 I think we can start. The plan for this morning, ladies and gentlemen, is that we continue with the sociale marked Vetschhaft, political economy. I made a typo on my slides last time. So I apologize for that. I forgot the E, sociale. And I think there was a complication about or here with the C, I put the C somewhere else, Vetschhaft economy, social market economy. This is what we've been talking about, economic policymaking. But this morning, I'll look at the social part of the sociale part of the social market economy. So we've talked more about the economic aspects of social market economy. So this morning, I'm planning to talk about the social policy aspects of social market economy. But just to be on the safe side, let's look at this very quickly. We're talking about the market aspects here, combination of competitive economy, market economy, and the generous welfare state, which we shall be talking about this morning. And policies are generally interactive and supporting the markets. We have a flexible system in which we have regulation. But the state provides framework regulations, small amount of nationalized industries, so collectivization is much less. Although we have bio-ECD standards around average or a little bit larger or higher than average public employment in the public sector, we have a smaller amount of nationalized industry. And we have what's called cooperative federalism, which I shall be talking about when I talk about governance and policymaking. Bank-centric model of economic development. This is an example of stakeholder capitalism. So each, the industry, let's say I gave you the example of a glass industry, glass factory, side by side with a bank. Let's say we're talking about the city of Bielefeld in Germany. So Sparkasse, Bielefeld, Savings Bank of Bielefeld, side by side with a glass factory there. Let's assume that this is the case. Each has a stake in the life of the other. Or the bank has also a stake in the life, in the future of the glass factory. And there are joint appointments in the executive boards. And this is an example of what's called networked or coordinated capitalism. At the firm level, there is all kinds of coordination. High wage and also high welfare, high benefit system, but extremely competitive system. We talked about the German apprenticeship system, the Meister, and the apprentice. So vocational training is very important in this political economy, in this system, which fosters high skill development. So skill development is very important. Highly skilled workforce means that we have a higher productivity, a higher labor productivity, but overall total factor productivity, but overall productivity is much higher than elsewhere. Works councils, these are not unions. These are firm level institutions in which we have workers voicing their, articulating their interests to the management. And a comprehensive R&D research and development strategy. We talked about what research is and also development. Development was once again all about inventing a marketable product once the research stage has been completed. And we've got the Bundesbank, which has been providing a stable, conducive ground for economic development. So for the industrialization drive, post-World War II, the German economic miracle. So easier fiscal policies, but tight monetary policies. So macroeconomic policy is solid, sound, overall, very low levels of budget deficits. When we talk about budget deficits, ladies and gentlemen, what do we refer to? Budget deficits. What was budget deficit? Budget deficit, come on. Good morning, good morning. Budget, whose budget are we talking about? It's the government's, right? It's the government's budget. So government's budget is composed of receipts, taxes, and expenditures. So budget deficits involve less expenditure is higher than, OK? So we've got, during the post-World War II era, low levels of budget deficit, despite easy expansionary fiscal policies. But at the same time, we also had very low inflation rates due to the tight monetary policies the Bundesbank has been following, has been designing and implementing. Behind these ideas were, remember? OK, let's see. The hyperinflation experience of the 1920s, early 1920s. So you have to reign in. You have to control monetary expansion, so monetary base. So you have to be, the Bundesbank has been quite conservative in its posture in terms of implementing monetary policies. So this was the economic aspects or market aspects of social market, social market economy. So now let me delve into social policy aspects of the social market economy or social market economic system as we've seen in the German political economy, as representing the German political economy, especially during the post-World War II era. So second half of 20th century. We've got a generous welfare state. Remember we talked about social insurance? Or we talked about, we didn't talk much about social insurance, we talked about the welfare state. Remember, there were many programs that make up the welfare state. And these programs, in some political economies, it's