German Federalism: A reform that misses its mark

Early in the present decade, political actors at the national and regional levels finally seemed to agree: if government at both levels was to remain effective, Germany‘s system of federalism needed to be reformed. Their objective was to reduce the number of federal laws requiring approval by the upper house of the federal parliament, and to increase the range of issues to be decided autonomously by state parliaments. But by the end of the first reform stage, not much had been achieved. And according to the viewpoint of Fritz W. Scharpf, Emeritus Director at the Max Planck Institute for the Study of Societies, nor will the second stage, which involves restructuring the financial affairs of the Bund (the federation) and the Länder (the states), deliver the desired “disentanglement.” Here, he analyzes the faulty approach that defeated the objectives of the first stage of reforms.

Legislative powers of the Länder

For Bavaria, Baden-Württemberg, Hesse and North Rhine-Westphalia, these were trivialities that did not amount to their objectives of “creative federalism.” “That’s not what we were there for,” concluded an interviewee at the Ministry of State in Stuttgart. The fact that the Bund was ultimately compelled to withdraw from education does little to change this estimation, given that, within a matter of months, this proved more of a Pyrrhic victory for the state chancelleries than a triumph for educational policy in the individual Länder.

But why couldn’t the Länder achieve more? The decisive reason seems to me to be contained in the second explanation cited above: the prime ministers had framed their objectives in a way that paid too little heed to the realities of German federalism.

By defining their goal as a clear separation of responsibilities and demanding exclusive competence over large policy areas, the Länder had ignored the objective multi-level nature of most fields. There are surely many aspects of education policy that are best regulated at regional or even local levels or in individual schools and universities. Other aspects, however, require uniform regulation at the national level, whereas still others now depend on Europe-wide coordination. The same may be said of environmental, economic, employment or social policies.

Moreover, the principle postulated by the Länder also ignored the unitary character of German political culture. Politically salient public debates are conducted in the national media. When scandals claim public interest – from meat unfit for consumption to child murders – it is federal ministers who are asked to respond. And politically important demands are self-evidently aired at the level of federal politics.

In contrast to Switzerland or the US, regional differences that are not merely of folkloristic interest are regarded in Germany, not as an authentic expression of regional democracy, but as obstacles to mobility and a denial of the constitutional entitlement to equal or at least equivalent living conditions. Not least because of this entitlement to equal living conditions, the wholesale decentralization of governmental responsibilities contrasts starkly with the differences in the economic, financial and administrative capabilities of the Länder, which have been even more pronounced since the reunification of Germany.

In their position paper of May 2004, the prime ministers themselves had rejected the transfer of taxing powers with the argument that “fair competition” required that they should “start from conditions of economic equality.” But the same argument could also be applied to the transfer of other legislative competences, which could just as easily arouse the fears of the economically weaker Länder that they might be about to embark on a program of ruinously competitive deregulation, tax cutting and increasing inequality.

Why didn‘t the Länder gain more legislative autonomy?

Moreover, the discussion had to be conducted in an anticipatory framework. If constitutional reform were to involve the complete and final transfer of competences, then it was the duty of responsible constitution makers to assess the risks associated with potential uses of such powers by future Länder governments and parliaments. And given the uncertainty of anticipatory judgments, it was easier to raise concerns than to rule them out.

In short, by adopting the principle of separation as the solution to the joint-decision trap, the reformers established a frame of reference within which only closely circumscribed competences could be delegated. Such competences should not make excessive demands on the administrative or financial capacities of, say, Saarland or Bremen; they should not create incentives for beggar-my-neighbor policies; nor should they endanger the equality of living conditions, or impede the mobility of businesses or families. Measured against these criteria, the competences gained by the Länder represent the maximum that Bavaria, Baden-Württemberg, Hesse or North Rhine-Westphalia could have hoped to achieve in application of the principle of separation.

Moreover, it has since become apparent that the Länder have little idea of what to do with what they’ve got. Even on the issue of store opening hours, they found it self-evident to negotiate uniform national regulations. On the issue of a smoking ban, the Bavarian minister even insisted that the hard-won right to regulate restaurants and taverns should lead to a situation where rules in a Bavarian border town might differ from those in its Baden-Württembergian neighbor. And in the present discussion over the need for more day-care and pre-school education, Länder ministers are demanding exactly the kind of federal subsidies that their prime ministers had ruled out in the reform package.

Greater political scope at the level of the Länder could only have been achieved if, instead of the strict separation of competences, the Länder had aspired to a more flexible division of responsibilities. Such proposals were raised in the Reform Commission, but they were not taken up by the Länder. None of this is going to change in the second phase of reform. The focus this time is on the initially postponed issues of public finance. Once again, however, in view of the massive conflicts of interest between the Länder, it is scarcely to be expected that the highly desirable enlargement of their financial autonomy will actually be achieved.

The author:
Political scientist Fritz W. Scharpf was Director at the Max Planck Institute for the Study of Societies until 2003. He also served as an expert adviser to the Federal Reform Commission, which met between fall 2003 and December 2004.

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