Germany's Risky Populism - NYTimes.com BERLIN - From the European Commission in Brussels to the United States Treasury Department in Washington, lately it seems almost everybody has been bashing the Germans for their high trade surplus. But those who think that this imbalance is dangerous need to relax. The next German government, currently being negotiated between the two leading parties, will address it - by inadvertently, but effectively, hamstringing German competitiveness. Germany spent the last decade working its way out of a regulatory and spending straitjacket that kept unemployment high and competitiveness low. It has spent the last few years lecturing countries like Greece, Italy, Spain and Portugal about the benefits of austerity and structural reforms like deregulating labor markets, scaling back welfare systems and cutting pensions to adapt to demographic decline. But if the terms of the talks are any indication, it looks as if Germany has been preaching water while planning to take another deep sip from the populist wine: As their price for entering a "grand coalition" with Chancellor Angela Merkel's center-right Christian Democrats, the left-leaning Social Democrats want to raise pensions, regulate the labor sector and dole out ever more money for questionable social benefits. And so far, the Christian Democrats are going along with it. According to some estimates, the additional spending decided on by the different working groups in the talks already amounts to 50 billion euros. On the surface, these steps might seem to make sense: Germany is a rich country, so why shouldn't it open the fiscal taps? But each proposed measure presents a significant risk. For example, the Social Democrats want a national minimum wage, at €8.50, or about $11.45, a level that some economists estimate could cost hundreds of thousands of jobs in the low-skilled labor sector, which is the most vulnerable. And they insist on scaling back policies that enhance labor-market flexibility, which have been key to the recent success of Germany's export industry. Meanwhile, both parties want more pension payouts: If the government comes through, the conservatives will get a pension increase for single mothers, while Social Democrats want a boost for "mini pensions," and possibly even an earlier retirement age, at just 63, down from the current 65. Such expansive spending will load even more unpaid bills onto the younger generation, which, in a dramatically aging society, will probably never retrieve the money in its old age that it is now forced to pay into the state pension system. And spending is only one part of the negotiations" anticompetitive agenda: It is also unclear whether the new government would seriously tackle Germany's rising energy prices, which are already driving some companies out of the country. In a recent report, the Council of Economic Experts sharply criticized these plans, fearing that Germany might reverse the gains that resulted from the hard-won reforms under Ms. Merkel's predecessor, Gerhard Schröder, a Social Democrat of the Clinton and Blair mold. "The German government," the council wrote, "should not give the impression that it expects - or even demands - painful adjustment processes from other countries, but shies away from unpopular measures for Germany." There are many ways to explain the populist turn away from the recipes that resulted in the breathtaking decline of unemployment over the last decade. One is the feeling that Germany is in good shape and that it is ordinary citizens" turn to get some benefits after years of bailing out the fat cats in finance. Now that voters have pushed the free-market Liberal Democratic Party out of the Bundestag, the German Parliament is left with four parties that are either socialist or social democratic: the radical Left party, the leftist Greens, the Social Democrats and the conservative Christian Democrats, whom Ms. Merkel has taken so far to the left that their economic and welfare policies today, in American terms, would put them to the left of Bill Clinton. That is the irony of today's Germany: It is a country that rides the waves of the global free market better than many other countries of the developed world, but its Parliament is full of parties that believe that state activism is the right answer to real (and imagined) problems of German society. To be fair, during the coalition negotiations Ms. Merkel demanded that the financial feasibility of all proposals be tested before clinching a final deal. But Ms. Merkel cannot undo a basic fact of these talks: Whenever the two major opposing parties of German politics are forced into a coalition, you will never get a coherent government program. And the usual way to paper over ideological differences in European politics is to grant every side its respective pet projects - and let others pay the bill, preferably the younger, smaller and often less vocal generation. In recent years many people in and outside of Germany have come to believe that fiscal populism is an illness unique to southern Europe. In reality, all postmodern Western societies have a tendency to overconsume now and let the following generations foot the bill. It's just that this populist impulse is better constrained in some countries than in others. The coalition talks in Berlin give ample proof that Germany is in no way immune to the sort of overspending and overregulation that is known to diminish national competitiveness. By reducing Germany's trade surplus, the measures agreed to under the coalition negotiations might appease the critics in Brussels and Washington. But it is hardly in Europe's interest to weaken its biggest economy in the face of fierce competition from beyond the borders of the old Continent. All of Europe will lose if Germany becomes another calcified France and returns to being the "sick man of Europe" it was just 10 years ago. Clemens Wergin is the foreign editor of the German newspaper group Die Welt and the author of the blog Flatworld.