a more social insurance-based programs. Social insurance. So what were the welfare state programs once again? I know we've had quarreled about this a few weeks ago. So what were the welfare state programs? You may look at your previous notes. I'm just kidding, Ali, please. Health care is one. Come on, guys. Pensions is another education. OK, let's assume that this is part of the welfare state, which is, in fact, part of Sena. Child care, disability programs? Very good. OK. What a relief. OK, I feel much better now. So all of these programs are supposed to protect labor market participants, i.e. employees, from risks in the labor market. What are the risks? One risk is pregnancy, so maternity benefits. Or another risk is we may feel sick. We may get sick. So health care and sickness programs. Another risk is getting fired. So that's also another risk, which is so unemployment benefits. So the state provides socialized insurance. Another risk is we hope that we reach retirement age, and we hope that risk materializes. We all want to retire at some point. We all want to be able to be retired. Or we all want to be able to retire at some age. So if and when that risk hits, if and when that risk materializes, the system will protect us against the costs associated with this. We will not be able to participate in the labor force. Or we may get involved in an industrial accident, what's called an industrial accident. Accident on the job. So we may be receiving disability benefits for some time for an extended period of time, god forbid. So all of the system, it's called social insurance system. It's socialized in the sense that the state is involved. It's collectivized. It's insurance because we all pay premier to the system. Let me explain this. I'm not sure whether I explained this in detail to you previously. So what we do is that we have our employees, employers, let's say, and employees, so workers. Let's say Gizem makes, let's say, $2,000, or 2,000 euros a month. Or let's say, 2,000 Turkish lira a month. Some of this will go to, this is Gizem's gross monthly salary. Some of this will go to, go back to, the state in terms of taxes. So let's say, among the 2,000 lira, let's say, give me a tax rate, I was going to say, out of 2,000 lira, if you say 1,000 lira, the tax rate is 50%. Come on, give me a tax rate, 20%. So that makes 400 lira deducted for personal income taxes. On top of this, there may be other deductions this time. The other point here is that there's going to be another lump sum which is collected for the social insurance purposes institution. And we have, in Turkey, we have the Social Security Institution, which is called the Segeka, Social Güvenlik Kurumu. So let's say another 300 lira go to Gizem's account in the social insurance system or social insurance institution. So it makes, so netwise, it's come down to 1,300 lira. So what happens is Gizem's 300 lira go to here. Gizem's employer, let's say, Bilkent University, puts in another 300 lira, goes into Gizem's account. This is Gizem's account. And the state also puts in another, let's say, 400 lira. So 300, another 300, and in another 400, that makes 1,000 lira accumulating every month for every 2,000 lira Gizem earns. Out of this account will be paid Gizem's retirement pensions. But also maternity benefits, child care benefits, unemployment benefits, health care, sickness benefits, will all come through this collectivized account. It won't be Gizem's account, but from the collective social or socialized account. OK, so this is the social insurance system in a nutshell for you. So the German system has its roots in the Bismarckian era, so 1880s. It goes back as late as that, as early as that. In fact, everything starts with industrial accidents, then pensions, then health care, then this, that, and the other. And by the post-World War II era, by the end of World War II, we see a full-fledged, comprehensive social insurance system running in place. So all of these, oh, I gave you some hints over there, generous welfare state social insurance. I hope you didn't see that, and then we're answering my questions. Health care and employment pensions, and all that. This was the outcome of a negotiated settlement between major social forces of the time. OK, so so capital and labor. Remember collectivist consensus? We talked about consensus era in Britain, then also in France. So this was the outcome of that particular era, the consolidation, the crystallization of the German welfare state system known as the Wolfer Staat. So then comes the institution of democratic corporatism, sometimes known as neo-corporatism, to distinguish this system from earlier forms, early 20th century forms of authoritarian forms of corporatism. So in this system, we have interest intermediation between three players. So we have the state. We have capital, let's say, employers. And we have labor as employees or workers. So we have a tripartite system of interest intermediation. The state is also part of this system. It's a system of negotiation among privileged, organized actors which have access to this