EXPROPRIATE DEUTSCHE WOHNEN & CO. A SOCIALIST FANTASY, AN ECONOMIC NIGHTMARE

"Socialism is, in its essence, an attack upon the right of the ordinary man or woman to breathe freely without having a harsh, clumsy tyrannical hand clapped across their mouths and nostrils" - Winston Churchill

Red-Red-Green Coalition - you should be ashamed of yourselves.

Have we learned nothing from the plethora of recent populist-politics failures - Donald Trump, Brexit, Mietendeckel, anyone?

This latest debacle eerily reminds me of a nightmare I used to have as a kid. I was stuck on a rickety old carnival merry-go-round, screaming for it to stop while the scary clown operating it just laughed in my face.

In this nightmare, however, I am stuck on a metaphorical merry-go-round of anti-capitalist political rhetoric, economic incompetence and socialist ideology. The scary clown laughing in my face is my own government, and all I can see is a sickening blur of red, red and green.

I keep trying to wake up; but this nightmare is unfortunately our reality.

Has no one noticed the painful irony of all this? This government, who has played a leading role in selling hundreds of thousands of public apartments to real estate corporations over the last 20 years, is now also the one leading the charge to steal them back like a knight in shining armor; The very people who caused this are the ones being lauded as saviours!

It seems the Berlin public has a serious case of Stockholm Syndrome.

First of all, let’s have some perspective.

Berlin is the capital city of the largest economic power in Europe. We are the political capital of Germany. We are the number 1 city in Europe for start-ups and more money was invested in this area than in London in 2019 pre pandemic. Think about that for a second! The GDP has risen??faster than any other German city recently. Unemployment levels have dropped drastically and average household income is significantly higher - According to Numbeo, the average net salary in Berlin, after tax, is €2.834,81. That’s just €244 per month less than Amsterdam; where the average cost of a 1 bed city center apartment costs €600 per month more than in Berlin (More on that in a second). Perspective is key.

Geographically, Berlin is a huge city with plenty of open spaces and parks - and room for redevelopment. Tesla, Amazon, Siemens, google all have HQs here. By all accounts, the landscape has changed significantly in recent years.

We are no longer “poor but sexy”; we’re just sexy.

Interestingly then, The average rent in Berlin is comparatively very low compared to most other European Capital cities. According to Numbeo, rent is on average 14.46% higher in Madrid, 38.1% more expensive in Paris, 50.69% in London. In fact; rent in Berlin is comparatively low compared to many non-capital cities too.

Given the outrage about rent increases, you might be surprised to know that Berlin is only Germany’s 5th most expensive city for renters; behind Munich, Frankfurt, Stuttgart and Hamburg.

EXPROPRIATE DEUTSCHE WOHNEN & CO

The concept: Forcefully expropriate apartments from anyone who owns over 3000 apartments. Robin Hood 101. Take from the rich and give to the poor.

The idealogy: Control over the apartments means control over rents.

The real world: This inept coalition government, seemingly as with all governments, exists only to self-serve and self preserve; to keep themselves in power by any means possible - at the expense of the taxpayer and to the detriment of the general public.

The idea that any government is truly working for you is an ideology as extinct as the dodo.?

The danger with this, especially when it involves the extreme left socialist red red Green, is the extent of what it has to promise in order to gain votes and stay in power. The more radical the promise, the more votes and traction; the more radical the promise, the greater the economic catastrophe that lingers.?

Have we, the public, really not learned from the spectacular failure of Mietendeckel, and inept policy behind it? A movement that was baseless from the start as it contradicted federal law, that cost the public millions and endangered the security of the tenants it promised to assist, and that took less than an hour to throw out of Federal court.?

Similaraly, the new 2021 rent index failed miserably, and was swept under the carpet after proving to be complete rubbish (see link below).

https://ikb-law.blog/en/2021/05/13/berlin-ohne-mietspiegel-2/

Was it not a warning for us when after Mietendeckel was thrown out, a supporting party member tweeted that now mietendeckel is cancelled she can no longer afford to keep BOTH apartments she currently rents. Poor woman. Of course this was immediately deleted after realizing the mistake; it didn’t quite fit the populist socialist narrative.

