The Berlin Wall came down 32 years ago this November, ushering in a new era of freedom and opportunity. But judging from the results of a recent local election, it looks as if socialism is trying to stage something of a comeback in Germany’s capital city.
In a referendum that coincided with Sunday’s general elections in Germany, a majority of Berliners approved a measure to have apartments forcibly seized from landlords. The move would socialize nearly a quarter of a million flats, costing the city between $34 billion and $46 billion.
Supporters of the referendum believe this will help control rent hikes, but they’re forgetting a couple of things. One, living costs are rising not necessarily because of greedy property owners, but because construction of new housing has not kept pace with surging demand. Kicking out the landlords does nothing to address this persistent problem.
And two, inflation is hitting all sectors right now, not just rental property. Germany’s annual rate of inflation hit a 13-year high in August (one of the reasons many of its citizens have been loading up on gold). So why stop at apartments? Why not socialize food? Clothes? Automobiles?
Pretty soon, Berliners could find themselves back behind the Iron Curtain.
Around the world, socialist-minded lawmakers and politicians celebrated the referendum’s passage. In a tweet, Canadian Member of Parliament (MP) Don Davies called the measure “a creative and bold way to deliver affordable housing.”
Mick Barry expresses his approval of German voters and the human right to housing
Twitter: @DonDavies
Mick Barry, an Irish lawmaker representing Cork, tweeted: “Time to take on the corporate landlords here too.”
Mick Barry expresses his approval of German voters and the human right to housing
Twitter: @MickBarryTD
Meanwhile, a candidate for Los Angeles City Controller floated the idea of similarly seizing property owned by “private real estate companies/developers.”
Kenneth Mejia expresses his approval of German voters and the human right to housing
Twitter: @kennethmejiaLA
I’ll admit, ours would be a perfect world indeed if everyone had a comfortable place to live rent-free. But as Margaret Thatcher said, “The trouble with socialism is that eventually you run out of other people’s money.”
Angela Merkel Crystallized Germany as an Economic Powerhouse
It isn’t just Berlin. Germany as a whole is set to shift left after the country’s Social Democratic Party (SPD) narrowly won the biggest share of votes on Sunday, with finance minister and former Hamburg mayor Olaf Scholz expected to succeed Angela Merkel as chancellor.
I predict Merkel will be remembered fondly, in Germany and elsewhere, for many decades to come. After 16 years as chancellor, she’s leaving office with a higher approval rating than any other world leader.
Like Margaret Thatcher, she reined in government spending, kept bureaucracy in check and oversaw a period of strong economic growth. A former research scientist, Merkel deftly navigated Germany through a number of crises, including the 2007-2008 recession, helping to crystallize her country’s role as not just Europe’s largest economy but also its de facto leader. On her watch, Germany’s GDP per capita growth topped that of all other G7 countries.
Germany’s economy has beaten all other G7 countries over the past 15 consecutive years
USGI, World Bank
But the time has come to look beyond Merkel, and if I’m being honest, Berlin’s socialist referendum makes me slightly uneasy.
I know nothing about Olaf Scholz, the presumed chancellor-in-waiting, other than he’s a member of the SPD, a party that has its roots in Marxism. Among his campaign pledges are to increase housing—which I believe will do more to quell rent hikes than socializing rental property ever could—expand renewable energy and raise the minimum wage.
Can We Reverse Course?
Germany’s flirtation with socialism is part of a troubling trend that’s hitting the world’s biggest economies, from Justin Trudeau in Canada to Alexandria “Tax the Rich” Ocasio-Cortez in the U.S.
Although the People’s Republic of China has always been socialist, President Xi Jinping has lately taken aim at Western-style capitalism in a bid to revive Chairman Mao’s Marxist vision. According to reporting by the Wall Street Journal, Xi seeks to build a China “in which the party does more to steer flows of money, sets tighter parameters for entrepreneurs and investors… and exercises even more control over the economy than now.”
Like Berliners who seems to have forgotten the struggles living under Soviet rule, President Xi seems to have forgotten that it was Deng Xiaoping’s decision in 1978 to liberate parts of China’s economy that helped the country undergo some of the fastest growth the world has ever known.
Announcement! I will be in Dubai on October 12 for the AIM Summit. If you’ll be in the area then, make sure to catch my panel on mining Bitcoin with sustainable energy: www.aimsummit.com.
Frank Holmes attending AIM Summit in Dubai.
U.S. Global Investors
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OTTAWA – The Canadian economy was flat in August as high interest rates continued to weigh on consumers and businesses, while a preliminary estimate suggests it grew at an annualized rate of one per cent in the third quarter.
Statistics Canada’s gross domestic product report Thursday says growth in services-producing industries in August were offset by declines in goods-producing industries.
The manufacturing sector was the largest drag on the economy, followed by utilities, wholesale and trade and transportation and warehousing.
The report noted shutdowns at Canada’s two largest railways contributed to a decline in transportation and warehousing.
A preliminary estimate for September suggests real gross domestic product grew by 0.3 per cent.
Statistics Canada’s estimate for the third quarter is weaker than the Bank of Canada’s projection of 1.5 per cent annualized growth.
The latest economic figures suggest ongoing weakness in the Canadian economy, giving the central bank room to continue cutting interest rates.
But the size of that cut is still uncertain, with lots more data to come on inflation and the economy before the Bank of Canada’s next rate decision on Dec. 11.
“We don’t think this will ring any alarm bells for the (Bank of Canada) but it puts more emphasis on their fears around a weakening economy,” TD economist Marc Ercolao wrote.
The central bank has acknowledged repeatedly the economy is weak and that growth needs to pick back up.
Last week, the Bank of Canada delivered a half-percentage point interest rate cut in response to inflation returning to its two per cent target.
Governor Tiff Macklem wouldn’t say whether the central bank will follow up with another jumbo cut in December and instead said the central bank will take interest rate decisions one a time based on incoming economic data.
The central bank is expecting economic growth to rebound next year as rate cuts filter through the economy.
This report by The Canadian Press was first published Oct. 31, 2024