governance system. So employers are organized under business associations. And employees, workers are organized under, which are called in English. Thank you. Unions. So these are privileged actors, collectively organized and mobilized. And they bargain with the state on matters that are related to industrial or working life. Let's say health and safety at work, occupational safety, occupational licenses, collective bargaining in terms of, let's say, minimum wage laws, which we never had in Germany, a nationwide minimum wage law. But the wages have been quite high. So it's a bargaining system. It's a system of interest intermediation, interest articulation among privileged actors, organized collective actors. It's a stable pattern in the sense that it's institutionalized. Its lifetime, you know, is not short. So you know that next year you shall also be convened to this tripartite system of bargaining, negotiation, cooperation, coordination, and consultation. So cooperation, coordination, consultation, bargaining, intermediation. These are the keywords that really define democratic corporatism, which produce negotiated outcomes. Because these are outcomes of negotiation. These are outcomes of coordination, bargaining, and cooperation. And this is quite in contrast to other forms of interest intermediation, such as pluralism, which we never really talked about. I may have briefly touched upon pluralism, pluralist modes of interest intermediation. This is, as you can see, among collective, institutionalized, organized actors. Some institutions have privileged access. So the state acknowledges that this is a networked society. These are my business associations. In fact, this is my business groups. Or these are my employees. And representing you, the group of employees, is one of your friends. And let's say a second friend of yours. There are two different sectors, let's say, in this economy, which are the most competitive. And I acknowledge them as representatives of you. And I acknowledge these three who sit in the front, representing my many workers in different segments or sectors in the political economy. So I provide access to them. So one, two, here representing business. And then another three representing labor. So one group, or group one, group two, group three, we negotiate. We consult one another. We coordinate. And we arrive at negotiated outcomes. In contrast to this model of privileged access, institutionalized privileged access to me as government is what's called pluralism, in which I do not pick and acknowledge privileged actors. I do not privilege any actor. So it's less of a networked society. It's less of an organized society, such as in the case of the US and or Anglo-American countries, Anglo-Saxon countries. Britain is another example in which we have pluralist forms of interest intermediation, where agents are not collective or organized. Agents are more optimistic, more individualist, acting in a more individualist way. And I negotiate with whomever is the most powerful among you as agents. So there is no privileging. There is no collective or semi-permanent institutionalized regime-like institutional links between me and particular actors in society. Whomever is powerful will help say the last word. So this is the pluralist system of interest intermediation, which is in contrast to democratic corporatist or neo-corpitist ways of making policy, taking decisions through all kinds of negotiations, consultations, coordinations, and cooperations. So in a networked society, only in a networked society can we speak of organized, collectivized actors in which we have privileged access to the system of interest intermediation as well as policymaking. Is this clear? Any questions? All right, so there have been some challenges since the 1980s in the system. Higher unemployment has been one area of problems. Crisis, 1980s, late 1970s, world economic crisis had ramifications for Germany. Power shift, alternation from a coalition, CDU, SPD, we'll talk about this later on, to conservative government under Helmut Kohl. Plus, 1990s, costs of reunification, which have seen rising unemployment. Rising unemployment in a system as such means that the state's resources are being used for unemployment benefits. So unemployment benefits have been increasing in response to rising unemployment. And also, vocational training systems, apprenticeship programs could not effectively absorb the Western apprenticeship program. The Western vocational training programs could not effectively absorb what was coming from the East, workers coming from the East. So there were some problems with respect to coordination and all that. Costs of unification or reunification was also important. So infrastructural costs meant that the state's resources had been quite limited. So this was another problem. And sustaining corporatist institutions was another problem with respect to responding to all of these shocks in about a decade or so. So world economic crisis. Plus, reunification. And by this time, the European Union was consolidating. We had European economic