German Culture and Politics


Monday, June 26, 2006

Benefit check: why Germany is confronted with a welfare state fiasco (FT)

It is early afternoon when Helge Hofmeister reaches the Parkhotel Rödermarkt and heads for the cavernous bar.

A bulky man with a gun bulging through his untucked summer shirt, he has a date with "Pregnant Natasha", a Russian prostitute. But Mr Hofmeister is neither lonely businessman nor pimp. He is a civil servant going about his lawful business.

Pregnant or not, selling one's body is legal in Germany. But claiming unemployment benefits at the same time is not. And that, according to the file tucked under his arm, is what Natasha has been doing for months.

Mr Hofmeister, a former policeman, and his colleague, Helena Fürst, head of the new welfare-benefit fraud investigation unit in Offenbach, a quiet suburb of Frankfurt, have since November been fighting a battle they cannot win: to fix one of the most urgent economic, financial and political challenges facing Angela Merkel's grand coalitiongovernment.

A labour law nicknamed Hartz IV and hailed at its inception as the most radical structural reform in Europe since the era of Margaret Thatcher has become a case study in unintended consequences that casts a harsh light on the flaws in the way Germany makes policy. It has not only failed to dent unemployment but has also sent welfare costs spiralling, jeopardising the government's efforts to bring public finances under control and putting Ms Merkel's unwieldy left-right coalition under severe strain.

When an expert commission appointed by Gerhard Schröder, Ms Merkel's predecessor as chancellor, unveiled its blueprint for an ambitious labour market reform four years ago, Peter Hartz, a Volkswagen executive and chairman of the working group that drew it up, claimed the measures would halve unemployment.

Instead, in the 18 months since Hartz IV, the central plank of the reform, was introduced the number of recipients has rocketed from an initial estimate of 2.6m to just under 4m. In its first year, the benefit cost the state €25bn ($31bn, £17bn), or €10bn more than planned. And although the government took that into account when drafting this year's budget, overruns of up to €4bn are expected this year and next. Without drastic cuts, the 2007 federal budget is heading straight for a breach of the constitution, which bans borrowings from exceeding investments.

How could this happen? Clues can be found in Offenbach, the first German municipality to take action when fears of a massive increase in welfare-benefit fraud began to surface. "Hartz IV is an open invitation to rob the state," says Ms Fürst, a hard-bitten chain-smoker whose persistence once earned her the epithet "Hartz-Nazi" from an irate victim. Hartz IV merged two types of benefits - a generous wage-indexed payment for jobseekers who had worked in the past and a more basic form of income support for those who had never held a job - into one, flat-rate benefit that would apply to everyone who had been jobless for more than a year. The goal was to support the needy while "coercing" those capable of work back into the labour market.

But although Hartz IV meant a benefit cut for a minority, recipients of the old basic benefit, known as social assistance, found themselves better off overnight. "The fact that the new system is more generous than the old one went completely unnoticed," says Ralf Brauksiepe, a Christian Democrat member of parliament and labour market expert.

While the new flat-rate benefit may appear low at €345 a month, recipients can claim rent, heating and even furnishing costs from the state, which also foots pension and health insurance bills. Subsidies for interest payments on mortgages and for dependent children are also on offer. The cost to the public coffers of rent and heating subsidies alone trebled between 2004 and 2005 to €12.5bn.

While under the old system, no one with more than €2,000 in assets was eligible for social assistance, the threshold under Hartz IV was raised to €26,000 and every adult member of a recipient household is entitled to a car.

Many such provisions were not in the original draft but were added during the tense negotiations between the CDU-controlled upper house of parliament and the Social Democrat-led government that shaped the final bill in late 2004. "It was a classic case of German over-engineering," says a member of the original Hartz commission. "Once they had the draft, politicians began adding this or that sweetener and lost sight of the broader edifice. No wonder no one knew how high the eventual bill would be."

According to the federal labour agency, monthly benefits for a married couple with two children can reach €1,600. While welfare experts in parliament blame sluggish growth for the lack of jobs, many economists consider such generous benefits a powerful disincentive to work.
Even low-wage workers qualify, provided their earnings fall below a certain level. Nearly 1m Hartz IV recipients are legally employed and, as Ms Merkel herself admitted in a speech to the BDI industry federation last week, many deliberately work short hours in order to maintain their eligibility.

So dramatic has been the haemorrhage of state money that charitable organisations, including the Red Cross, recently disconcerted some of their own members by publishing a joint letter calling for benefit cuts "to guarantee the sustainability and stability of the welfare system".
While the generous payments make fraud attractive, it was a second flaw in the system that made it possible: the administrative chaos that reigned during the changeover at the agencies administering the scheme.

In a report published on Friday, the Hartz IV ombudsman's office, which oversees the reform, branded the "poorly organised" local agencies responsible for recipients on the ground as "bureaucratic monsters" in need of urgent repair. Again, the report blamed the politicians. Having failed to agree on whether the federal labour agency or municipal welfare offices should have ultimate control of the scheme, they had opted for hybrid solutions that had "blurred responsibilities". One finance ministry official in Berlin suspects that an endemic "bleeding-heart culture" at the federal labour agency and many welfare offices also accounts for some of the profligacy.

Given the combination of attractive benefits, generous means-testing rules and lax controls, Ms Fürst, whose team of two has recovered €300,000 in misappropriated benefits since November, estimates that 20 per cent of all Hartz IV claims are groundless.

She has a fund of horror stories. One manager who earned €3,800 a month was granted Hartz IV for more than a year. Another recipient sold all his furniture on Ebay, then re-equipped his house by claiming a generous subsidy for movers. As she drives through an affluent neighbourhood, she points to a villa surrounded by a vast garden. Its owner, she says, managed to pocket €9,000 in Hartz IV payments masquerading as a jobless tenant while in fact working as a freelance consultant.

Natasha, officially an unemployed doctor, has claimed Hartz IV while maintaining a website where she poses naked, promising to "fulfil all male fantasies with much creativity anddedication".

"Hiding assets is popular," says Mr Hofmeister. The team found recipients with villas in Lebanon, estates in Turkey, yachts, high-end kitchens and plasma screens. One was operating a hotel in Spain.

