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"To create quality of life and reduce the consumption of resources it involves requires that we take further steps in incorporating sustainability in everyday action as employees, consumers, and citizens."

Kathrin Menges, Member of the Council

24.03.2009

The Economic Crisis
"Billions Are Being Squandered Without Rhyme or Reason"

SPIEGEL ONLINE
Interview with Volker Hauff, 24 March 2009, 9:40 a.m.

The German government is spending billions to bail out the banks – and placing a massive burden on future generations, says Volker Hauff. In an interview with SPIEGEL ONLINE, the Chairman of the German Council for Sustainable Development accuses the German government of having no strategy and bailing out "the lame and the footsore."
 

SPIEGEL ONLINE: Mr. Hauff, are you already saving money for your children and grandchildren?

Hauff: I have been doing this for a long time. We have given them a good education and they have already inherited a house. After all, we don't have to use up everything that we have.

SPIEGEL ONLINE: So your children don't have to worry about mounting government debt?

Hauff: Actually, they do – because it is definitely going to affect them. But what irritates me the most about this is that, despite the enormous sums of money, the government is not clearly and unequivocally saying what problems it intends to solve, and how it intends to do this. I also haven't heard a single word about what a sustainable financial system should look like. The roots of the problem are not even being called by name: The old financial system gave us these problems, so we have to adapt a new one accordingly.

SPIEGEL ONLINE: Doesn't the German government know what it should do?

Hauff: I don't care if the government is overwhelmed. Its job is to lead the country into the future, and it's not doing that. When it comes to the decisive points, no thought is being given to the new financial system. And I'm not only concerned about day-to-day political issues, like eliminating tax havens. I'm interested in long-term policies.

SPIEGEL ONLINE: What do you propose?

Hauff: I think three things are important: First, there can no longer be financial institutions beyond the reach of banking regulatory agencies. Second, it should be a criminal offense to trade in products that are not allowed on the stock exchange. And third, it should be a criminal offense to trade in financial products that are not in the possession of those who trade in them. Those are only a few, yet effective points that we have to agree on. On this note, I'm very happy to see how the new US President Barack Obama has managed to mobilize the public and push through these changes.

SPIEGEL ONLINE: Why isn't the German government doing this?

Hauff: I'm afraid you'll have to ask them that yourself. For example, hardly anyone has asked why Karlheinz Bentele left the executive committee of the German Financial Markets Stabilization Fund after only a few weeks. You see, he didn't want to just distribute money. He was actually particularly interested in talking about the future of the financial sector. But instead the government is considering bailing out the lame and the footsore, those who are responsible for bad business decisions, like the Schaeffler company. This is a theater of the absurd – at the taxpayers' expense.

SPIEGEL ONLINE: And why has the general public remained silent on the issue?

Hauff: Because no one in the political arena goes to the heart of the matter. Because there is nobody who is developing a long-term strategy. Instead, billions are being squandered without rhyme or reason. It reminds me of the oil crisis in the 1970s. The investment program for the future that was launched back then completely fizzled out. That's why we should consult experts who have experience with such developments and have drawn lessons from this. But instead we have everywhere the same players who caused this crisis in the first place. That's bound to fail because no one in the banking industry has talked about the mistakes. Instead they're all trying to gloss over the situation.

SPIEGEL ONLINE: Isn't there a single politician who is willing to directly address these issues?

Hauff: The strategy of the German government revolves around the word "rescue," which is already a mistake, in my opinion. We don't have to save everything and everyone, especially not in the financial sector. They are acting as if we will soon be able return to business as usual. But the next crisis is looming just round the corner, namely in the commodity futures sector. Instead of clearly analyzing the situation, though, they are giving in to special interest groups …

SPIEGEL ONLINE: … and handing out billions that coming generations will have to pay back …

Hauff: … that annoys me – and when certain politicians say that major tax cuts will soon be in the cards, I get absolutely furious. What we're currently witnessing here has already saddled coming generations with enormous burdens. It is absurd then to also promise tax cuts.

SPIEGEL ONLINE: What effects will the debts have?

Hauff: Due to the budget consolidation, future innovations will get the short end of the stick and, despite all the hype, we need to be prepared for tax hikes over the medium term. We still haven't even begun to realize, however, what the worldwide consequences of the crisis will be.

SPIEGEL ONLINE: Namely?

Hauff: Countries like Iceland, Latvia and Romania are no longer able to meet their financial obligations. In the Third World countries, the entire financial system is collapsing. The World Bank has calculated that due to the financial crisis alone, millions of people will slide into poverty, and hundreds of thousands of children will die. The development aid money which is currently still being sent represents only a fraction of the monies that are being drained off there. Development in these regions has been set back by up to 20 years.

SPIEGEL ONLINE: Isn't it then cynical that we in Europe are afraid of losing a few jobs?

Hauff: The banking sector has undergone a high degree of professionalization, coupled with naked greed and a total disregard for social responsibility. The crucial financial products were co-developed by academics and Nobel Prize laureates. But it is precisely these people who now act as if they could not have foreseen the consequences. I don't believe them. They couldn't have been so unsuspecting. They acted as if they were in a casino.

SPIEGEL ONLINE: Nevertheless, German policymakers are now seeking advice from precisely these people, for example, Deutsche Bank CEO Josef Ackermann.

Hauff: The government is acting as if it can quickly solve the problem. That's not a strategy that will actually hold water. As soon as the consequences become more evident, public pressure will increase.

SPIEGEL ONLINE: What can we learn from this crisis?

Hauff: We have to manage to use this crisis as an opportunity for the economy and launch a sustainable development that will pave the way to the future for coming generations of Germans. For instance, by building more energy-efficient cars, introducing new energy policies, and seriously pursuing a recycling economy.

SPIEGEL ONLINE: Nonetheless, the major issues of the past year, such as climate change and the world hunger crisis, have more or less disappeared from the headlines …

Hauff: Not entirely – you just have to listen carefully: For example, they are currently discussing at Opel which products are viable for the future. Other carmakers are also suddenly offering a significantly wider range of more energy-efficient cars than before. And that's the right approach because the climate disaster won't stop looming just because we also have a financial crisis.

Interviewed by Susanne Amann

Further information:

SPIEGEL ONLINE