Scholz JSON

{"version":"1.11","identifier":"post-206348","language":"en-GB","title":"Who is Olaf Scholz \u2013 and can Labour look to the SPD candidate as an ally?","documentStyle":{"backgroundColor":"#fafafa"},"layout":{"columns":7,"width":1024,"margin":100,"gutter":20},"components":[{"role":"header","layout":"headerPhotoLayout","components":[{"role":"photo","layout":"headerPhotoLayout","URL":"https:\/\/labourlist.org\/wp-content\/uploads\/2020\/08\/shutterstock_1117818974.jpg"}],"behavior":{"type":"parallax","factor":0.8}},{"role":"container","layout":{"columnSpan":7,"columnStart":0,"ignoreDocumentMargin":true},"style":{"backgroundColor":"#fafafa"},"components":[{"role":"title","text":"Who is Olaf Scholz \u2013 and can Labour look to the SPD candidate as an ally?","format":"html","textStyle":"default-title","layout":"title-layout"},{"role":"byline","text":"by Jos Gallacher | Aug 20, 2020 | 4:15 PM","textStyle":"default-byline","layout":"byline-layout"},{"role":"body","text":"<p>Germany\u2019s socialist party, the Social Democratic Party (SPD), last week <a href=\"https:\/\/www.theguardian.com\/world\/2020\/aug\/10\/germanys-sdp-picks-olaf-scholz-as-candidate-to-succeed-angela-merkel\">chose its candidate<\/a> to replace Angela Merkel as Chancellor. Olaf Scholz has his admirers within Labour, but would a government led by him be an ally for a transformational Labour Party? He has been Germany\u2019s minister for finance since joining the government in 2018 and has a reputation as a fiscal hawk \u2013 making him more a George Osborne than an Alastair Darling. He enthusiastically adopted the \u2018<em>schwarze Null<\/em>\u2018 policy of his right-wing predecessor. Schwarze Null, or \u2018black zero\u2019, is the policy of keeping the government budget in the black and with zero budget deficits. By contrast, Labour\u2019s Gordon Brown backed deficits to smooth the economic cycle and, like his successors, borrowing for investment.<\/p>","format":"html","textStyle":"dropcapBodyStyle","layout":"body-layout"},{"role":"body","text":"<p>The pandemic pushed the German government to loosen the purse strings. It <a href=\"https:\/\/www.reuters.com\/article\/germany-debt\/update-2-germany-prepares-150-bln-euro-emergency-budget-in-coronavirus-package-idUSL8N2BE0EV#:~:text=BERLIN%2C%20March%2021%20(Reuters),finance%20minister%20said%20on%20Saturday.\">temporarily suspended<\/a> its borrowing rule, authorised up to \u20ac150bn of new debt and <a href=\"https:\/\/www.reuters.com\/article\/us-health-coronavirus-germany-budget\/germany-launches-750-billion-euro-package-to-fight-coronavirus-idUSKBN21A2XU\">backed a plan<\/a> to allow the EU to borrow \u20ac750bn to support recovery from the economic impact of Covid-19. Scholz\u2019s reputation rose as he took credit for this change in policy, which may have helped him win his party\u2019s nomination. However, his past tells a different story. In his first budget in May 2018, Scholz set out plans to maintain a fiscal surplus throughout the 2019-2022 budget period and to aim for a surplus of 1% of GDP.<\/p>","format":"html","textStyle":"default-body","layout":"body-layout"},{"role":"body","text":"<p>Even international commitments were sacrificed to the goal of budget surplus. Development aid was frozen at 0.5% of GDP. In government, Labour hit the United Nations\u2019 target of 0.7%. Defence spending, which was due to reach 1.3% of GDP in 2019, would be cut back to 1.23% the following year. This, despite a NATO target of 2% of GDP, which Labour met in government and has supported in all recent manifestos. In essence, Scholz was allowing Germany to free ride on collective security and international development funded by the efforts of others. The <em>Financial Times\u2019<\/em> <a href=\"https:\/\/www.ft.com\/content\/1f705ce8-543d-11e8-b3ee-41e0209208ec\">verdict<\/a> was scathing: \u201cIt would be better for the world, in other words, if Germany put its surpluses to work at home, where there are good targets for investment. That would have a pleasant side effect, too: it would make Germany a better place for Germans to live in.