Whenever fraudsters are caught, they must repay the money and their files are passed to the local prosecutor. Yet, with overloaded courts prioritising more serious offences, in 18 months not a single person has been convicted. And in the absence of fines, abuse is essentially risk-free.

"Fraudsters should have to repay double the money illegally obtained," says Peter Walter, former Frankfurt police chief and the top CDU man on Offenbach's municipal council."That would cover the cost of our investigations and create a deterrent where there is none today."
Fraud, however, only partly explains the escalating costs. The dentist's wife who moves out of her home or the teenager who gets his own flat in order to claim benefits and rent subsidies, are acting perfectly legally. Germans, says Ms Fürst, are treating Hartz IV as a sporting challenge to the ingenious dodger. Mr Walter adds: "I hear complaints about the entitlement mentality and eroding morals, but [this] is the result of what we have done for decades, which is to gradually replace full employment by welfare support."

A "Hartz IV modification" bill, rushed through the lower house of parliament last month, will close the most gaping loopholes and beef up sanctions for the workshy. Yet it will save only €500m this year and €1.2bn in 2007. The CDU's powerful state premiers - whose budgets bear much of the Hartz IV burden - have secured the promise of a more ambitious reform this autumn after threatening to block the "modification" bill.

At the same time, though, some within the grand coalition are crossing party lines and banding together to resist radical change, anxious that if they are party to a crackdown, they could pay the price at the next election.

"The grand coalition should have moved earlier on this," says Leef Dierks, economist at Barclays Capital in Frankfurt. "The longer it waits, the less likely it is [to] muster the courage and the will."
Copyright The Financial Times Limited 2006

Thursday, June 22, 2006

Merkel rejects plan for radical health reform (FT)

Angela Merkel has rejected a radical proposal by her coalition partner for a largely tax-financed health insurance system based on the Scandinavian model, people close to the German chancellor told the FT on Thursday.

Monday, June 19, 2006

Siemens and Nokia in €20bn network deal (FT)

Siemens and Nokia are to merge their network telecoms businesses in a joint venture that will create a leading player in the industry with a combined value of up to €20bn (£13.7bn).

Nokia said on Monday as many as 9,000 jobs could be axed in the next four years as a result of the deal between the German engineering conglomerate and the Finnish mobile giant. The merger announcement on Monday followed four months of discussions.

Olli-Pekka Kallasvuo, chief executive of Nokia, who will become chairman of the new venture to be called Nokia Siemens Networks, said: “The communications industry is converging, and a strong and independent Nokia Siemens Networks will be ideally positioned to help customers lower costs and grow revenue while managing the challenges of converging technology.”

The company had a combined €15.8bn in pro forma annual revenues for the calendar year 2005 and is expected to deliver cost savings of €1.5bn annually by 2010. Nokia said this would come primarily form the eliminating overlapping functions, better use of sales and marketing resources, overhead savings and sourcing benefits as well as more efficient research and development.

Nokia said a “substantial” portion of savings was expected to materialise in the first two years. “These changes are expected to result in a headcount adjustment over the next four years in the range of ten to fifteen per cent from the initial combined base of about 60,000.”

Simon Beresford-Wylie, currently executive vice president of networks at Nokia, will become chief executive of the newly formed company, which will have its headquarters in Helsinki and a regional headquarters in Munich, where three of the future five divisions of the new company will be based.

The joint venture follows hard on the heels of Alcatel's merger with Lucent and is a further step in the consolidation of the much-fragmented telecoms equipment industry.

Since the telecoms bubble burst, many industry players have struggled, and consolidation among their customers - the big telecoms carriers - has spurred them also to seek tie-ups. A Siemens-Nokia link could spark other deals, with Sweden's Ericsson and Motorola of the US seen as likely participants in consolidation.

The deal will lead to the separation of Siemens' enterprise networks business, which analysts believe could be sold later at a value of €3bn-€4bn. Nokia will become more focused on its mobile handsets business. Siemens will still have 11 other divisions ranging from power plants to light bulbs.

The deal is set to be warmly welcomed by Siemens investors, many of whom have been pressing hard for a solution to its troubled telecoms division, known as Com. Com is its largest division with €13bn in annual sales but has seen a dramatic decline in recent years, making a profit of just €27m in the second quarter, giving it a margin of 0.8 per cent, well below its target of 8-11 per cent by April.

Some analysts have suggested that Siemens had no coherent strategy for Com. DWS, Germany's largest fund manager and a top five Siemens shareholder called in January for Com to be spun off, suggesting it could add about €20 to Siemens shares, currently standing at €62.84.

The 50-50 joint venture marks the latest step in the restructuring undertaken by Klaus Kleinfeld, the young chief executive of Siemens. Mr Kleinfeld said on Monday: “This combination creates a leading industry player with immediate strength, excellent potential for growth and well-positioned to improve future profitability.”

In the job since January 2005, he has impressed investors, but Siemens' share price has not moved much since his arrival as investors awaited news on Com.

The deal is expected to be finalised by January 1 subject to regulatory approval.

Shares in Siemens were up 5.87 per cent to €66.24 in early trade, while Nokia shares rose 2.8 per cent to €16.11 in early trade.
Copyright The Financial Times Limited 2006

Germany finds its voice as a new generation waves the flag (FT)

Singing along to the national anthem of your country while waving its flag is not an unusual sight at football games. But the scenes in Dortmund last week among German fans were nothing short of extraordinary. The German team, playing against Poland, locked their arms around each other shoulders and to the accompaniment of tens of thousands of their compatriots belted the anthem out.

"I have never heard it sung even a quarter as loud before," says Uwe, a regular at Germany games and a car salesman. With the black, red and gold flag emblazoned on his cheek and another wrapped around him, he adds: "For the first time in my life I feel really proud to be German and the joy when we scored [in the 90th minute to win 1-0] was immense."

Germany is being engulfed by a wave of patriotism. From grannies with their faces painted to flags flying in the smallest of villages, pride is surging through a nation that has hitherto been uncertain how to celebrate itself.

Even now, though, the progress is accompanied by hand-wringing in some quarters and questions as to whether it can last.

