse is above the cap) from the first Euro to the cap (43.200 EUR) at this marginal rate.
For the calculation of the marginal tax rate I have included employer's contribution to the social insurances.

As said above, the cap is not simply a cap. You can leave the public health insurance if you earn that much, which is way cheaper. So a single with gross income of 43201 EUR, can end up with 200 EUR more each month than a person with an income of 43199 EUR.

Der Amerikaner ist die Orchidee unter den Menschen
Volker Pispers

by Martin (weiser.mensch(at)googlemail.com) on Tue May 20th, 2008 at 05:16:43 PM EST
[ Parent ]
With the cap and private insurance are different values, I just found out. The cap indeed is 43200 EUR, but the possibility to leave the public health insurance system only starts at 48150 Eur.
However, I think the general point is clear.

Der Amerikaner ist die Orchidee unter den Menschen
Volker Pispers
by Martin (weiser.mensch(at)googlemail.com) on Tue May 20th, 2008 at 05:45:56 PM EST
[ Parent ]
I'm not sure I understand. What does the cap do?

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Wed May 21st, 2008 at 06:28:25 AM EST
[ Parent ]
Above a certain income, health insurance payments are fixed. It used to be identical with the limit above which you could choose private health insurance, but the Schröder government raised the latter.

*Lunatic*, n.
One whose delusions are out of fashion.
by DoDo on Wed May 21st, 2008 at 07:31:25 AM EST
[ Parent ]
What is the goal of this exercise? Do you mean to test if one could say that even if Slovenia is different from the flat-tax countries, relative to Germany, Slovenia's tax rates are still very low?

If so, I ask you to define me the inputs I should look up in the form of a formula.

Now I can say the following [pdf!]:

  • income tax: steps are 16%-27%-41%, the last kicking in above €13.600
  • corporate tax: 22% (annual 1% reductions ongoing)
  • tax on dividends and interest: 20% (raised 5% recently)
  • capital gains tax: 20%, reducing to zero for 20-year idle holdings
  • payroll tax: steps are 0%-1.1%-2.3%-4.4%, the last kicks in above €3.129.69 (than halved from one year earlier)
  • social security contributions, total: employee's part 22.1%, employer's part 16.1%
  • property tax: vacant building land is locally taxed, buildings have progressive taxes, among these the rate for dwellings is 0.1-1.0%, for business 0.15-1.25%, idle business premises 50%(!), rest/recreation facilities 0.2-1.5%. But there are lots of exemptions that appear to favour small business.


*Lunatic*, n.
One whose delusions are out of fashion.
by DoDo on Wed May 21st, 2008 at 07:23:01 AM EST
[ Parent ]
Not very low, but significantly lower, btw. originally I wanted to say, that other forms of taxes do play a significant role to judge about the general progressiveness of the system. The numbers you posted just now, affirm a mixed picture, but with generally lower taxes than in Germany.

Der Amerikaner ist die Orchidee unter den Menschen
Volker Pispers
by Martin (weiser.mensch(at)googlemail.com) on Wed May 21st, 2008 at 08:01:13 AM EST
[ Parent ]
Generally lower, but, when compared to the flat-taxers, is it significantly lower?

I note however that Slovenia is a less obvious argument as I originally thought: the present income tax reflects tax cuts by current right-wing government, and even if those were less 'ambitious' than original proposals, the biggest gift to the rich was the elimination of a top income tax rate of 50%.

*Lunatic*, n.
One whose delusions are out of fashion.

by DoDo on Wed May 21st, 2008 at 08:30:28 AM EST
[ Parent ]
...would be an excellent candidate and I hope the SPD will let her run.  Everything I've read about her indicates she is an original thinker.

Dialog International
by DowneastDem (david.vickrey (at) post.harvard.edu) on Thu May 22nd, 2008 at 12:20:22 PM EST
If the news of today are to be believed, she's running. It's gonna be an interesting year for the Grand Coalition, now that the campaign for the Bundestag election 2009 seems to have begun already.

"If you know your enemies and know yourself, you will not be imperiled in a hundred battles." Sun Tzu
by Turambar (sersguenda at hotmail com) on Thu May 22nd, 2008 at 01:03:27 PM EST
[ Parent ]
There was an excellent profile of Köhler in the last Spiegel which called him out for being a bland populist:

Staatsoberhaupt: Der Politikverdrossene - Politik - SPIEGEL ONLINE - Nachrichten

Horst Köhler wird in nächster Zeit entscheiden, ob er sich ein zweites Mal zum Bundespräsidenten wählen lassen will. Bislang hat er seine Rolle eher unglücklich definiert.

Will er, will er nicht? Das ist die Frage, die Berlin derzeit umtreibt. Sie richtet sich an Bundespräsident Horst Köhler, der entscheiden muss, ob er eine zweite Amtszeit anstrebt. Es ist eine wichtige Frage, aber es ist die falsche. Eigentlich müsste die erste Frage an Köhler lauten: Was will er? Wofür braucht er eine zweite Amtszeit? Es ist nicht so, dass er diese Frage bislang zufriedenstellend beantwortet hat.

The CDU and FDP currently have a majority of one or two votes in the Federal Assembly. That will probably be gone after the elections in Bavaria. After that, it's all up in the air, down to courting the Greens and the Linke. Eight people from the CDU and/or FDP voted against Köhler last time around...

by nanne (zwaerdenmaecker@gmail.com) on Fri May 23rd, 2008 at 04:34:20 AM EST
Yet, Kurbjuweit ends with:

So wie die Lage ist, gehört der Bundespräsident auf die Seite der Politik, als Botschafter, als Brückenbauer zu den Bürgern. Er müsste dafür werben, dass sie sich nicht abwenden, obwohl der politische Betrieb kompliziert ist und oft unerfreulich wirkt. Er müsste sich klar auf die Seite der Politik stellen, und von dort kann er auch hin und wieder die Politik kritisieren. Es darf für einen Präsidenten nicht heißen: Ich und die. Es muss heißen: Wir.

This sounds very much like wanting the Prez to explain to the stupid voter why he is wrong, and the politicians right. As if politicians would be nothing to do with the emergence of Politikverdrossenheit.

*Lunatic*, n.
One whose delusions are out of fashion.

by DoDo on Fri May 23rd, 2008 at 12:41:10 PM EST
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