German far-right hails historic election victory in East

Under Björn Höcke, the party has cleaned up in one of the poorest areas of Germany.

And this is not an isolated case.

It was also in the East, in former Soviet Germany, that AFD smashed its rivals in the recent European elections.

So why is AFD making such a big splash in Eastern Germany?

The reason seems quite clear.

The poorest people, who live in the former communist territories, are also the ones who suffer the most from immigration, and their problems are not solved by the classic traditional left-wing parties that have stopped caring so much about the working class and are now more concerned with urban trivialities such as electric cars.

But this is not what we're here to talk about in this video.

We've come to talk about what exactly Alternative für Germany is proposing to revitalize Germany's flagging economy.

Because yes, as we told you in a previous video, the Teutonic Giant has been in the doldrums for a few years now.

German workers are suffering the consequences by getting poorer.

But politicians don't seem to be offering realistic solutions.

And here is where AFD comes into play.

This party is well known for its rejection of immigration, Islam, gender ideology and all those things.

But what economic policies would they carry out if they managed to win the general elections?

How does AFD want to change the economy of the European Colossus?

Today on VisualEconomic we're going to tell you all about it.

The history of AFD began at the hands of this man, Bernard Lucke, a professor of macroeconomics at the Habsburg University.

I know, he looks like anything but an anti-immigration activist.

An economics professor getting into this kind of trouble?

Come on, I'd sooner believe he joined the chess club and got fired for being bored.

The point is that, deep down, there is some truth to it.

Which is when he founded AFD, we would hardly recognize the party.

Bernard Lucke created a conservative party that was certainly no friend of Islam, but he cared little about the immigration issue.

To give you an idea, it didn't even appear in the party's program.

Keep in mind that, at that time, the great waves of refugees and immigrants had just begun.

There was no massive social resentment about it yet.

In reality, the alternative for Germany of 2013 was a party composed of angry pro-market economists whose leitmotif was that they didn't agree with Southern Europe living the life of Reilly at the expense of indebting the German taxpayer.

And the trigger for it all was the EU bailout of Greece.

For Lucke, the Euro was a terrible invention that meant that the most profligate countries had artificially low interest rates, which they used to get even deeper into debt, while

Germany and the other more fiscally sensible countries had to foot the entire bill.

And let's see, the Euro has many positive things going for it, but in this respect we have to admit that they were right.

So AFD was basically a party with a program focused on the economy and defending a current known as auto-liberalism.

And what on earth is auto-liberalism?

Because the name seems more like something you would call the offspring of Sauron and

Javier Melei.

Well, instead of just telling you what this auto-liberalism is all about, let me illustrate it with a story.

After the defeat of the Nazis at the end of the Second World War, the western part of

Germany was left in the hands of this gentleman, Ludwig Erhardt, who, although he may resemble

Damrod from the Rings of Power, is actually the father of the German economic miracle.

Of course, the Federal Republic was still in a war economy, prices were frozen and the job of every German was decided by a bureaucrat according to the needs of the country.

Of course, Erhardt was not alone.

And at least he had the support of the United States, which, along with offering economic aid, also sent lots of advisers to revive economic activity.

Well, on the 20th of June 1948, the American commander, Lucius Clay, telephones Erhardt.

Hey, Ludwig, look, I've been told that you want to load the price controls by your own, without asking anyone.

Is that true?

That's right, Lucius.

My advisers tell me that this will be a disaster, that you're putting your foot in your mouth.

Yeah, mine tell me the same thing.

Erhardt ignored everybody.

He did whatever he wanted.

He hoped that the basic economics textbooks that say price controls don't work were right.

And boy, were they right.

In just a couple of days, the German markets were filled to the brim with food.

And this anecdote illustrates very well the basic point of auto-liberalism.

That is to say, to apply the ideas of Adam Smith and the introductory books to economics of the first degree, the most basic, but that without having problems in redistributing wealth to alleviate the consequences of the war and to have a system with enough social support to last in time.

Something that Adam Smith also argued, for instance, in the first chapter of Book 5 of the Wealth of Nations.

Well, the ideas of Bernard Lucker, the founder of AFD, were along the same lines.

A little less taxation, a little less public spending, less regulation.

But he was also not as breakaway as it seems.

However, in the 2013 elections, Alternative for Germany didn't even reach the minimum 5% of votes needed to sit in parliament.

It was a party that only excited a few academic geeks and a small part of the population which, as you can probably guess, was the part with the highest income.

If you look at it, the situation was the opposite of the current situation, where the people who vote for the party the most now are low-income people.

So what changed?

The change came when, in 2015, Bernard Lucker was removed from the party.

Bernard Lucker's successor was Frauke Petry, who actively proposed to forget all about economics, autoliberalism and the rest.

What's more, since the Greek bailout and Europe's financial problems were already far behind them, they invited her to focus on the social issues we are all familiar with.

As you can see, after the change of leadership, the party practically abandoned economic issues and shifted its focus to social issues.

Remember that in 2015, immigration was really starting to be a problem for many.

Refugees had already been crossing the borders for several years, and it's clear that the shift worked wonders for them.

The change served, above all, to rally the country's least qualified workers.

To give you an idea, in 2013, just 4% of the party's voters had incomes of less than €1,000.

However, by 2016, this figure had grown to over 15%.

Almost 1 out of 5 AFD voters is paid less than €1,000.

In Germany, the shift to the right may seem better or worse to you.

But what is clear is that these results have been achieved by giving a much more populist tone to their proposals.

Above all, capturing voters with less education.

So much so that today Bernard Lucker regrets having founded the organization.

I regret what has become of the party.

It has developed from a professor party to an association based on the moods of the street.

The party was initially full of good people with well-considered proposals.

Most have left.

