German Backlash Against the Rich

Posted by: Jack Ewing on February 21

Germany’s crackdown on tax dodgers could fuel a growing backlash against international capital. When TV cameras captured Deutsche Post CEO Klaus Zumwinkel being escorted from his Cologne villa by authorities, the scene fed simmering resentment at managers whom average folks believe have gotten more than their share of Germany’s recent economic recovery.

It’s not completely true that only a narrow group as benefited from growth—more than 600,000 unemployed people have found work since last year. But the growth has come partly as a result of unpopular reforms including reduced jobless benefits and weaker job protections.

Now it looks like internationally oriented managers such as Zumwinkel who pushed for austerity were, as the German saying goes, preaching water but drinking wine. Add in the big writeoffs by European banks that invested in subprime paper—and in at least one case required a taxpayer-financed bailout—and you’ve got the makings of a popular backlash.

One fruit of that backlash is a rise in the far left. The aptly named Left party, a coalition of East Germany’s post-Communist PDS and dissident Social Democrats, won enough votes in the states of Hessen and Lower Saxony to earn seats in the local parliaments. In Hessen, where no party won enough seats to form a government, the Social Democratic Party (SPD) is considering whether to accept support from the Left Party to form a coalition with the Greens, according to German press reports.

Even though the Left party wouldn’t formally join the government, their participation is still a scary development. The Left party is a ragtag collection of traditional socialists and unreconstructed Communists. One Left Party representative-designate in Lower Saxony has already had to quit after she defended the Berlin Wall and the East German secret police in a TV interview.

But if it turns out Germany’s business elite did in fact, as alleged, hide assets in Liechtenstein banks, they’ll only have themselves to blame for the people carrying torches outside their villas.