CDU/CSU (Christian Democrats) and SPD (Social Democrats) are destroying Germany’s small and medium-sized enterprises (SMEs)

The fact that the new German grand coalition even came to power is thanks to a disastrous traffic light policy of “transformation”, “deindustrialisation” , and “ecology instead of economy”. This deliberately undermined the very foundation of SMEs and made their lives increasingly difficult with unprecedented production costs, “green” burdens and bureaucracy, as well as the highest taxes and social security contributions worldwide in Germany.
    SMEs believed that with FriedrichMerz, they would finally once again be able to elect a government friendly to them, for example through, the long-time chairman of the CDU’s SME association, Carsten Linnemann, and through Merz as a representative of a sound, prudent fiscal policy, as well as a halt to uncontrolled migration, green economic policies, and rising production costs.

Credibility lost

But Merz had already lost credibility even before taking power, by imposing on Germany its largest debt package – over one trillion euros – through trickery and a constitutional amendment. This was not meant to revitalise small and medium-sized enterprises (SMEs), but rather to finance the Ukraine crisis and purchase arms from corporations. Furthermore, construction and infrastructure companies are to be subsidised with even more debt.
    No significant measures to support SMEs were included in the coalition agreement. Due to a sense of shame, the CDU’s representative for SMEs, Linnemann, resigned from the government. The SPD, after losing the election, prevailed on crucial issues, particularly in social policy. The coalition agreement does not bode well for SMEs in the coming years.
    Ludwig Erhard achieved the post-war economic miracle in Germany by guaranteeing tax exemption for the profits retained by small and medium-sized enterprises (SMEs). This measure affected 96 per cent of all SMEs in Germany and, above all, it created a psychological climate of hope and optimism that motivated SMEs to achieve peak performance, maximum investment, and maximum growth, bringing the entire country an “economic miracle” and a period of prosperity.
    Surveys conducted among SMEs by the SME Institute have revealed no hopeful outlook or boom mentality following the elections. In the 96 per cent of companies in our economy that rely on personnel services, dissatisfaction persists, in some cases hopelessness, and even fear of the measures the new government will take.
    With its new debt of more than one trillion euros, the Merz government has not addressed consumer demand or the demand for goods and services provided by SMEs, but has rather unilaterally prepared the way for military and infrastructure spending. The majority of this money will therefore flow to foreign corporations. More than two-thirds of the military equipment is ordered from the USA, with tens of billions of euros being sunk into corrupt Ukraine, its collapsing army, and the continuation of the war. According to calculations by the American intelligence agency NSA, half of these funds never reach their intended purpose for the war, but instead disappear into corruption and kickback schemes. The Americans are therefore withdrawing from this corrupt and useless war of subsidies, prompting Merz to rejoice that Germany can now become the largest military power in Europe and he the leader in the Ukraine war.

To BlackRock’s delight

This war in Ukraine is of no benefit to small and medium-sized businesses; on the contrary, it has harmed them through increased costs, most notably through drastically rising energy costs. This is because sanctions and the destruction of the Nord Stream gas pipeline have cut off the cheap Russian gas supply, forcing the import of American fracking gas, which is three times as expensive. Merz has tried to prevent hopes of repairing the Nord Stream pipeline by urging Ursula von der Leyen to impose sanctions against the rest of the pipeline – to the delight of the American fracking industry and his former employer BlackRock, but to the Germany’s detriment.
    Once again, big business is being politically promoted and even subsidised at the expense of small and medium-sized enterprises, and all voters – especially SMEs – are being forced to shoulder exorbitant energy costs. Merz even intends to significantly increase the CO2 tax in the coming years, a tax with which the EU authority is attempting to pave the way for its own tax, as it currently lacks its own taxing authority.
    The long-time representative of Atlantic big business Merz has not only lost credibility by acting against his promises (by incurring debt), but has also demonstrated to SMEs in his first few months in office that he will disappoint their hopes for a new SME policy. Merz thinks in terms of corporations, capital, and the power of capital–he seems unable to grasp the mentality of our venture capitalists who invest at their own risk and run their own businesses.