Take the German anthem - its first verse "Deutschland über alles" is banned in Germany. The third verse that is now used has long remained obscure to many Germans, so much so that the official singer earlier this year at a German international got them wrong. For some, even this verse is too much. The GEW teachers' trade union has called for it to be replaced because it is a "Nazi-era relic".

Some MPs in Berlin argue that because of its past Germany must remain more modest about being patriotic. But there is a sense that things are changing with this World Cup.

Oliver Bierhoff, Germany's assistant coach, says: "I have never seen such scenes." Christoph Metzelder, a defender who is known as one of football's most intelligent voices, feels that Germany's new confident style of play - after years of turgid focus on defending - is in part a metaphor for the country. "My generation grew up in one of the most stable democracies in the world," he says.

"We won't forget the reminder of 12 years of the Nazi-era. But we can live unselfconsciously and carefree and we can also play football that way."

This sentence construction is normal when speaking to a German: they talk about the past before adding "but". Now even the "but" may slowly be starting to disappear.

Politicians are also showing their patriotic side. Chancellor Angela Merkel celebrated the goal against Poland by clenching her fists, while sitting next to the Polish president. Earlier she had said: "People are waving flags without having to justify themselves. Fifteen years ago, things were different. Our relation to our country has become something beautiful, but in a normal and not an arrogant way."

Norbert Lammert, head of the Bundestag, says: "It is the reconstruction of normality."
The explosion of joy in Germany has partly been one of relief - relief that Germany are playing well as a team after months of pessimism; relief that following hundreds of negative articles about matters such as stadium safety or ticketing, the World Cup is so far an unequivocal success; and relief that things finally feel different.

Olaf, a manager at a biotechnology company, says: "As a 42-year-old for the first time I am not embarrassed by the history. I remember in 1974 [when Germany hosted and won the World Cup] there was no singing, no sense of triumph. I remember in 1996, when we won the European Championship, seeing one person with a flag and feeling it was wrong."

One question is how long the euphoria will last and whether it is just connected with football or more deeply rooted. "It is hard to know if it is just caught up with the tournament," says Olaf. Uwe adds: "I'd like to think I would still want to wear the flag after this but I'm not sure whether it will feel embarrassing again."

For foreign visitors, perhaps most impressive is how Germans are throwing themselves into games between other countries. On a tram in Gelsenkirchen after Friday's match between Argentina and Serbia and Montenegro, passengers gradually began a singalong. Suddenly dozens of fans dressed in Argentina kit revealed their true colours - and their ambition to reach the final in Berlin. And suddenly in unison, everybody sang "Berlin, Berlin, wir fahren nach Berlin," ("Berlin, Berlin, we're going to Berlin") and then "Deutschland, Deutschland".
Copyright The Financial Times Limited 2006

Deutsche Börse in new move on Euronext (FT)

Deutsche Börse on Monday launched a fresh effort to woo Euronext away from a deal with the NYSE Group, making key concessions on operations that would give its Paris-based rival more power than the Germans had been prepared to concede.

The move involves no additional cash and was not presented to the Euronext board. John Thain, NYSE Group chief executive, dismissed the move, saying: “Based upon what I have seen so far, I don’t see any reason to change any element of our transaction.”

He also hinted that if Deutsche Börse improved the financial terms of its bid, the NYSE had more flexibility to respond, saying: “The NYSE has no debt and $650m in cash.”

Deutsche Börse’s concessions followed weeks of meetings with shareholders, bankers and politicians in Europe, and are aimed at persuading Euronext that its bid would not dismantle the organisation. On Monday, Kurt Viermetz, Deutsche Börse chairman, said it could raise the bid as a “final option”.

The move comes amid growing scepticism about the US tie-up among the French political establishment and is aimed more at public opinion than at winning over the Euronext board.

Advisers to both Euronext and Deutsche Börse privately agree that Euronext’s objections to a merger hinged on Deutsche Börse’s insistence on dismantling much of the organisation, and on controlling the new company.

The latest offer includes three significant concessions, one of which is integration of Deutsche Börse’s information technology business into Euronext’s.

Deutsche Börse also agreed that after a merger only German equities would be cleared through its Eurex subsidiary, leaving current Euronext clearing services in the hands of its LCH.Clearnet platform.

Thirdly, Deutsche Börse tried to address fears that the merger would get bogged down in scrutiny from European Union competition authorities by seeking advance clearance of the deal.
Euronext declined to comment last night but its advisers did not dismiss the approach out of hand. Under its agreement with the NYSE, Euronext may not solicit new offers, but an adviser said its board would be obliged to look at any better offer.

Rich Repetto, exchanges analyst at Sandler O’Neill, said the changes were “only a token of improvement” and that Deutsche Börse must improve the financial terms of its proposal “to be taken seriously”.

Others suggested the deal could hinge on NYSE’s share price, which has rebounded 10 per cent since last week but remains 9 per cent below its level when it announced the Euronext bid. This affects the mathematics of the deal. Deutsche Borse said that at the close on Friday, its bid was worth €65.98 per Euronext share, against €65.67 for the NYSE’s bid.

Additional reporting by Anuj Gangahar in New York

Copyright The Financial Times Limited 2006

Saturday, June 17, 2006

Germany's truce with feminism (FT)

Until recently, new welfare benefits were taken as permanent advances for civilisation. Whether they involved earlier retirementages, more generous health plans or rights to education, they were what the French called acquis - promises that the next generation would be spared a problem that had bedevilled the last. But when the German government approved a new programme for Elterngeld (parents' money) on Wednesday, the reaction was muted.

Like all welfare innovations nowadays, Elterngeld addresses not an age-old problem but a new one, which has arguably been created by the welfare state itself. The new problem is that German women are having very few babies: 1.34 per woman, to be precise. Thanks to a number of frightening recent bestsellers, Germans have become aware that this national barrenness means the certain destruction of their welfare state over the next decades and the possible collapse of their society.

Ursula von der Leyen, the philoprogenitive family minister, hopes that Elterngeld will once again make childbearing look like a good deal. Starting next year,a mother who takes time off to have a baby will get two-thirds of her previous take-home pay - to a maximum benefit of €1,800 (£1,200) a month for up to 12 months - 14 months if both parents stop work for a bit.
The unemployed get €300 a month. It is a €4bn programme. So why is the public so lukewarm about it?

