commission on fiscal imbalance 合集

The unifying force was clearly german language and

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Unformatted text preview: urt in its recent ruling on the Finanzausgleich. 1. HISTORICAL BACKGROUND AND SETTING The present state of German federalism can only be understood against its historical background. During most the 19th century, Germany consisted of a patchwork of mini-states subject to hegemonial interests of both German-speaking superpowers (such as Prussia and Austria) and centrally controlled European nation states (such as France, Russia, and the United Kingdom). The German ambition at that time was the creation of a strong nation state to match competing European interests both politically and economically. The unifying force was clearly German language and culture as well as economic motives, notably the creation of a common market without barriers among German states. The language criterion was so decisive that unification was impossible under Austrian rule, a monarchy that, at that time, had different aspirations in the Balkans and Southern Europe. When the German Reich was finally established in 1871, the Prussian hegemon controlled about two thirds of economic resources in Germany, truly a highly asymmetric construct which would render the federation vulnerable to centripetal tendencies and abuse of power. Although formally a federation, with representatives of the constituent German states cooperating in a similar way as today’s Council of the European Union, the system had all characteristics of a monarchy with the Emperor and his nominated cabinet exerting the sovereign power of the Reich. True, there was an elected parliament, which became a source of continuing political quarrels, especially after the opposition to the ruling parties had won a significant majority, but it remained virtually powerless and without significant political influence. After World War I, the Weimar constitution aspired to establish the accountability of government to an elected parliament, but failed to render the latter politically viable. A highly fragmented party system—representing a rickety society at a time of major social and political upheavals—and the national parliament fell prey, at last, to the ploys and threats of the Nazis, which ended the short-lived democracy between the two wars. Hitler’s ascending to command had proceeded via Berlin and through Prussian institutions, the other states of the federation being impotent or unwilling to counterbalance his usurping of power. This is why the Allies would abolish the state of Prussia immediately after the War thus eliminating one important asymmetry and source of political instability. The newly created zones (later Länder or states) did not necessarily respect historic boundaries, and—after the Nazi experience—regional balance and symmetry became guiding principles for the reconstruction of post-war Germany—at least in the West at that moment. A concession to German history was, however, the creation of so-called city-states, Hamburg and Bremen—the “Hanse” cities—and after unification Berlin, which introduced a minor asymmetric element into intergovernmental fiscal relations that has more recently found the attention of...
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This note was uploaded on 03/06/2013 for the course ECON 220 taught by Professor Paulo during the Spring '13 term at University of Liverpool.

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