Is this really who you are trusting again with another real estate policy?

Now, it goes without saying that there is a problem to address here, no one is denying that. There is a severe housing crisis in Berlin.

But as a wise man once said - desperation is one thing, hopelessness is another.

There is a reason these wild promises work - they strike a nerve with many people. To those struggling to pay their rent, or to those forced to move outside of the city center because of rising rents - and indeed those more than capable of paying higher rents but just don’t want to - this new scheme sounds wonderful. Who doesn’t want to pay less rent?

However, expropriation is absolutely not the way to help; ironically, it will only make things worse.

Now, it is not the fault of those in support; many have been tricked, lied to, manipulated and roused into frenzied compliance. With all the??countless money spent on the propaganda machine (seen any of the thousands of billboards and countless sales staff / activists walking the street lately?), maybe I would be too if the shoe was on the other foot.?

Populist politics works by preying on those in need, those who are disillusioned with current situations and promises them everything they want to hear regardless of its consequences. The trouble is, no one ever really has to explain the cost of such actions; no one asks how, or what comes next. No one really cares.

Many of those who are advocating Socialism or voting Socialist today will be horrified at this idea. That is because they are shortsighted, that is because they do not see where their theories are leading them. - Winston Churchill

Where is this money coming from?

Some background - the foundation of this movement stems from an antiquated GDR law -?Article 15 of Germany's Basic Law - that condones expropriation of property, if for the good of the public, and only if a fair market price is paid.?

Fair. Market. Price.?

The obvious question - Who decides what is fair?

According to the proposed calculations, fair market value seems to be circa 40k euro per apartment; which might have been correct in 1985. It certainly isn’t today.

Even with those criminally low estimations; it will still cost the government circa 10 BILLION euros to acquire just the Deutsche Wohnung portfolio and Vonovia portfolios alone.

That’s right, 10 BILLION EUROS.

The reality is that fair market value would take this expropriation up to circa 30-40 BILLION euros for just these 2x companies alone. Thats almost double the total annual government budget!

I ask again - where is this money coming from? Perhaps from the welfare budget, social care, education, police?

This isn’t taking into account the president it sets. Anyone who owns over 3000 properties can be expropriated. If you enforce it for some, it must be inforced for all. Where does it stop?

Well, it doesn’t stop there! Who is then liable for the upkeep of these newly aquired buildings? The cost of running these buildings?

I would estimate this to be in the 10’s of millions of euros every single year…. Forever. That’s an egregious waste of tax payer money.

The worst thing about this whole thing is that despite the billions and billions of tax payer money, not one new apartment is planned to be built!

Think about that; not one new apartment.

How can that be the answer to solving a housing crisis?

What about the homeless? A fundamental part of the Socialist movement is that housing is a right provided for everyone. I ask again - how does this policy help the homeless, if not one new apartment is to be built despite billions and billions being spent on housing policy? Maybe socialism only counts for those who already have homes, rather than those that need them.

It does not take an expert to see that you do not solve a housing shortage and extreme upward price pressure by essentially doing nothing!

Wouldn’t that money be better spent by offering more government assistance to those in need in the form of rent subsidies? Building homes for the homeless? Building more government funded socially responsible accommodation? Offering tax breaks and subsidies for developers to build new apartments with capped rents?

Recent inward migration to Berlin has fluctuated from 40-60k people every year. If the situation for housing is bad now, what will it be in 10 years if nothing new is built that could ease the pressure?

Taking away this many privately owned apartments from the open market will surely put even more upward price pressure on the ones that are left; creating even more price gulfs between privately owned and state owned; between the haves ad the have-nots.

Price pressure is directly related to supply and demand. If the demand increases and supply doesn’t, what is the only logical outcome?

Action must be taken to halt the rent increases and make living affordable for everyone; but that isn’t expropriation - it is investment into the sustainable development of socially subsidized housing.

There is still time to stop this madness and the truly terrifying economic implosion this will undoubtedly cause. Vote "NO" to populist socialist propaganda on 26.09.21.?

Mike Totman

The views expressed in this article are my own and do not necessarily reflect those of my employers.