The leftwing objection to Elterngeld is that it is less egalitarian than the system it is replacing. Kindergeld (or child money), as the old system is called, would cover children up to age 27 in some cases, and other side-benefits could be tapped along with it. Jobless new mothers, who could collect €300 a month for two years under the present system, will only collect for half as long in future. The government made some adjustments to the new plan last week that soften the blow for low earners. But of the 620,000 new families covered annually by the measure, 250,000 will be worse off. Some rank-and-file Christian Democrats (CDU) are upset because Kindergeld was one of their party's proudest achievements. Now their own CDU chancellor, Angela Merkel, has abandoned it for Elterngeld, a more capitalistic plan that was developed by their Social Democratic (SPD) coalition partners and rivals. (Clearly, politicians' attitude towards the welfare state depends more on their era than on their party: Clinton, Blair and Schröder have proved less socialist than Eisenhower, Macmillan and Adenauer.)

But there is also a rightwing objection. It is that, nice though family formation is, Elterngeld is going to backfire. The child-averse psychology that the law seeks to short-circuit is a complex one. Poorer people may forgo children because the cost is too high. But people with good jobs are reluctant to have children, too, because the opportunity cost of stopping work is too high. In theory, Elterngeld is tailored to address this problem because the value of its benefit rises along with a would-be mother's earning power. But there are instances where its incentives may work to delay childbearing. Consider a 28-year-old married woman in law school or medical school. If she has the baby she wants, she will collect only the €300-a-month minimum, while the family will likely still be too poor to have the father stay home to "earn" the two supplemental months. Betterto hold off for a few more years. Then, rather than get the €300 benefit for 12 months (€3,600), the family can get the €1,800 benefit for 14 (€25,200).

And what of the women who do not ever want to enter the workplace? In a grumpily brilliant attack on Elterngeld, Stefan Dietrich of the Frankfurter Allgemeine Zeitung coined the term Nurhausfrau ("onlyahousewife") to describe the contempt that the paltry €300 payout signals for those women who stay at home and raise children. Mr Dietrich has a point. Work in the household - whether childcare or cleaning - is the last socially useful work that is not given a dollar value. The moment it is, then parents will be seen as woefully undercompensated for what they do.

But that is a different argument. The present German family-policy debate does not resemble the ones that raged until recently in almost all western countries, with two ideals of motherhood battling it out. The needs of working mothers (for more daycare) used to be pitted against those of non-working mothers (usually for tax relief). Elterngeld aims neither to ease the burden on the working mother, nor to lift the stigma on the stay-at-home one. It aims to get women who would not otherwise have children to have them. Like most emergency measures, Elterngeld takes the situation as it exists, not as it ought to be. That is why it declares a truce with feminism's ideal of women in the workplace.

That truce may be temporary. There are deeper conflicts that the German policy papers over. Through the feminist decades, women's wishes for society have been in perfect harmony with businessmen's wishes for the economy. Everyone seemed to benefit from women's eagerness to take their rightful spots in the workplace. It meant more manpower, lower labour costs and more investment in education. You could have your cake and eat it. But now an important western country has shown itself willing to pay billions to steer women out of the workplace and into childbearing, if only for a short time. We are clearly in a new era, marked by a recognition that building the society we want is going to cost us part of our standard of living - or that our standard of living can only be maintained at the cost of damage to society.

Elterngeld reflects this thinking more clearly than any government programme yet. It is a new set of tradeoffs, not a new set of benefits. We will see a lot more government programmes like it.
The writer is a senior editor at The Weekly Standard
Copyright The Financial Times Limited 2006

Friday, June 16, 2006

German truce with feminism (FT)

Christopher Caldwell: German truce with feminism
By: By Christopher Caldwell, FT.com site
Published: Jun 16, 2006

Until recently, new welfare benefits were taken as permanent advances for civilisation. Whether they involved earlier retirement
ages, more generous health plans or rights to education, they were what the French called acquis – promises that
the next generation would be spared a problem that had bedevilled the last. But when the German government approved a new programme for Elterngeld (parents' money) on Wednesday, the reaction was muted.

Like all welfare innovations nowadays, Elterngeld addresses not an age-old problem but a new one, which has arguably been created by the welfare state itself. The new problem is that German women are having very few babies: 1.34 per woman, to be precise. Thanks to a number of frightening recent bestsellers, Germans have become aware that this national barrenness means the certain destruction of their welfare state over the next decades and the possible collapse of their society.

Ursula von der Leyen, the philoprogenitive family minister, hopes that Elterngeld will once again make childbearing look like a good deal. Starting next year, a mother who takes time off to have a baby will get two-thirds of her previous take-home pay – to a maximum benefit of €1,800 ($2,300) a month for up to 12 months – 14 months if both parents stop work for a bit. The unemployed get €300 a month. It is a €4bn programme. So why is the public so lukewarm about it?

The leftwing objection to Elterngeld is that it is less egalitarian than the system it is replacing. Kindergeld (or child money), as the old system is called, would cover children up to age 27 in some cases, and other side-benefits could be tapped along with it. Jobless new mothers, who could collect €300 a month for two years under the present system, will only collect for half as long in future. The government made some adjustments to the new plan last week that soften the blow for low earners. But of the 620,000 new families covered annually by the measure, 250,000 will be worse off. Some rank-and-file Christian Democrats (CDU) are upset because Kindergeld was one of their party's proudest achievements. Now their own CDU chancellor, Angela Merkel, has abandoned it for Elterngeld, a more capitalistic plan that was developed by their Social Democratic (SPD) coalition partners and rivals. (Clearly, politicians' attitude towards the welfare state depends more on their era than on their party: Clinton, Blair and Schröder have proved less socialist than Eisenhower, Macmillan and Adenauer.)

