September 27, 2013 9:42AM

Germany Votes against Limited Government

The world’s most watched elections occur in America. The world’s most boring election just occurred in Germany. As expected, Chancellor Angela Merkel was effectively reelected.

The Federal Republic of Germany is the world’s most admired nation and possesses Europe’s largest economy. Berlin’s political and economic stability is the envy of the European Union.

Merkel has served as chancellor for eight years. A skilled political infighter, she exudes confidence and competence.

Germans rewarded her Christian Democratic Union (CDU) and its sister party, the Christian Social Union (CSU), with 41.5 percent of the vote, well ahead of the more left-wing Social Democratic Party. However, the CDU/CSU fell five seats short of a parliamentary majority. And Merkel current coalition partner, the Free Democratic Party, failed to receive the 5 percent of the vote necessary to be represented in the Bundestag.

Commentary on the election has focused on Merkel’s triumph. There is little doubt that she will remain chancellor. The only question is the identity of her coalition partner--and what price she will have to pay for that party’s support.

Ironically, policy isn’t likely to change very much as a result of the election. Merkel has steadily pulled her party leftward. Cem Ozdemir, co-chair of the Green Party, complained that the chancellor “becomes Green when it helps her and becomes a Social Democrat when that’s beneficial too.”

Alas, her policies helped wreck Germany's liberal Free Democratic Party (FDP). The Free Democrats were created in 1949 and have served in the Bundestag ever since. In 2009 they made their best showing ever, 14.6 percent. Now, with just 4.8 percent of the vote, they are out of the Bundestag.

The Free Democrats are liberals in a classical sense: supporting free markets and social tolerance. However, as their conservative partners embraced the welfare and regulatory state, the FDP has enjoyed less policy impact.

In 2009 the Free Democrats campaigned for tax cuts and a freer economy and supported Merkel as chancellor. Within a year, the FDP’s political support had hemorrhaged, with the party’s poll rating dropping by two-thirds.

As I noted in my Forbes online column:

The Free Democrats failed to deliver policy change. There were no tax cuts, but big Euro bail-outs, nuclear plant closures, and a range of other actions inconsistent with their program. At the same time, Chancellor Merkel claimed credit for economic prosperity and stability. Germans could be forgiven wondering, what was the purpose of the FDP?

The party’s political fortunes collapsed. As the September 22 vote loomed, the FDP was reduced to begging for the second vote (for party, as opposed to for specific candidates) from CDU/CSU supporters. It turned out to be a less than compelling political appeal.

While it is premature to write the FDP’s obituary, its future looks dim. The FDP now faces a principled competitor, the Alternative for Germany (AFD), which is more likely to shake up the existing power structure. The newly created AFD, which campaigned against the euro, the common European currency, matched the FDP’s vote total, falling just short of the magic 5 percent.

The AFD has the field to itself in resisting Berlin’s ever more expensive commitment to the euro, and the party could broaden its appeal--its economist founder appears to hold a classical liberal philosophy. If so, the Alternative could become the most effective challenge to the CDU/CSU’s slide to the left.

The big winner in Sunday’s German election was Angela Merkel. But the German people are losers; their government seems destined to grow more expensive and intrusive. And the one party that traditionally advocated free markets and individual liberty will disappear not only from government, but also from parliament. The consequences could be serious and long-lasting.