Germany’s Reunification - The Political Geography of Inequality - page 168

The rise of the PDS in the East, and the consolidation of the Liberals and the
Green Party at roughly similar levels of support translate to higher levels of
political fragmentation that consolidate precisely the East-West cleavage that
Western political elites were so keen to prevent.
Unsurprisingly, as the contours of an East-West divide become sharper, an
increasing number of leaders of Western l ander became less constrained by
the notion that massive transfers towards the East were a necessary sacrifice in
extraordinary times. As a result, the nature and cost of efforts toward the social
and economic integration of the East became the focus of renewed political
contentions over the organization of Germany's fiscal structure. These conflicts
affected the design of interpersonal and interregional redistribution alike and
reflect neatly the interplay between economic geography and representation in
the aftermath of Reunification. Ziblatt ( 2002 ) offers an excellent analysis of
these conflicts in the context of the political revival of “competitive federalism”
in the German federation (Gunlicks 2005 ).
In terms of public insurance and interregional redistribution, the most reveal-
ing conflict in this period concerns the attempt by the CSU government of
Bavaria to pursue the decentralization of unemployment insurance. As illus-
trated in an earlier section of this chapter, a great deal of transfers to the
East operated indirectly, that is, via the territorial incidence of public insur-
ance policies designed to cope with individual labor market circumstances. The
high rate of unemployment in the East implied large transfers out of Western
paying states. Hence the question by the Bavarian minister of social affairs,
as reported by Ziblatt ( 2002 : 637-638): “Why should a hard-working con-
struction worker in Bavaria have to pay for the problems of unemployment in
Mecklenburg-Western Pomerania?”
This question provides an excellent illustration of this topic's proposed logic
behind elites' behavior. CSU's Edmund Stoiber, a regional leader in a relatively
wealthy region (who is relatively less concerned with national elections than
the rest of his party) launches, through his minister of social affairs, a political
appeal for low income voters within his region in a clear attempt to mobilize
the “poor among the rich” against the existing centralized system of public
insurance. The argument is logically appealing to tax payers and employers
within Bavaria, as they would hope to see their share of taxes and social
security contributions reduced in a decentralized regime. However compelling
for Bavarian tax payers and employers though, the proposal had a very short
where the East-West divide is starkest; and a second period in which welfare retrenchment at
the federal level (Hartz IV and pension reform most notably) causes a split in the SPD, the
formation of a new political force (WASG), and ultimately the merger between the PDS and
the WASG into Die Linke in 2007. Arguably, this latest development helps rebridge the East-
West divide. In line with the argument, given centripetal representation, a fraction of the “poor
among the poor” and a fraction of the “poor among the rich” join forces along class lines under
the same organizational umbrella. The implications of these recent events for contentions over
Germany's fiscal structure remain to be seen and fall out of the scope of this chapter.