Housing crisis | Socializing – the final objection

Instead of expropriation, it's actually about socialization, but the word was perhaps too long for the poster. Photo: dpa/Christoph Soeder The socialization of Berlin apartments owned by large real estate groups is becoming increasingly tangible. A commission of experts has dispelled the legal concerns. Politically, the project becomes more feasible thanks to the election victory of the Left Party. And now the financial objections have also been rejected - according to a study by the trade union-affiliated economic research institute IMK, socialization can be financed without any problems. What remains is a central economic point of criticism: socialization will damage investor confidence and thus the entire location of Germany. This objection cannot be easily refuted. However, the question remains what conclusion one can draw from it.

Socialization is a danger for the entire country, the Kiel Institute for the World Economy (IfW) warned this week in a study commissioned by the Association of Berlin Merchants and Industrialists. Because »legal certainty and property protection are among the location factors with which Germany can still score points even in the current difficult economic environment. Socialization would permanently damage the institutional quality of the business location.«

The German Economic Institute (IW), which is close to employers, takes the same line: In the event of socialization, “it can be assumed that investors will withdraw, which will have a negative impact on tax revenue.” Ultimately, such expropriation represents a breach of trust that leaves “significant doubts about the reliability of the business location.” The withdrawal of investors will not only be limited to the real estate industry. This puts jobs and infrastructural development at risk across the board. In addition, it is to be expected that investors will demand higher risk premiums - i.e. interest rates - in the future, which will massively increase the refinancing costs for the state.

The warning about capital flight and rising interest rates is not trivial.

What is remarkable is who is facing each other here. IW and IfW argue less as representatives of the “economy” or “employers” but simply as representatives of property, namely the property of those things that the whole society needs: apartments, offices, factories. On the other side, the IMK represents the wage earners, i.e. the non-owners. One side represents those who live from their work - their wages. The other side is those who live from their property - rent, interest, dividends - i.e. from the work of others. One person's wealth - expensive real estate, high stock prices, rising prices - is another's poverty.

The fact that this relationship lasts ultimately lies in the “investor trust” that socialization threatens to damage. Now you couldn't care less about this trust from the owners - if everything in the current system didn't depend on them. Because the successful investment, i.e. the return on capital, is the source not only of profits, but also of jobs, of wage income, of growth and thus also of the state's income, which forms the basis of its debt capacity.

In this respect, the warning about capital flight and rising interest rates is not trivial. She points to a real problem in trying to ensure the "affordability" of life for the masses while at the same time not scaring away the owners. The IMK is keeping a low profile here: it calls a loss of investor confidence in the course of socialization “theoretically plausible”. In practice, however, the extent of this loss and its consequences are “largely open.” But what if an insurmountable gap opens up between affordability and investors' demands for competitive returns? Which side do you take?

This article cost you nothing. We do: for research, printing and technology. We saved on office rent as well as printing and distribution. And we gave up salary. Nevertheless, the calculation doesn't work without you. We need 300,000 euros by the end of the year. You pay what you can, in return we keep writing.

No paywall, no small print, just one goal: that nd stays.