By Manuel Alvarez-Rivera, Puerto Rico
Voters in Denmark go to the polls today (Tuesday, November 13) to choose members of the Scandinavian country's unicameral legislature, the 179-seat Folketing, in a parliamentary election called a year-and-a-half ahead of schedule by Prime Minister Anders Fogh Rasmussen.
Preliminary 2007 Folketing election results are available at the bottom of this posting, under Update; in addition, Elections to the Danish Folketing has detailed 2007 election results.
The early election will be held under an amended electoral law that retains the existing proportional representation (PR) electoral system, but redraws the three electoral regions and introduces ten new multi-member constituencies. In the latter, 135 of the 175 Folketing seats assigned to metropolitan Denmark will now be filled by the largest average method (also known as the D'Hondt rule), which replaces the modified Sainte-Laguë rule traditionally used for the distribution of parliamentary seats in the Scandinavian countries. The average number of seats per constituency has increased from eight to 13-14, and the switch to the D'Hondt rule is intended to counterbalance the effect of having larger constituencies which make it easier for smaller parties to secure Folketing representation, and consequently qualify for the nationwide distribution of parliamentary seats - no trivial concern in Denmark, where as recently as 1998 there were no fewer than ten parties represented in the Folketing. There is no formal threshold for the allocation of constituency seats, but the D'Hondt rule imposes an average de facto threshold of 6.7%, down from 8.5% under the old system (had modified Sainte-Laguë been retained under the new constituencies, the barrier would have dropped to an average of about 5.1%).
However, the electoral system remains otherwise unchanged. As such, all 175 Folketing seats in metropolitan Denmark will continue to be distributed on a nationwide basis by the largest remainder method of PR among parties that secure representation at the constituency level, or win a number of votes no smaller than the ratio of valid votes to constituency seats in two of the three electoral regions, or poll at least two percent of the nationwide vote. Of the three thresholds, the latter is by far the most important: in recent parliamentary elections, parties which have fallen below the nationwide two percent barrier have been consistently unable to fulfill either of the two alternative requirements (although the Center Democrats came close to doing so in the 2001 Folketing election: with 1.8% of the nationwide vote, they reached the votes-to-seats barrier in the Islands region, but came up just 491 votes short of the corresponding threshold for the Jutland region).
As in previous elections, constituency seats won by a party will be subtracted from its nationwide seat total, and the remaining seats shall be allocated from forty supplementary mandates, which will be then redistributed at the regional and constituency level, and finally among party candidates, who must stand in ninety-two nomination districts. The latter are vestigial remnants of single-member constituencies used in Danish parliamentary elections before the introduction of full PR in 1920, which have been retained to maintain a close link between voters and their elected representatives. However, they are not allocated a fixed number of seats, and some will end up with more than one Folketing member, while others could get none. Elections to the Danish Folketing has a more detailed overview of Denmark's electoral system.
The Faroe Islands and Greenland, both autonomous regions within the Danish realm, also take part in the Folketing election, electing two members each.
For most of the 20th century, Denmark's multi-party system was dominated by the left-of-center Social Democrats, which were by far the largest party. However, the Danish Social Democrats never commanded an electoral following as large as that of their Swedish counterparts or the Norwegian Labour Party in their respective countries. Thus, in the years following World War II Social Democratic-led governments alternated in power with right-of-center cabinets - unlike in Norway and Sweden, where Labour and the Social Democrats had extended periods of political hegemony.
Moreover, the Danish party system has been traditionally more fragmented than those of Norway or Sweden (particularly after the emergence of several new parties in 1973), in no small measure because Denmark's electoral system makes it easier for small parties to win parliamentary representation: as previously noted, a party can win Folketing seats with as little as two percent of the vote, whereas in both Norway and Sweden the nationwide electoral threshold is set at four percent. Consequently, minority governments have been the norm in Denmark for more than three decades now, with minority coalition cabinets coming to power far more frequently than in the other Scandinavian countries.
Nonetheless, the Danish party system has undergone a number of significant changes in the last decade-and-a-half. First, the Social Democrats slipped to second place in the 2001 general election (for the first time since 1920), and continued to lose ground in 2005. Second, the Liberal Party emerged as the largest party to the right-of-center in 1994, clearly ahead of the Conservative People's Party for the first time in nearly two decades, and subsequently became Denmark's largest party, a position it retained in the 2005 parliamentary election; the party is still known in Danish as Venstre, but the name, which means literally "the Left," is only a relic from its origins as a 19th century agrarian party that was initially to the left of the ruling, right-wing Conservatives. Third, by 2001 the far-right, anti-immigration Danish People's Party, led by Ms. Pia Kjærsgaard, had become the country's third-largest party, having completely eclipsed the anti-tax Progress Party from which it had split several years earlier. And fourth, two of Denmark's centrist parties underwent a marked decline in recent Folketing elections: the Center Democrats lost all their seats in 2001, followed by the Christian Democrats in 2005. In all, the number of parties from metropolitan Denmark represented in the Folketing gradually declined from ten in 1998 to seven in 2005.
