Groko Loco

Dear SPD, Germany needs another grand coalition

GroKo-related anxiety. Source: DPA

With the leaders of the conservatives and the Social Democratic Party (SPD) beginning exploratory talks on a grand coalition, colloquially known as “Groko,” more is at stake than just four more years of a coalition government between the two big-tent parties. The parties must now set the course to secure prosperity and growth in the coming years, or preferably decades. We also urgently need a clear commitment to strengthening Europe. Even though the SPD continues to wrestle with the Agenda 2010 reforms, Social Democratic economic policy has been good for Germany.

Today, Germany enjoys stable economic growth that has spurred employment. Hundreds of thousands of new jobs have been created, tax revenues are increasing, many people are seeing significant net income growth, and many German companies have become more competitive.

However, there are also alarming developments in Germany as a business location. Compared to the 1990s and to other OECD countries, Germany is seeing an increasingly uneven distribution of market income. The German Institute for Economic Research has calculated that the country’s economic output could be around €50 billion ($59 billion) higher if incomes were distributed more fairly. The call for social justice is therefore not a Social Democratic effort to romanticize the past, but an indispensable and important productive economic force, because qualification, motivation and flexibility through social security can sharply increase labor productivity. The modern social market economy must therefore be inclusive, and it cannot tolerate a widening gap between rich and poor.

The characterization of the coalition talks as "open-ended" ... should be replaced by the term "goal-oriented."

An economic policy based on values ensures that fair competition prevails and that the rise of the individual does not depend on a person’s background or financial resources, but on the willingness to make an effort and learn. Inclusive growth means enabling all parts of the population to participate fairly in the wealth they have earned. It is the key to securing our country’s long-term economic success and should be at the heart of Social Democratic economic policy.

French President Emmanuel Macron has presented a list of proposals on the future of the European Union. A German response is urgently needed. Europe needs a more coordinated economic and monetary policy. A European economic government could emerge from the European Commission. Changes to treaties are only conceivable in the mid-term.

At the same time, the euro zone needs to be more closely integrated, and all European countries must work together to improve the development opportunities of weaker partners through more effectively coordinated economic policies. This will not happen without European development taking place at different speeds. Together with our most important partner, France, Germany should strive to achieve an economic Schengen Area, which defines industries without borders and supports the development of “European champions” by reducing, improving and standardizing regulation. It is time to invest much more heavily in the continent’s competitiveness and future viability.

We are only at the beginning of the digitalization of business, work and society. Digitalization presents great opportunities, but also immense challenges. Some traditional job descriptions and business models will disappear, while new ones will develop. We will likely see an increase in the number of self-employed people and small businesses, coupled with the many challenges involved in shaping social systems.

Germany needs to prioritize the “three I’s”: intelligence, investment and innovation. If we look beyond our borders, we should add two other I’s: internationality and integration.

Following the party convention in Berlin, the SPD now has the chance to do good things for Germany. In this respect, the characterization of the coalition talks as “open-ended” is the wrong choice and should be replaced by the term “goal-oriented”. We need a German and a European plan for the future aimed at 2030. The goal is clearly formulated – and anything but open-ended.

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