One of the toughest policies to implement for any government is spending cuts. Too often, it is easier said than done. Indeed, governments tend to do the opposite — to spend more, especially on transfer payments (cash handouts) because they are popular and win votes. Germany’s next chancellor, Friedrich Merz, has promised to crack down on immigration, cut taxes for both individuals and businesses to rejuvenate growth and competitiveness, as well as reduce regulations, simplifying administrative processes to foster a more business-friendly environment. But execution plans, particularly around reducing subsidies and social services, have been vague and he has acknowledged that the German public has low tolerance for disruptions. This is a stark contrast to how swiftly US President Donald Trump is moving, tasking and largely standing by the Department of Government Efficiency (DOGE) thus far.
Cut government spending and lower taxes for the people and businesses, deregulation, free market, anti-immigration, deglobalisation and less progressive inclusion. These are the policies that an increasing number of countries are embracing to stimulate economic growth.
And they are contrary to the preference of the progressive left (which was the more dominant force politically for more than two decades, until recent years) for larger, more interventionist governments and higher and progressive taxes to fund myriad social programmes in creating strong welfare states (redistribution of wealth to aid the lower-income groups). As we wrote previously, the economic pendulum is swinging to the right across the globe, most notably in Europe and Latin America. Last week, the centre-right coalition in Germany was the latest right-leaning party to emerge victorious in national elections while the far-right party, Alternative for Germany, came in second, gaining more votes than the incumbent centre-left party of Chancellor Olaf Scholz.