Since 2001, Denmark has been ruled by a minority center-right coalition government of the Liberals and the Conservative People's Party, sustained in power by the Danish People's Party, with the Social Democrats, the Social Liberals, the Socialist People's Party and the Unity List - Red-Green Alliance in opposition. The Social Liberals are a 1905 breakaway from Venstre: in Danish they are still known as Det Radikale Venstre, which translates literally as "The Radical Left" (as they were to the left of Venstre); however, the party is essentially centrist. Meanwhile, the Socialist People's Party and the Red-Green Alliance stand to the left of the Social Democrats. The Socialist People's Party represents the distinctly Scandinavian phenomenon of the left-socialist party which stands ideologically between the Social Democrats and the Communists, while the Red-Green Alliance brings together a number of far-left groups.
The Faroe Islands and Greenland elect their Folketing members separately from metropolitan Denmark, and these seats could come into play in the event of a very close outcome in Denmark proper. However, both regions have completely different party systems. In the Faroe Islands, the Folketing vote will be a warm-up act for the upcoming election to their devolved legislature, the Løgting, which will be held by no later than January of next year. Elections to the Faroese Løgting has further information about the Faroe Islands' party system.
Nine parties (plus a number of independent candidates) will contest the November 13 vote in Denmark proper: the seven parties elected in 2005, plus the Christian Democrats and a new party, the New Alliance, headed by Naser Khader, a naturalized Dane of Middle Eastern origin who was originally elected to the Folketing on the Social Liberal Party ticket. Most of the parties have grouped in two blocs (but will otherwise run separately): the Social Democrats, the Social Liberals, the Socialist People's Party, the Red-Green Alliance and the Christian Democrats to the left-of-center, and the Liberals, the Conservative People's Party and the Danish People's Party on the center-right. The right-of-center parties stand behind Liberal Party leader and Prime Minister Rasmussen, who is running on his record of economic achievements - Denmark's unemployment rate is currently the lowest since 1974 - while the center-left parties support Social Democratic leader Helle Thorning-Schmidt, who aspires to become Denmark's first female head of government.
Nonetheless, opinion polls suggest the two blocs are in a statistical dead heat (with as many as one in three voters still undecided); while support for the New Alliance has experienced significant fluctuations, the centrist party appears likely to hold the balance of power after the election. New Alliance leans towards the Liberals but also wants to limit the influence of the Danish People's Party over Rasmussen's government, which enacted controversially strict immigration laws in 2002. However, the polls published so far indicate that Rasmussen would need the support of both New Alliance and the Danish People's Party to continue in office, but the two parties and their respective leaders have wide policy differences - particularly on the issue of immigration - and in all likelihood would attempt to pull the government in opposite directions. As such, the question may not be so much whether Rasmussen will remain in power after the election, but for how long.
Update
With all votes counted, Denmark's Ministry of the Interior and Health reports definitive results of the 2007 Folketing election in Denmark proper were as follows:
Liberal Party of Denmark (Venstre) - 908,472 votes (26.3%), 46 seats (-6)
Social Democratic Party - 881,037 votes (25.5%), 45 seats (-2)
Danish People's Party - 479,532 votes (13.9%), 25 seats (+1)
Socialist People's Party - 450,975 votes (13.0%), 23 seats (+12)
Conservative People's Party - 359,404 votes (10.4%), 18 seats (-)
Danish Social-Liberal Party (Radikale Venstre) - 177,161 votes (5.1%), 9 seats (-8)
New Alliance - 97,295 votes (2.8%), 5 seats (+5)
Unity List - Red-Green Alliance - 74,982 votes (2.2%), 4 seats (-2)
Christian Democrats - 30,013 votes (0.9%), no seats (-)
Independent Candidates - 549 votes (0.0%), no seats (-)
Voter turnout in the election stood at 86.6%, up from 84.5% in 2005.
Venstre remained the largest party by a narrow margin over the Social Democrats, who came in second place for the third consecutive time, but both parties lost further ground in the election: the Liberal vote now stands just slightly above its 1998 level (before the party came to power), while the Social Democrats had their worst election outcome in more than a century.