But there is also a rightwing objection. It is that, nice though family formation is, Elterngeld is going to backfire. The child-averse psychology that the law seeks to short-circuit is a complex one. Poorer people may forgo children because the cost is too high. But people with good jobs are reluctant to have children, too, because the opportunity cost of stopping work is too high. In theory, Elterngeld is tailored to address this problem because the value of its benefit rises along with a would-be mother's earning power. But there are instances where its incentives may work to delay childbearing. Consider a 28-year-old married woman in law school or medical school. If she has the baby she wants, she will collect only the €300-a-month minimum, while the family will likely still be too poor to have the father stay home to "earn" the two supplemental months. Better
to hold off for a few more
years. Then, rather than get
the €300 benefit for 12 months (€3,600), the family can get the €1,800 benefit for 14 (€25,200).

And what of the women who do not ever want to enter the workplace? In a grumpily brilliant attack on Elterngeld, Stefan Dietrich of the Frankfurter Allgemeine Zeitung coined the term Nurhausfrau ("onlyahousewife") to describe the contempt that the paltry €300 payout signals for those women who stay at home and raise children. Mr Dietrich has a point. Work in the household – whether childcare or cleaning – is the last socially useful work that is not given a dollar value. The moment it is, then parents will be seen as woefully undercompensated for what
they do.

But that is a different argument. The present German family-policy debate does not resemble the ones that raged until recently in almost all western countries, with two ideals of motherhood battling it out. The needs of working mothers (for more daycare) used to be pitted against those of non-working mothers (usually for tax relief). Elterngeld aims neither to ease the burden on the working mother, nor to lift the stigma on the stay-at-home one. It aims to get women who would not otherwise have children to have them. Like most emergency measures, Elterngeld takes the situation as it exists, not as it ought to be. That is why it declares a truce with feminism's ideal of women in the workplace.

That truce may be temporary. There are deeper conflicts that the German policy papers over. Through the feminist decades, women's wishes for society have been in perfect harmony with businessmen's wishes for the economy. Everyone seemed to benefit from women's eagerness to take their rightful spots in the workplace. It meant more manpower, lower labour costs and more investment in education. You could have
your cake and eat it. But
now an important western country has shown itself willing to pay billions to steer women
out of the workplace and into childbearing, if only for a short time. We are clearly in a new era, marked by a recognition that building the society we want is going to cost us part of our standard of living – or
that our standard of living
can only be maintained at the cost of damage to society.

Elterngeld reflects this thinking more clearly than any government programme yet.
It is a new set of tradeoffs, not a new set of benefits. We will see a lot more government programmes like it.


The writer is a senior editor at The Weekly Standard


Copyright © Financial Times group

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Thursday, June 15, 2006

Germany poised to slash taxes on business by a quarter (FT)

Peer Steinbrück, the German finance minister, has finalised the outlines of a corporate tax reform aimed at slashing levies on company profits by almost a quarter from 2008.

The changes would bring the average nominal tax burden on corporations, now the third highest in the developed world after the US and Japan, from 39 per cent down to 30 per cent, below the rates in most of Germany's neighbours.

The initiative, details of which were leaked to the news media, could help restore business confidence in the "grand coalition" of Angela Merkel, chancellor. Her government of Christian Democrats and Social Democrats has come under fire for dragging its feet on structural reforms and for its planned 3 percentage point rise in value-added tax next January.

Tax cuts, however, could meet with disapproval from those European Union neighbours battling large budget deficits and fearing such cuts could fuel tax competition in the region.

"We are not provoking tax competition but it is here and we must react," a government official said. "What is objectionable is the kind of ruinous competition that leads to dramatic tax revenue falls - which will not be the case here."

Germany already faces criticism for the restrictive wage settlements of the past five years.

Critics have likened the deals to a "beggar-thy-neighbour" attempt at raising the competitiveness of German companies at the expense of domestic demand and growth.

Mr Steinbrück, who presented his blueprint to Ms Merkel yesterday, has yet to release information about his plan. The reform could be heavily changed during Germany's notoriously protracted law-making process, which could last until next year.

Officials yesterday confirmed that the minister proposed to cut the centrally set Körperschaftsteuer - corporate taxation - from 25 per cent to 12.5-16 per cent, saving companies up to €7bn ($4.8bn) in the first year.

The Gewerbesteuer - a communal tax - would be left untouched but its basis would be extended, allowing the state to recoup most of the lost revenues from the corporate tax cut in the medium term.

These two measures would result in an average consolidated rate of about 30 per cent, which would also apply to reinvested profits bynon-incorporated companies currently subject to income tax.

Mr Steinbrück's plan also envisages a new flat-rate capital gains tax at source.

While taxpayers today must declare capital gains as part of their taxable income, banks would in the future levy a 25-30 per cent tax on all gains from financial transactions.

Wednesday, June 14, 2006

Cloudy outlook for the German economy (FT)

The outlook for Germany's slowly recovering economy has clouded, according to a monthly survey of financial analysts released yesterday.

The ZEW indicator fell by 12.2 points to 37.8 - the fifth fall in a row since hitting a high of 71 in January - and in contrast to the upbeat business sentiment surveys and positive macroeconomic data released in recent weeks.

The ZEW institute listed poor stock market performance, the appreciation of the euro, higher oil prices, and the European Central Bank's policy of raising interest rates as the main reasons behind the pessimism about Germany's heavily export-dependent economy.

Analysts had moved be-yond the expected short-term rise in retail sales in advance of a planned three-point increase in value added tax next January and were now focusing on the slowdown in demand that the VAT rise could cause next year, it said.

But several of the experts who participate in the survey of 330 financial analysts said the results should be put into perspective, pointing out the high volatility of the poll.

Erik Sonntag, of ING Bank, said he remained positive about Germany's gross domestic product in the short term and continued to forecast accelerating growth in the second quarter.

The Ifo sentiment index, which polls more than 7,000 companies, and recent Purchasing Managers surveys are close to their record highs. Export and industrial production statistics show Germany's manufacturers have so far weathered the euro's appreciation, while robust retail sales in April hinted at a rebound in consumer spending.

Ihr Verlierer! (Die Zeit)

Die Männer sind in Not: In der Schule, auf dem Arbeitsmarkt und im Familienleben.

