ALLIANCE FO§ DEMOCRACY

Clueless Advisors – Report of the Council of Economic Experts

There will be little or no economic growth in Germany. This is what the German Council of Economic Experts concludes in its 2014/2015 Annual Report. The report, titled “More Confidence in the Market Processes”, is optimistic, even though growth projections for Germany for 2014 have been revised down from 1.9%, which is already absurd, to 1.2%. For 2015, the so-called economic experts are hoping for 1.3%. By the end of 2015, this figure will be 0.5% to 0.8%.
These economic experts have been nominated by the German President by law since 1963 for a term of five years. They submit their report to Angela Merkel, who reportedly told the German Press Agency (DPA) that the government is not to blame for the economic slump.
Two things have become clear: The slump is not a slump but the worst economic and political disaster of all times resulting in the greatest public deception of all time.
The chancellor is therefore mistaken when she calls it a slump. A Government that allows our income, pensions and savings to be misused for the financing of the national banks of other bankrupt euro countries, or even offers them up for this purpose, while the German state treasury itself is broke and must be sustained by investors, taxpayers and retirees, must really be confused about the true state of our country. It must still like the idea of a united Europe, but is taking the wrong path to fund this idea. This includes the introduction of the euro, and the misconduct related to the concealed and illegal funding of euro debts. The Merkel administration has chosen the path to the “poorhouse” and accepted much too high a price for the idea of a united Europe, and the people are given no choice and no information. There are some pre-election giveaways for which there is no funding such as additional maternity/paternity leave and early retirement at 63 or the "misguided reforms in social policy," as they are called in the economic experts report, and this means that Germany's implicit debt, i.e. the pension fund deficits, will increase. These debts currently amount to €12 trillion. By contrast, the amount of explicit debt is currently €2-€3 billion.
Overall the report is questionable and, with the economy floundering, sounds as though it was handed down from another time. And Angela Merkel is annoyed because the economic experts managed to blame the poor economic situation on the minimum wage. Now Merkel wants to make sure that the leading expert, Christoph Schmidt, does not prepare any more analyses, because Merkel believes, as the DPA reported, that something that has not been introduced yet could not affect the economy. The chancellor may be right about this, but what she overlooks (we can only suppose) is that the German economic situation is no longer sustainable due to the insurmountable public debt and daily devaluation of the euro. It is not the heads of the economic experts that must roll to change this situation but the head of the chancellor, so she can finally be replaced by a chancellor who establishes a real democracy and is actually qualified for the post – such as ousted former Federal President Wulff, who alone acted in the people’s interest to prevent the ESM.
The so-called economic experts analyse the situation of the German economy and future trends. Commissioned by the federal government, they present their annual report every autumn, but also provide opinions on other issues in special reports. Moreover, they can seek advice from other experts. The current Council members are Christoph M. Schmidt (economist Ruhr University, Bochum), Peter Bofinger (economist, University of Würzburg), Isabel Schnabel (economist Johannes Gutenberg University Mainz), Lars P. Feld (University of Freiburg) and Volker Wieland (Goethe University, Frankfurt am Main).
To mark the Council’s 40th anniversary, a Special Report was issued in which various politicians and economists discuss the issue of economic consulting, and policy enforcement in particular (starting on pg. 15). Then German Chancellor Gerhard Schröder (p. 15-21) wrote: “In its 40-year history, the Council has not only been recognized by its own colleagues within its own group of experts but indeed in politics as well. Insofar as I can tell, and so far as I'm concerned, this also applies to the advice that we have not or not yet been able or wanted to put into practice.” Now that is real political shrewdness!
Moreover, the former chancellor stated: “The Council has in no way become what some sceptics feared it would when it was established. It has also not become what has also been suggested – a kind of auxiliary body of the federal government, to anticipate enforcement of what the government does – and instead is an adversary in an intense and necessary debate. The Council must remain independent of individual business and economic interest groups. I think that we can say that this has been achieved and defines the work of the Council.”
Regarding the council’s report, Schröder says: “The Council’s report shows that it must not get caught up in the day to day politics. They are embedded in a larger framework with long-term perspectives, and this - we can say with certainty - is based on current scientific knowledge. And this is also what distinguishes the Council’s reports, at least in my opinion, because they are beneficial, and the past problem of presenting different opinions in a Babylonian plethora of languages has been overcome.”
Two key points can be drawn from this: It is unrealistic to praise politics because those who want to be independent of politics cannot be independent if they are appointed by politicians. If there are advisors who contradict the interests of political parties, there are always loopholes that any political party can use to put their plans into effect, regardless of what any council says.
Despite all of the fuss around the release of the reports by the economic experts, with the threat of more ceremonies and speeches after the Council has been around a few more years, its predictions are dubious. This is evident in the actual results: From 1994 to 2003 (at the Council’s 40-year anniversary), the experts were off the mark 10 times, mind you; the results exceeded their predictions 4 times and fell short of them for 6 years. This is partly because some of the predictions depend on politically driven targets, resulting in predictions of growth that were just a dream for many years, and have now become a nightmare. There were also some unforeseen events such as changes to the tax laws, the effects of which are only felt in the years that follow.
Although the Council of Experts helps make the economic issues more understandable, they have no real independence due to the politics. Otherwise, the 2014/15 report would have predicted German bankruptcy or negative growth, since there is nothing else to be expected or predicted. The rest is political input.