Breaking News
Investing Pro 0
Free Webinar - Master Indicators: Maximized Trading Potential! | Thursday, June 8 | 12:30PM EDT Enroll Now

Does Socialism Threaten Germany’s Economy?

By Frank HolmesMarket OverviewSep 30, 2021 12:03PM ET
Does Socialism Threaten Germany’s Economy?
By Frank Holmes   |  Sep 30, 2021 12:03PM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items

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 law-makers and politicians celebrated the referendum’s passage. In a tweet, Canadian Member of Parliament Don Davies called the measure “a creative and bold way to deliver affordable housing.”

Mick Barry, an Irish law-maker representing Cork, tweeted: “Time to take on the corporate landlords here, too.”

Meanwhile, a candidate for Los Angeles city controller floated the idea of similarly seizing property owned by “private real estate companies/developers.”

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 last 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 elsehwhere, 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.

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.

Disclosure: All opinions expressed and data provided are subject to change without notice. Some of these opinions may not be appropriate to every investor.

Does Socialism Threaten Germany’s Economy?

Related Articles

Michael Gayed
Tackling the Retail Rut By Michael Gayed - Jun 07, 2023

The May jobs report was another step in the continuation of a trend that we’ve seen ever since coming out of the COVID recession. Even as several economic markets indicate a...

Does Socialism Threaten Germany’s Economy?

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.
  • Any comment you publish, together with your profile, will be public on and may be indexed and available through third party search engines, such as Google.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at’s discretion.

Write your thoughts here
Are you sure you want to delete this chart?
Post also to:
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Comments (1)
William RIPPARD Oct 02, 2021 11:11AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
If the rents are increasing because there is in effect a monopoly then have mega corps divest of interest within a reason time and create competition. Inflation is on it's way; inflation here to stay. If the city has 4o some billion to spend, then it can bid, along with others, when divesting occurs. If the City has vacant land etc it can build low income housing, with the 4o billion,  cheaper because of no land cost.  Of course when the City takes over the housing; there goes the real estate taxes along with them. Also when you force the sale of housing, the incentive to build future housing is gone along with future taxes. Socialism has never worked and it still won't.
Are you sure you want to delete this chart?
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Continue with Google
Sign up with Email