Personnel companies are no capital companies

A personnel company is something completely different from a capital company; it is a company run by people, with people, for people, and thrives on mutual trust, not on mere profit maximisation as capital companies do. Ludwig Erhard knew that a large part of small and medium-sized enterprise (SME) policy is psychology. However, this requires a trustworthy representative of SMEs in political leadership, and Merz no longer has one after losing Linnemann.
    Therefore, SMEs can hardly expect credible SME policy from Merz, the former representative of capital interests and now a warmonger.
    On the other hand, no credible SME policy can be expected from the coalition partner SPD (the Social Democrats) and their chairman Lars Klingbeil either.

Ignorance of the nature of small and medium-sized enterprises

The Social Democratic Party (SPD) secured the Ministry of Labour and Social Affairs for itself; this is crucial for production costs and has been waging a class struggle for workers against capital for decades, following in the footsteps of Karl Marx. However, even Marx’s theory of exploitation targeted corporations, i.e. capital companies, and specifically the owners and managers of large corporations. He overlooked the fact that more than 96 per cent of our businesses are not corporations at all, but rather that entrepreneurs and their employees form a cohesive performance team and that, therefore, the “exploitation of workers” he wrote about does not occur in companies based on personnel. This harmonious situation within SMEs stands in stark contrast to the socialists’ class struggle theory regarding corporations. SME policy must therefore implement a personal, trust-based economy, as the SME Institute in Hanover has been advocating unsuccessfully for decades.
    The policies of higher production costs, higher minimum wages, reduced working hours, and costly bureaucratic and social welfare programmes less affect corporations than – to more than 90 per cent – labour-intensive small and medium-sized enterprises, thus harming SMEs more than large corporations. Even if this is not due to malice, but rather to a lack of understanding of the fundamentally different team structure of SMEs, it cannot generate trust, a positive outlook, or economic growth in the SME sector.

The Social Democrats stand for bureaucratisation and enormous tax burdens

An example of this is that our SMEs are not only burdened with the highest taxes and social security contributions in the world, they also bear the heaviest bureaucratic burden. Every entrepreneur in Germany has to spend more than 1,000 hours annually fulfilling bureaucratic obligations: reports, inspections, statistics, regulations, and so on.
    This burden has increased dramatically in the last decade due to green environmentalism and the EU. No wonder that the productive economy is desperate and downsizing in Germany, while unproductive bureaucracy is our biggest growth sector.
    The black-and-red coalition government has so far failed to grasp that economic growth and prosperity stem primarily from the 96 per cent of personnel businesses in our economy, and that effective policies for small and medium-sized enterprises do not consist of subsidising corporations or providing social benefits to ever-larger segments of the population. After all, two-thirds of our population live on state transfer payments, including more than 6.5 million people who are completely unemployed, relying on “Bürgergeld”, i.e. basic income, and social benefits – many of them better off than if they were working. When you burden labour with the highest taxes and social costs in the world you should not be surprised if people lose their interest in working.
    Continuing to burden the SME sector ever more overwhelms its capacity, destroys it, and has led to the current frustration among SME owners.
    Those who make policy only for fringe groups are strangling the productive SME sector. We have already lost more than a million SMEs (mostly self-employed individuals). Of the remaining approximately 4 million, we will lose another million in the next two years. The loss of small and medium-sized enterprises means increasing unemployment and growing social demands coupled with decreasing state and social welfare provision.

What will our children say?

Losing our SMEs is not only a problem for the business owners themselves – who are falling into the abyss of the destruction of their livelihood – but also means increasing unemployment for employees, a declining GDP, a threat to social cohesion, and the proletarianisation of our society.
    At its peak around the turn of the millennium, the middle class encompassed half of our population (47 per cent), but it has already declined by more than 4 per cent and will emerge from the recession as comprising only a third of our society. This means the crash of millions of middle-class families, including self-employed and employed families, and livelihoods.
    The government’s lack of SME policies is therefore not just a theoretical error, but an existential disaster for millions.
    This is likely also the reason why the entire firewall cartel [against the Alternative for Germany, AfD] tolerates no alternative criticism. The fear of discussing their flawed policies leads Merz and his ilk to resort to anti-democratic exclusion of critics from practical politics and to fight against any alternative, just as all dictatorships have defamed, fought and persecuted their critics.
    Enthusiasm among the middle class cannot be generated through such policies and behaviour.
    Our children will one day mourn the flourishing, bourgeois Germany that we, through our election of anti-middle-class parties and policies, have de-bourgeoisified and thus proletarianised. The culprits will be long gone (with pensions, of course) and can no longer be held accountable, because we failed to hold them accountable in time. •

(Translation Current Concerns)