How to Destroy an Institution

Hi -

What, another post *already*?

Yep.

This afternoon a new report will be coming out on the estimation for tax income for the German government. This is widely expected to be wildly optimistic, based on something like over 1% growth (Yipee! This is, after all, Germany...), which means that the government will plan on taking in x Euros, but will take in something like x-many millions of Euros, resulting in further increase in the German national debt.

What's the problem here? The problem is that what we call the Five Wise Guys (Sachverständigen Rat), the five leading German public research institutes, have utterly failed in their charter, to provide advice to the government and technical expertise.

Their technical expertise remains, but that's all there is: no one takes them seriously anymore, since they consistely remain uncritical of what is increasingly obvious really bad economic policies. They don't see being openly critical as part of their charter, and as a result they fail to fulfill their own charter.

The problem is that German politics is so thoroughly ideologized that it brokes no criticism: all political parties of note here are adamantly refusing to recognize that A) the German economy is, domestically, in very bad shape and B) Germany's rather generous social instracture means that Germany is living beyond its means (due to A), and has been doing so for at least 20 years.

If not longer.

Germany is, bluntly, broke. And has been for a while, covering up the problems with mounting debt and tax burdens.

And the institutions that are supposed to jump up and down pointing out the obvious are on the sidelines reestimating their equations to see if they can get a better fit so that their models continue to show growth rates that are politically acceptable.

A "proper" forecast would show that Germany won't show economic growth until the government is downsized and the tax burden is, if not reduced, then at least made more progressive, so that people actually have some money to spend.

These five institutes are basically blind to these problems because it doesn't fit the accepted orthodoxy of German politics. But by failing to be unorthodox, by failing to provide critical advice, they are ultimately destroying what utility they can provide. No one reads their twice-yearly reports on the German economy, because there is nothing of meaning there.

John