Eine Schadensbilanz Von Susanne Gaschke

Schon ohne dass man die großen Worte »Krise« oder »Versagen« bemühen muss, können Männer einem auf die Nerven gehen: wenn sie die Frau am Nebentisch mit Stentorstimme über Banalitäten belehren; wenn sie im ICE irgendwelchen Business-Unfug in ihr Handy brüllen; wenn sie wieder einmal ihre Gattin wegen einer Jüngeren verlassen. Doch das sind mehr oder minder subjektive Ärgernisse. Den Anlass, tatsächlich von einer Krise der Männer zu sprechen, liefern harte, objektive Fakten: die massiven Erziehungs- und Bildungsprobleme des männlichen Nachwuchses; die zunehmende, praktisch ausschließlich männliche Gewaltkriminalität; die für Männer besonders ungünstige Entwicklung auf dem Arbeitsmarkt; ihre Unfähigkeit, sich auf Familie und Vaterschaft einzulassen; schließlich der Mangel an kulturellen Vorbildern für einen zukunftsfähigen Mann neuen Typs.

Vor einer Sichtung dieser fünf Probleme ist allerdings eine Einschränkung angezeigt: Die deutschen Männer geraten auf hohem Niveau unter Druck. Sie stehen noch nicht unmittelbar vor dem Untergang. Sie sind nach wie vor gut vertreten in der Politik (auch wenn dort jetzt Angela Merkel ertragen werden muss) und in den Chefredaktionen, sie dominieren den Wissenschaftsbetrieb und die Vorstandsetagen der Wirtschaft und werden im Durchschnitt besser bezahlt als vergleichbar ausgebildete Frauen. Es geht also zum einen um die objektiven Krisenmerkmale, aber mindestens ebenso um ein Phänomen, das der Berliner Soziologe und Männerforscher Walter Hollstein »gefühlten Machtverlust« nennt. Wir sprechen über eine Frage des Trends. Es ist ein bisschen so wie bei den an sich absurden Vergleichen des Wirtschaftsriesen Deutschland mit Winzigländern wie Estland: Deren dynamische Wachstumsraten bedeuten wenig mehr, als dass dort noch alle Straßen zu pflastern, alle Außentoiletten nach innen zu verlegen und alle Kohlefeuerungen herauszureißen sind – und doch machen uns die Winzlinge in unserem Exportweltmeistertum Angst. Die Männer sind im Augenblick Deutschland, wenn man so will. Die Frauen sind Estland.

Erstes Alarmsignal: Der männliche Nachwuchs ist von der Rolle. Erwachsene sind zutiefst verunsichert darüber, ob man überhaupt Kinder haben und, wenn ja, wie man sie erziehen sollte. Diese Verwirrung trifft Jungen härter als Mädchen. Für Mädchen gibt es das traditionelle Rollenangebot mit einer gesellschaftlich akzeptierten Erweiterungsmöglichkeit um (fast) alle männlichen Optionen: Klein Sabine kann mit drei Jahren Mamas Lippenstift benutzen, mit 14 Ballettunterricht nehmen oder Fußball spielen und mit 18 Jahren Kindergärtnerin werden oder zur Bundeswehr gehen. Fußball und Bundeswehr würden von der Mehrzahl ihrer Freunde und Verwandten als Bereicherung ihres Lebens betrachtet werden. Für Klein Torsten hingegen stehen Lippenstift, Ballett und Arbeit im Kindergarten nicht wirklich auf der Zugewinnliste. Unterdessen gerät die originär männliche Identität immer mehr ins Wanken: Bewusst jedenfalls wollen nur die wenigsten Eltern einen fiesen Macho heranziehen. Während Mädchen also nahezu zwei komplette Rollenoptionen für sich vorfinden, steht Jungen allenfalls eine zur Verfügung.

Diese Problemlage spitzt sich noch einmal zu für die wachsende Zahl von Jungen, die ohne Väter, ja überhaupt ohne männliche Vorbilder aufwachsen. Im Kindergarten stoßen die vaterlosen Jungen auf 95 Prozent Erzieherinnen und fünf Prozent Erzieher. In der Grundschule ist nur jede vierte Lehrperson männlich. Die alte feministische Hoffnung, dass eine rein weibliche Erziehung sanftere, einfühlsamere Männer hervorbringen müsste, hat sich nicht erfüllt. Und es ist ja auch nicht so, dass alle Mütter, Erzieherinnen und Lehrerinnen sich eindeutig verhielten: Einerseits werden Jungen am Ausleben normaler, vollkommen unschädlicher Aggressionen in Ringkämpfen gehindert, weil weibliche Betreuungspersonen den harmonischeren Barbie-Spielstil der Mädchen zum Ordnungsmaßstab auf dem Schulhof erheben. Andererseits werden ihnen, auch, gerade von Frauen die Botschaften der »alten« Männlichkeit souffliert: Ein Indianer kennt keinen Schmerz! Ein Junge weint nicht! Es gibt unglaublich viel verantwortungslos-stolzes Mutti-Gerede über den »kleinen Mann«, der sich unter diesem ermutigenden Einfluss munter zum Familien-Tyrannen entwickelt. Bei vielen Eltern findet man zudem einen kruden Bequemlichkeits-Biologismus: Wenn der Knabe nicht lesen will, ist das gewiss genetisch bedingt; wenn er stundenlang am Computer ballert, drückt sich darin irgendwie sein natürliches Technikverständnis aus.

Jungen stottern viermal so häufig wie ihre Schwestern

Es gibt eine Vielzahl von Hinweisen darauf, dass diese zwiespältige Erziehung und die geschlechtsspezifische Medien-Fehlnutzung dem männlichen Nachwuchs nicht gut tun: Jungen sind viel häufiger verhaltensauffällig als Mädchen, stottern viermal so oft wie ihre Schwestern und leiden, unterschiedlichen Schätzungen zufolge, drei- bis siebenmal so häufig wie die Mädchen am Aufmerksamkeits-Defizit-Syndrom (ADS). Das alles macht die Jungen zu schwierigen Kindergarten- und Schulkindern. Dementsprechend schlechter fallen auch ihre Leistungen aus.