Meanwhile, the Socialist People's Party emerged as the election's big winner: the party more than doubled its number of votes and Folketing seats with its best result in almost two decades, just behind the Danish People's Party - which remained Denmark's third largest party on a slightly higher share of the vote (and one extra seat) - but ahead of the Liberals' junior partner, the Conservative People's Party, which won the same number of seats as in 2005 on a nearly identical showing.
However, the other parties did not do so well: the Social Liberals were unable to hold on to their sizable 2005 election gains, while New Alliance and the Unity List barely overcame the crucial two percent threshold (although the latter won a constituency seat in Copenhagen that would have allowed it to bypass the nationwide barrier), and the Christian Democrats fared poorly.
Although the ruling Liberals and Conservatives no longer command a parliamentary majority with the support of the Danish People's Party - the three right-wing parties came up one seat short of an absolute majority - Prime Minister Anders Fogh Rasmussen is expected to remain in power with the support of the Faroe Islands' Unionist Party - which captured one of the region's two Folketing seats - as well as that of the New Alliance. Contrary to earlier expectations, the latter won't hold the balance of power in the newly-elected Folketing, but it may nonetheless play a significant role: without New Alliance, Prime Minister Rasmussen would have a majority of just one seat, and his government would be in an even more vulnerable position than before the election, when defections from Venstre and the Danish People's Party had reduced the center-right's parliamentary majority to just three seats - which triggered the early vote in the first place.
Tuesday, November 13, 2007
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Special Feature, The German Economy At A Glance
Welcome to the Global Economy Matters Blog. Below you will find the normal chronological blog posts. But first here is our Monthly Special Feature which in January 2008 focuses on Germany. Here you will find charts which provide background data on the German economy. We hope these will be of some help to the first time reader here, making it easier to contextualise, assess and get to grips with the general argument being presented on the blog. The big question which arose concerning the Germany economy in 2007 was whether or not the new found dynamism in German economic activity constituted some form of remaissance, and formed part of a global decoupling process whereby a sustainable recovery in domestic demand was taking place. Analysts on this blog never really accepted this view. The key question and central enigma associated with the German economy is really why domestic demand should have remained so congenitally weak over such a considerable period of time.
Since this phenomenon is also to be observed in the the two other societes with very high (circa 43) population median ages - Italy and Japan - we postulate that demographics and population ageing processes offer some part of the explanation here.
Basically what we can observe as societies move above the 40 median age mark are a number of stylised facts. Weakness in domestic private consumption would be one of these, absence of consumer credit driven property booms would be another, growing pressure on the national debt as the elderly dependence ratio steadily rises would be another, and growing dependence on export growth for sustaining GDP growth would be the central feature of the whole edifice.
We hope you will find the background data presented here useful in assessing the argument which we are presenting on this blog, which is basically that a key component in the longer term growth stagnation from which Germany is suffering has its roots in the underlying demographics. Basically and in the long run (possibly with a 30 year lag) fertility does matter. Please click on thumbnails for better viewing.
What follows is a very rough and ready attempt to describe in broad brush strokes how the contemporary German economy actually works. First off, and as is well known, German society is ageing, and at the same time the German population has started declining. Not only is Germany's median age rising, the proportion of the population in the key 25-49 age group is now falling.
As can be seen from the chart this crucial age group touched its highpoint in 1997/98. This could be thought of as the moment of maximum capacity for the German economy since it includes the crucial 25 to 40 household-former, first-time-homebuyer group. In terms of credit expansion, it is this group which drives a significant part of internal demand.
The age group also includes another important group, the 35 to 50 years one. This group drives an economy in productive terms, since these are the prime age workers. If you think of a society as a 100 metres sprint athlete, then there is an age when this athlete is at the maximum of his or her running potential, an age after which each time they can only run the 100 metres more slowly.
Well a society is the same in terms of its collective economic potential, without addressing underlying issues either through fertility or immigration, it can only move forward more and more slowly. Consumption becomes flat, and GDP growth - gioven the external dependence - fragile.
Private consumption has hovered pretty close to the 60% mark for many years now, while government consumption - after moving sharply upwards as a total share in the first half of the 1970s has subsequently remained pretty constant, moving around the 19% of GDP mark. The big difference has been in the importance of fixed capital formation (GFCF) which reached from 1975 to 2000hovered around the 22 - 24% of GDP mark.
