Does Socialism Threaten Germany's Economy?

The Berlin Wall came down 32 years ago this November, ushering in a new era of freedom and opportunity. But judging from the results of a recent local election, it looks as if socialism is trying to stage something of a comeback in Germany’s capital city.

In a referendum that coincided with Sunday’s general elections in Germany, a majority of Berliners approved a measure to have apartments forcibly seized from landlords. The move would socialize nearly a quarter of a million flats, costing the city between $34 billion and $46 billion.

Supporters of the referendum believe this will help control rent hikes, but they’re forgetting a couple of things. One, living costs are rising not necessarily because of greedy property owners, but because construction of new housing has not kept pace with surging demand. Kicking out the landlords does nothing to address this persistent problem.

And two, inflation is hitting all sectors right now, not just rental property. Germany’s annual rate of inflation hit a 13-year high in August (one of the reasons many of its citizens have been loading up on gold). So why stop at apartments? Why not socialize food? Clothes? Automobiles?

Pretty soon, Berliners could find themselves back behind the Iron Curtain.