Zweites Alarmsignal: Kriminalität ist männlich. Die Gewaltkriminalität, die Delikte wie gefährliche Körperverletzung, Mord und Totschlag, Geiselnahme und Vergewaltigung umfasst, hat sich seit Mitte der achtziger Jahre verdoppelt – und sie ist fest in männlicher Hand. Männer sind siebenmal so häufig des Mordes und zwölfmal so häufig des Raubmordes verdächtig wie Frauen, werden fünfmal öfter der Körperverletzung und achtmal öfter der Sachbeschädigung bezichtigt und begehen den Großteil aller Verkehrsdelikte.

TEIL 2
Der kriminelle Trend ist auch beim Nachwuchs ungebrochen: Zwar ist die Jugendkriminalität insgesamt rückläufig, aber die (männlichen) Gewaltdelikte wie Körperverletzung haben in den vergangenen Jahren deutlich zugenommen. Männerforscher Hollstein hat ausgerechnet, dass das Ausagieren »fehlgeleiteter Männlichkeit« pro Jahr Folgekosten von 15 Milliarden Euro verursacht – ein Drittel des Hartz-IV-Budgets und ein interessantes Einsparpotenzial. Die männliche Aggression richtet sich direkt oder indirekt vor allem gegen das eigene Geschlecht: Männer verletzen nicht nur andere Männer, sondern begehen auch dreimal so häufig Selbstmord wie Frauen, sie sind viel häufiger obdachlos, drogen- oder alkoholabhängig und sterben im Schnitt sechs Jahre früher – offenbar infolge einer Mischung aus Veranlagung und einem Hang zu ungesunder Lebensweise.

Drittes Alarmsignal: Die Veränderungen des Arbeitsmarktes bedrohen vor allem die Männer. Der Arbeitsmarkt ist für viele Menschen in Deutschland ein unerfreuliches Thema: für Berufsanfänger, die zu endlosen unbezahlten Praktika genötigt werden; für leistungsstarke 60-Jährige, die man aus dem Job verdrängt; für Eltern mit Kindern, die den Flexibilitätserwartungen ihrer Chefs nur schwer entsprechen können; für Geringqualifizierte. Vor allem aber sind die Strukturveränderungen des Arbeitsmarktes ein Problem für Männer. Der Wandel von der Industrie- zur Dienstleistungsgesellschaft vernichtet vor allem einfache Arbeitsplätze und solche, für die man Körperkraft aufwenden muss.

Poland and Germany find unity in rivalry (FT)

The most appealing football games to fans are often those unloved by security officials. So it is with Germany against Poland, tonight in Dortmund.

The difficult history between the two countries gives the match an extra edge. Indeed, the notoriety of Polish hooligans has meant this has long been one of the top priorities among police. Signs from Neo-Nazis have made the problem explicit: "We defeated Poland in 1939 in 28 days. Today it will take 90 minutes," one says.

But talk to fans and political analysts and a much different picture emerges - one of German-Polish rivalry certainly, but where the old historical worries are no longer relevant. Far more important is the football - and for Poland, who lost in their first game with a terrible performance against Ecuador, the game "is nothing less than a final", says midfielder Jacek Krzynowek.

On the tram back from Friday's 2-0 defeat to Ecuador, Polish fans were despondent. "We played like idiots - I cannot explain it," said Michal from just outside Warsaw. But on Germany as a country he and his tearful comrades were unanimous: "All that was 60 years ago - there is animosity today, but on the football pitch only."

In Poland, the match carries none of the wartime echoes that are so common in the British press whenever England plays Germany. "There is no such attitude of linking the war to the game," says Marek Sarjusz-Wolski, editor of Unia & Polska, a magazine on European issues. "I see no danger, even if the Poles lose, and they will unfortunately lose, that the game will have any impact on relations."

Hundreds of thousands of Poles live and work in Germany, and many German companies, such as MAN, the truckmaker, have invested in Poland. According to a recent poll, 80 per cent of Poles believe that reconciliation with Germany is possible, while only 69 per cent thought the same was feasible with Russia. In 1990, half of Poles thought it would be impossible to reconcile with Germany, which is now judged the third most friendly country to Poland, behind the US and the UK, but ahead of France.

Politically, there are some tensions - notably over a gas pipeline and the issue of whether Germans expelled from Poland after the war should gain compensation - but such concerns will not matter to the tens of thousands of red-and-white clad fans expected in Dortmund. "That was why the World Cup was invented, so that our warriors meet on the football pitch and not on the battlefield," says Mr Sarjusz-Wolski.

On the pitch, the odds seem stacked in Germany's favour. Poland played against Ecuador without any inspiration and the threat is that they could buckle versus a German team that loves to rampage forward.

Much of the discussion in Germany before the match has centred on "Our Calf", as the German press calls it (when Josef Ratzinger was elected Pope, the Bildtabloid ran a headline "We are Pope"). Just as Wayne Rooney's injury has preoccupied the English, a much less serious (calf) injury to captain Michael Ballack has prompted a bout of national hand-wringing and raised questions about unity in the German camp.

Ballack is Germany's one clear star. His form has been variable this year but he remains capable of turning a game.

What has really been convulsing Germany, though, is the suggestion that Ballack and coach Jürgen Klinsmann are not seeing eye to eye. The usually reticent Ballack first criticised Klinsmann's tactics as overly favouring attack and being too naïve - a charge that finds much favour among Germans more used to seeing their team grind out 1-0 victories rather than 4-2 thrillers. Then, shortly before Friday's opening victory against Costa Rica, Ballack declared himself fit to play to Bild - a long-time hater of Klinsmann - despite the coach having already ruled him out.

Klinsmann prevailed but worries persist that captain and coach are pulling in different directions. Germany's three previous titles have all been achieved with strong captain-manager relationships from Sepp Herberger and Fritz Walter in 1954, to Helmut Schön and Franz Beckenbauer in 1970 and Beckenbauer and Lotthar Matthäus in 1990.

The Poles would probably love to have such problems. Krzynowek says theymust avoid beating themselves up too much over the Ecuador display.

"We must not talk ourselves down," he said. "In qualification [where they nearly secured top spot of their group ahead of England] we were strong enough. We just have toforget Ecuador and put everything into this match."

The German-Polish rivalry is perhaps best summed up by the fact that the home side's two starting centre-forwards were both born in Poland. Miroslav Klose and Lukas Podolski - who says the game "will be the most emotional of my life" - both moved to Germany in their childhood.