With these things in mind, you will already be imagining that economic issues are rather secondary.

However, they are not non-existent.

What exactly is AFD proposing for the German economy today?

Well, the pillar of the program is basically the same old party's auto-liberal recipe, but not surprisingly, adding many asterisks.

The idea of lowering taxes is still present.

Among their proposals is to eliminate the wealth tax, the inheritance tax and also to lower the personal income tax.

Regarding VAT, it's not very clear because they talk about harmonizing it according to the income level of each region.

But of course, they don't say whether they want to harmonize it upwards or downwards.

Yet perhaps their most interesting proposal is to create a kind of debt ceiling, but for taxes.

That is to say, to set by law the maximum percentage of GDP that the state can collect.

What a wonderful idea, don't you agree?

Yes, but no.

In practice, such ceilings are more for decoration than anything else.

Without digging too deep, the US debt ceiling has been in existence for 100 years.

And 100 years have passed with politicians overriding it at the drop of a hat.

In any case, unlike Uncle Sam, Germany is the country of fiscal austerity par excellence.

So much so that today its public debt barely reaches 65% of GDP.

So less taxation has to mean less public spending, right?

Well that's not so clear.

Of course, AFD has proposed cutting several items.

For example, they intend to eliminate unemployment benefits, but they want to do so in exchange for a new aid that, in theory, would provide more incentive to look for a job.

But who knows?

In reality, everything indicates that the cuts proposed by the party are going to focus on its favorite issue, taking away aid to immigrants.

The populism manual says, select an enemy and make him or her the culprit of all your ills.

In this case, it has been the immigrants' turn.

And in the case of the populist left, it is the evil rich and vulture funds.

But let's be honest, although immigrants coming to Germany are usually not net taxpayers, that is, they receive much more than they contribute, they are not a burden that will wipe out public budgets either.

In other words, limiting subsidies is fine, that may be reasonable.

But a different question is whether simply cutting subsidies to immigrants can compensate for all the tax cuts proposed by Petri.

If they want to maintain the German tradition of zero deficits, they're going to have to cut a lot more, not only in aid to foreigners.

And the problem is that it isn't at all clear where they're going to get the money from.

However, if these reductions in public spending have been somewhat disappointing, you should know that, in its economic program, there are proposals that would be a huge blow to the public coffers.

For example, they want family members who care for their elderly relatives, which is 70% of cases, to receive a tax reduction equivalent to receiving the salary of a nurse.

And then there's one of the party's star policies, showering public money on families who want to have more children.

Because of course, as the country is facing a brutal demographic crisis, and they don't even want to hear about immigration, future taxpayers will have to come from somewhere.

The amount is still not very clear.

However, we already know that giving money to families for having children doesn't usually work.

And there are thousands of cases of failure.

For example, Hungary recently dedicated 5% of the country's GDP to promote the birth rate.

It achieved absolutely nothing.

With these subsidies, what typically happens is that parents bring forward the age of their first child to collect the money.

But little else changes.

Be that as it may, AFD's measures go beyond taxes.

AFD members complain that immigrants don't integrate, that they don't work, that they depend on benefits.

And again, in many cases, this is true.

The problem is that AFD also wants to pass another measure that will precisely aggravate this problem.

Maintaining, or even raising, the minimum wage.

Thanks to many economic studies, we know that the minimum wage makes it difficult to create jobs, especially for people with lower qualifications.

In other words, if we set a legal minimum of €2,000, then all those jobs that produce less than €2,000 for their companies will simply disappear.

And who usually has access to these types of jobs?

Indeed, immigrants.

Low-skilled immigrants who often barely speak the local language.

In other words, a high minimum wage would further worsen the labour integration of immigrants.

Don't the AFD leaders realise this?

Have they forgotten the famous auto-liberalism of their founder?

Well, no.

Most likely they are perfectly aware of the problem.

But there's something else to consider.

AFD wins elections mainly in the poorer strata of society.

That means that, on the one hand, supporting minimum wage hikes is a populist strategy that is most effective among its supporters.

On the other hand, it's also a weapon of political confrontation.

According to AFD, the minimum wage is the perfect way to fight against the falling wages imposed by the massive influx of immigrants.

Or to put it another way, the AFD intentionally seeks to drive migrants out of the labour market.

This may surprise you, but it's actually nothing new.

The idea of a minimum wage became popular in the US, not because of the progressive movement or unions, but because of racists who saw it as a tool to keep blacks out of jobs.

The idea was that, since blacks had less than average education, they wouldn't be productive enough to reach the minimum level for which the company could pay.

In other words, the minimum wage was the way to discriminate against them.

And in this case, it seems that the Alternative for Germany party is following in the same footsteps.

Beyond migration issues, AFD also proposes other measures, such as the reduction of the bureaucracy so prevalent in Europe.

The problem is that all parties propose the same thing, and AFD gives no clue as to which specific laws it wants to cut or what their impact would be.

As a side note, in its plan of almost 100 pages, the section dedicated to this topic is a scant paragraph of 9 lines on a single sheet of paper.

And this bureaucracy brings us to another issue, one that has been of great concern to the Germans in recent years, the cost of energy.

In theory, AFD is in favor of extending the life of existing nuclear power plants.

But at the same time, they aren't very enthusiastic about nuclear power.

For example, we can read how they constantly talk about exploring other alternatives.

And also that gas and coal are fundamental pillars that will not be touched.

And let's remember that the proportion of coal in the energy mix has shot up precisely because nuclear energy has been eliminated.

The most striking point is the ban on renewables, especially windmills.

Last year, Germany passed a massive deregulation on wind farm construction, which has boosted renewable energy production more than the millions in subsidies it has provided over 20 years.

And just when it looked like this industry was starting to take off, bam, AFD wants to do away with the whole thing.

The reason?