\u201d<\/p>","format":"html","textStyle":"default-body","layout":"body-layout"},{"role":"body","text":"<p>Scholz is not an outlier in the SPD. Germany\u2019s social democrats have been in government for 11 of the last 15 years. When the red-green coalition of Gerhard Schr\u00f6der lost power in 2005, the SPD remained in government as the junior party in coalition with the country\u2019s conservatives from 2005 to 2009, and again from 2013. During that time, German economic policy has been characterised by a beggar-thy-neighbour approach, which has resulted in a massive current account surplus. Such a surplus is a sign that the country\u2019s exchange rate is too low. Normally, beggar-thy-neighbour is achieved by lowering the exchange rate to attract demand from overseas. But how can Germany, sharing the Euro, pursue this strategy? The answer lies in the real exchange rate that takes account of inflation and which Germany can still steer. To lower the real exchange rate, it needs to run a lower rate of inflation than its trading partners. Deflationary policies began with repressing wages, which dates back to the Hartz IV welfare reforms of the Schr\u00f6der era.<\/p>","format":"html","textStyle":"default-body","layout":"body-layout"},{"role":"body","text":"<p>Where Labour promotes a \u2018high-wage, high-skill, high-productivity\u2019 approach, restraining wages remains a centrepiece of the German economic model. Its balanced budget policies are designed to keep inflation suppressed, the real exchange rate low and the current account surplus high. It is not just German workers who suffer from this policy. Its impact is felt across the eurozone. The Euro remains fragile and needs a rebalancing to bring real exchange rates into line. German disinflation forces other eurozone countries to pursue deflationary policies themselves \u2013 in most cases resulting in austerity policies.<\/p>","format":"html","textStyle":"default-body","layout":"body-layout"},{"role":"body","text":"<p>Labour might hope for an alliance with a victorious Chancellor Scholz, yet the record of the SPD in government does not inspire confidence. It may have been in coalition but it cannot escape responsibility for the policies enacted. Free riding in NATO, beggar-thy-neighbour economics, low investment and wage repression at home and austerity in the eurozone are not models for a future Labour government.<\/p>","format":"html","textStyle":"default-body","layout":"body-layout-last"}]}],"componentTextStyles":{"dropcapBodyStyle":{"textAlignment":"left","fontName":"AvenirNext-Regular","fontSize":18,"tracking":0,"lineHeight":24,"textColor":"#4f4f4f","linkStyle":{"textColor":"#428bca"},"paragraphSpacingBefore":18,"paragraphSpacingAfter":18,"dropCapStyle":{"numberOfLines":4,"numberOfCharacters":1,"padding":5,"fontName":"AvenirNext-Bold","textColor":"#d9413a","numberOfRaisedLines":0}},"default-body":{"textAlignment":"left","fontName":"AvenirNext-Regular","fontSize":18,"tracking":0,"lineHeight":24,"textColor":"#4f4f4f","linkStyle":{"textColor":"#428bca"},"paragraphSpacingBefore":18,"paragraphSpacingAfter":18},"default-title":{"fontName":"AvenirNext-Bold","fontSize":48,"lineHeight":52,"tracking":0,"textColor":"#333333","textAlignment":"left"},"default-byline":{"textAlignment":"left","fontName":"AvenirNext-Medium","fontSize":13,"lineHeight":24,"tracking":0,"textColor":"#7c7c7c"}},"textStyles":{"default-tag-code":{"fontName":"Menlo-Regular","fontSize":16,"tracking":0,"lineHeight":20,"textColor":"#4f4f4f"},"default-tag-pre":{"textAlignment":"left","fontName":"Menlo-Regular","fontSize":16,"tracking":0,"lineHeight":20,"textColor":"#4f4f4f","paragraphSpacingBefore":18,"paragraphSpacingAfter":18},"default-tag-samp":{"fontName":"Menlo-Regular","fontSize":16,"tracking":0,"lineHeight":20,"textColor":"#4f4f4f"}},"componentLayouts":{"body-layout":{"columnStart":0,"columnSpan":6,"margin":{"top":12,"bottom":12}},"body-layout-last":{"columnStart":0,"columnSpan":6,"margin":{"top":12,"bottom":30}},"headerPhotoLayout":{"ignoreDocumentMargin":true,"columnStart":0,"columnSpan":7},"headerBelowTextPhotoLayout":{"ignoreDocumentMargin":true,"columnStart":0,"columnSpan":7,"margin":{"top":30,"bottom":0}},"title-layout":{"margin":{"top":30,"bottom":0}},"byline-layout":{"margin":{"top":10,"bottom":10},"columnStart":0,"columnSpan":7}},"metadata":{"thumbnailURL":"https:\/\/labourlist.org\/wp-content\/uploads\/2020\/08\/shutterstock_1117818974.jpg","dateCreated":"2020-08-20T15:15:09+00:00","dateModified":"2020-08-20T12:59:35+00:00","datePublished":"2020-08-20T15:15:09+00:00","canonicalURL":"https:\/\/labourlist.org\/2020\/08\/who-is-olaf-scholz-and-can-labour-look-to-the-spd-candidate-as-an-ally\/","generatorIdentifier":"publish-to-apple-news","generatorName":"Publish to Apple News","generatorVersion":"2.0.8"},"advertisingSettings":{"frequency":1,"layout":{"margin":{"top":15,"bottom":15}}}}