Prior to 1975 GFCF was at a much higher level, while post 2000 it has dropped substantially And So what we can see is that the year between, say, 1975 and 2000, when GFCF remaind a more or less constant share of GDP, constituted - to use the language of neo-classical economics - the constant growth period of the German domestic economy.The years prior to 1975 were the convergence, or "catch-up" years
And especially the 1960s, after Germany finally broke out of the destruction and devastation of WWII - while the years after 2000 constitute what the neo-classicists would call the "balanced growth period", although as we can see, it isn't very balanced, and there certainly isn't a steady state.
2008 Forecasts: There is a consenus at the present time that the German economy is slowing. Where there is no real consensus is over the rate at which it is slowing and where and when it will settle. It is clear that GDP growth in 2007 will be below the heady 3.1% annual rate achieved in 2006. The OECD last December revised their 2007 German forecast down to 2.6%, and their 2008 one down to 1.8%. The IMF in their October World Economic Outlook forecast growth for 2007 at 2.4%, slowing to 2% in 2008. Morgan Stanley's Elga Bartsch, while optimistic that the German economy will whether the credit crunch better than most (and here she may well be right) is somewhat more sanguine, putting 2008 growth at 1.5%. In general though I rather doubt her overview that "Germany could well be on the way to becoming the new growth locomotive in Europe." and especially her suggestion that "the phase of underperformance in terms of GDP growth, which has plagued Europe’s largest economy for years, is clearly over." Unfortunately, what we are arguing on this blog is that Germany's GDP growth rates since the mid 1990s are not some special kind of "underperformance", but what can be expected from a society with a rapidly rising median age which is increasingly dependent on exports rather than domestic consumption for growth.
The EU commission in it's November 2007 forecast was also convinced that the German economy was now on a "solid growth path", forecasting 2.5% growth for 2007 and 2.1% for 2008.
I personally will be very surprised if we see growth in the region of 2% for the German economy in 2008, and I even consider the 1.8% from the OECD and 1.5% from Morgan Stanley still on the high side given the extent of downside risk. Basically the reasonably favourable depreciation rules which currently apply to German investment have been changed as of 1 January 2008, and we might reasonably expect to see some sort of impact on investment comparable with the negative shock which hit private domestic consumption following the VAT rise on 1 Jan 2007. In addition all the indications suggest that German consumption will continue to be weak in 2008. So if consumer consumption is at best flat, governemnt consumption equally so, and investment and construction weakening, we are simply lefy with export growth, and here the outlook is definitely more negative in 2008 than it was in 2007. The Spanish economy (one important German customer) is visibly wilting by the day, as is the UK (another big customer), but it is to Eastern Europe we must look for the biggest impact on German exports of any correction in 2008. Just one data point should suffice, Germany exports roughly the same value of goods to the Czech Republic (and more to Poland) as it does to China. This means that Geramny is proportionately not that exposed to any slowdown in China, but hugely exposed to any sudden shift in growth and demand in the East of Europe.
So I would say, that on current data, 1% growth in Germany in 2008 look a reasonable estimate at this point, but that this needs to be taken to mean with considerable downside risk. Germany is now tremendously dependent on what happens elsewhere, and until what does actually happen elsewhere becomes clearer it is difficult to be more precise on Germany.
The only apparent bright spot on the horizon is employment, but I am dubious that in the context of Germany's ageing workforce this will work through as some are hoping, as I expain at some considerable length in this post here. My opinion is that Germany will enter recession at some point during 2008, and that we may well have 2 consecutive quarters of negative growth. The continuing high euro will maintain pressure on German exports, and high oil and food prices will maintain pressure on the inflation front, at least in the first half of 2008. The ECB will probably switch stance towards rate reductions at some point, but since, as Elga Bartsch among many others so eloquently argues German internal consumption and investment are not especially dependent on credit conditions, easing from the ECB may not have as much impact as one would hope for.
Key Posts For Understanding The Present Path of the German Economy
Is The German Economy Heading For Recession in 2008?
Employment and Unemployment in Germany January 2008
Germany Economy, What Price the VAT Effect Now!
The German Economy, Employment, Export Shares and Age Structure
Structural Aspects of German Export Dependence
Does NeoClassical Steady State Growth Really Exist?
1 comments:
"If the American People ever allow private banks to control the issue of their currency, first by inflation, then by deflation the banks...will deprive the People of all property until their children wake-up homeless on the Continent their fathers Conquered...The issuing power should be taken from the banks and restored to the People, to whom it propery belongs." Words by Thomas Jefferson and true today since most trouble stems from the fact that instead of Nations governing it will be the banks Ruling the World collecting on all humanity. All else is just talk, smoke& mirrors and market corrections.
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