Michal, the Polish fan, says: "They should be playing for us - it would just be our luck that one of them scores against us to sendus home."

Tuesday, June 13, 2006

Schule - sueddeutsche.de

Schule - sueddeutsche.de

Nach der Grundschule
Zum Versager abgestempelt

Eltern wollen nur das Beste für ihren Nachwuchs: das Abitur. Doch der wachsende Druck in den ersten Schuljahren macht Kinder krank.

Tuesday, June 06, 2006

Expect Integration Issues to Challenge NYSE/Euronext Merger (Gartner)

With the integration of Archipelago incomplete, the much greater challenge of realizing synergies for NYSE Euronext presents difficulties. Clients should reassess alternatives in case this merger doesn't work.

Monday, June 05, 2006

Germany: On the right day with the right support ... (FT)

Germany are the World Cup’s perennial over-achievers. They won their first (of three) in 1954 in Berne, with a team of petrol station managers and cleaning proprietors against Ferenc Puskas and his magnificent Magyars, in one of the competition’s biggest-ever shocks.

In the last World Cup, they went to Japan and South Korea with a side containing little talent and still made it to the final.

This time their squad is arguably even weaker. However, they have the advantage of playing at home. This has nurtured a peculiar attitude among German fans, who regard their team with a mixture of wild optimism and extreme condescension.

This uncharacteristically fickle stance has extended to coach Jürgen Klinsmann. The former international striker has dragged the team into the modern era with new training drills, adventurous selections and an aggressive style of play, yet has been forced to endure much criticism – including resignation calls – for his side’s indifferent results and his habit of jetting in for games from his California home.

The calls for him to go reached a particularly high pitch earlier this year when Germany lost 4-1 to old rivals Italy. Indeed, as armchair pundits like to point out, the Mannschaft’s last victory against a leading football nation was more than five years ago against England – who took emphatic revenge a year later, handing out a 5-1 drubbing in Munich’s Olympic stadium.

The biggest worries in the run-up to the opening game – what should be a relatively gentle loosener against Costa Rica – concern the home team’s defence. This is young and without much experience in big competitions – or at least it was until Klinsmann recalled veteran Jens Nowotny in what looked like a desperate act. Per Mertesacker, Philipp Lamm and Arne Friedrich all ooze insecurity, while Nowotny will struggle against a striker with even the slightest turn of speed.

Klinsmann even contrived to make a hash of what should have been a strength: the goalkeeper’s position. Oliver Kahn, Bayern Munich’s fiery number one, almost single-handedly guided Germany to the 2002 final. But Klinsmann felt he had become complacent through a lack of competition and so, about 18 months ago, set in place a rotation system, with Kahn playing one game and Jens Lehmann, his arch-rival from Arsenal, the next.

This created a poisonous atmosphere. Eventually, Lehmann got the nod only for fans to plunge again into an existential quandary after he was sent off in last month’s Champions League final against Barcelona.

Klinsmann also lacks a top-class striker, having only Werder Bremen’s solid Miroslav Klose, whose haul of five goals in the 2002 World Cup was inflated by a hat-trick against a dire Saudi Arabia, and the young but immature talent of Cologne’s Lukas Podolski. Like England, Germany have included an uncapped but pacy youngster – Borussia Dortmund winger David Odonkor.

The midfield has a bit more zip – at least on paper: Chelsea may have rolled out the red carpet for Michael Ballack, but much of his play this year for Bayern Munich has been below his best and Germany must hope he regains form fast. Torsten Frings and Bernd Schneider are both solid and dependable, while Bastian Schweinsteiger can supply a dash of the unexpected.

So far so uninspiring. And yet, not even this German team can be written off. On the right day, with vocal home support, they are capable of raising their game.

In last summer’s Confederations Cup, Germany played Brazil in Nüremberg. They may have lost 3-2 but they played brilliantly. Perhaps Klinsmann’s men may yet join Germany’s over-achievers.

Friday, June 02, 2006

East German state leader denies no-go areas exist (FT)

In spite of a recent surge in racist attacks in eastern Germany the region does not have no-go areas that foreigners should avoid for fear of neo-Nazis, a senior regional politician claimed yesterday.

Matthias Platzeck, state premier of Brandenburg, the east German state that surrounds Berlin, said black people could live safely in the state, but complained it had been "stigmatised" in the media by suggestions that foreigners should avoid the region.

"In Potsdam [the state capital], for instance, people of all skin colours can walk the streets perfectly safely; the city is more secure than many others around the world" he told the Financial Times, adding that no-go areas "do not exist".

His comments are likely to fuel a heated debate on responses to recent assaults. In April an Ethiopian man was mugged in Potsdam by two men with far-right links, and a Turkish-born politician was last month attacked in east Berlin.

Then neo-Nazi supporters marked a late-May public holiday by attacking a foreigners' festival in Weimar, south-west of Berlin, and by mugging several black people in the capital.

Concern about racist attacks has increased ahead of the football World Cup which starts in Germany next week and is expected to attract significant numbers of foreign visitors.

In rare comments from a senior legal figure, Monika Harms, Germany's newly appointed chief federal prosecutor, told a German newspaper yesterday that "far-right extremism is not just a problem for east [Germany]".

Her comments echoed concerns of many politicians and anti-racist groups that the problem was a national concern, and that warning foreigners to avoid certain areas handed a victory to far-right groups.

The controversy on no-go areas spiralled last month when Uwe-Karsten Heye, a senior politician from Mr Platzeck's Social Democratic party, warned black people not to visit parts of Brandenburg as they "might not come out alive".

Mr Platzeck said the reporting of Mr Heye's comments "had stigmatised Brandenburg in a way that really hurt us". The state has many anti-racist projects, he said. "These project workers now ask me: 'has our work over the last 10 years been in vain?'" he added.

He admitted that, compared with other states, Brandenburg had a "high level" of far-right violence. The risk of such an attack in the state is almost 10 times higher than in the western state of Hesse, according to official statistics.

He said that to promote anti-racism, teachers needed better training and nursery age children should be encouraged to mix with black people.