Piper’s World: The Power of the Treasurer – Economy

It is not every day that international economists interfere in German coalition talks. It is therefore quite remarkable what the American Nobel laureate Joseph Stiglitz and the British economic historian Adam Tooze have now written in time. The two men explicitly warn against the appointment of the President of the FDP, Christian Lindner, Federal Minister of Finance, because he represents “conservative clichés” in terms of budget and finance. Lindner wants to keep the money together instead of investing it, which is necessary today. And they add the sentence: “The Ministry of Finance is so important because, unlike all other ministries, it combines technical and political power as well as national and international tasks.

One could argue for a long time about “conservative clichés”, but there is no doubt that the treasurer of the nation actually has “technical and political power”. Those who have a hand over the public treasury have the power as only the Federal Chancellor himself. This power is illustrated, for example, by the fact that the finance department is included in the Basic Law (Articles 112 and 114) and is protected by it. If the government wants to spend money, the finance minister can use his veto. The BMF has an influence on the expenses of other departments through so-called mirror presentations. Whether Robert Habeck or Christian Lindner take over the ministry is therefore more than a simple question of the distribution of posts.

The history of the BMF is closely linked to parliamentary democracy in Germany. It was in 1919 when Central Swabian politician Matthias Erzberger created the Reich Finance Ministry from the Imperial Treasury in Berlin. He built a modern tax administration and introduced an income tax tariff, which in principle still exists today. Erzberger was assassinated by right-wing terrorists in 1921.

The Federal Republic succeeded Erzberger’s legacy. Fritz Schäffer (CSU) became the Federal Prime Minister of Finance in 1949. He was the only one who managed to create state assets – a total of eight billion marks. At that time, however, Federal Minister of Economics Ludwig Erhard had much more influence. It was due to the person of Erhard, but it was also due to a bureaucratic delicacy which was neglected: In the Ministry of Economic Affairs, there was a “Money and Credit” department which looked after the D-Mark. and monetary issues. The importance of this department became evident as the Federal Republic became increasingly closely linked to the world economy. According to Erhard, Karl Schiller in particular used this instrument masterfully, Minister of the Economy of the SPD in the first grand coalition from 1966 to 1969. With his fight for the revaluation of the mark, he became a star.

The federal elections of November 10, 1972 mark a turning point

A minister of the economy should never again have as much power as Schiller. The turning point was the federal elections of November 10, 1972. Chancellor Willy Brandt had won a convincing victory, the SPD became the strongest parliamentary group with what looks fantastic today, 45.8%, but the FDP has also strongly progressed. To take this into account, the coalition partners decided to assign the Ministry of the Economy to the FDP. The former federal director of the party, Hans Friderichs, has become minister. His power has been reduced on a crucial point, however. Finance Minister Helmut Schmidt made sure that the money and credit department was relocated to his home. The BMF was now responsible for the currency, as well as the International Monetary Fund, the World Bank and the G7 world economic summit. The BMF has now secured the domestic and foreign political power that Professors Stiglitz and Tooze fear today. Finally, under Theo Waigel (CSU), the BMF negotiated the Maastricht treaties for Germany on the introduction of the euro.

Meanwhile, the FDP has been reserved for the Ministry of the Economy. Since Hans Friderichs, all incumbents have come from the FDP, provided that he co-governs at all. On the other hand, the Liberals avoided the Department of Finance, which is surprising, because tax issues are in fact at the heart of the party’s platform. Since 1966, when the last FDP finance minister, Rolf Dahlgrün, resigned, the BMF has been led by the SPD and the Union. And when the FDP joined a black-yellow coalition under Angela Merkel in 2009, President Guido Westerwelle chose the Foreign Ministry and left the BMF to Wolfgang Schäuble of the CDU, which from a liberal perspective, may have been a capital mistake.

Lindner apparently wants to learn from this mistake. Comment from Theo Waigel, with a term of 3,476 days, the longest-serving BMF chief so far: Lindner absolutely needs to demand the office for the expectations it has raised. However, the task will be delicate. Olaf Scholz, the current incumbent, was able to spend the money with both hands to fight the crisis. His successor must save again and reduce debt: “He must be aware that he must prepare the people for sacrifices and uncomfortable truths.

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