community, European Union. Germany was, or has been, one of the local motives, motor forces in the system. The single market program, competitiveness was very important with rising costs. So your industries had to be extra competitive in a given single market. The single European market program was supposed to be completed by about the early 1990s. It was called the 1992 program. So there were demands for increasing competitiveness. But at the same time, the German economy was struggling with ramifications of the economic crisis. But not only that crisis, but also the exogenous shock of reunification. So there were much tensions during this period. Social cleavages. We generally talk about social cleavages, inequality. When we talk about political economy, as we've been doing so for the past three cases, this is the fourth case. Ethnicity has been a complicating issue. Racism, xenophobia, especially in response to the world economic crisis of late 1970s. So throughout 1980s, the Gastarbiter, the guest workers, who were warmly welcome just two decades ago, late 50s, early 60s, all throughout 60s, all throughout 70s, were feeling that they weren't welcome anymore. Because of immense pressures in the labor market that many felt with rising unemployment, many native-born felt that the Turks, the ex, what was called back in the 80s, Yugoslavs, the Italians, were stealing our jobs. Then they realized that these were stealing, were getting the bad jobs. But before the time they felt this, there were many incidents in Germany in which there were many Turks, Turkish Gastarbiter, were lit on fire, for example, in Zollingen back in the 1980s, which was a massive incident in German history. During the 1980s. And on top of these pressures came reunification with all of its shocks associated with it, which meant that unemployment further increased, states' coffers in the vault, so receipts, payments, expenditures, taxes, imbalances, so cutbacks, a reunification tax, a poll tax of 7.5% on citizens. This all meant that the pressures had been increasing, which many scholars associate with rising xenophobia, rising racism and all that in the 1980s, 1990s, and tech shortages of 2000s, the dot-com busts. So again, another recession back in the 2000s. And by the way, early 1990s were years of recession in Europe that had struck Europe, not only German reunification, but also this was a time of economic bust. Things looked meager. Unemployment had been high all across Europe. There were some banking crises up north, which had ramifications for all across Europe, too. So 1980s were years of crisis. Early 90s were years of another set of crisis recession. Early 2000s, again, recessionary years, Indian softwares were making up to the headlines, getting green cards, getting licenses to work permits, to work in Germany, whereas the native-born population were feeling that they couldn't compete with foreign-borns. So that added to all this. Please. Germans? Uh-huh. Well, first origin, remember we talked about Prussia, which was a patriotic system. It was a nationalist system. The state system was fostering nationalism. And Napoleon's defeat of Germany then came World War I. Germany defeated. The world's superpower, industrial superpower, got defeated in about less than 20 years again. So early 1900s, 1800s, early 1900s, defeat, massive boom after World War II, interestingly, under Weimar Republic, then came Hitler. World went into a recession, depression, 1929. Germany didn't. Germany was booming. Continued to boom. So massive economic growth, late 1930s, war again. Defeat again. So one defeat after another in less than 150 years. Just imagine the guilt in the psyche of an average citizen and also the war guilt attached to it. I mean, defeat, I'm sorry. Imagine the defeat as well as the guilt. So this is one way of more of a probably psychological reaction to all that. I'm not an expert on this. But when I read about all this, what I make of it is just imagine all kinds of consecutive defeats in a matter of three generations or five generations. And this meant that one shock after another, economic shocks, 70s, 80s, 90s, that this was xenophobia, like the Gastarbata, no more welcome anymore. So all of these really added to xenophobic elements. And we saw 1980s skinheads on the streets, sympathetic to Hitler's ideas, ultra-right ideas, nationalistic, overly ultra-nationalistic ideas. So I associate some of this to late Prussia, so Napoleonic defeat, feeling backwards, catching up, in fact, superseding everyone. By 1900, Germany was the industrial leader of the world. Just imagine, Industrial Revolution had started in mid 1700s in Britain, then scattered. Germany came into the system much later. 1900s, late 1800s, scramble for Africa and East Asia, no more markets, no more raw materials. Everything was cannibalized by other imperial powers. So Germany could only catch whatever it found in terms of its colonial imperial past. But then in a matter of less than 10 years, 15 years, or 20 years, right after being the superpower of the periods, industrial-wise, industrial stronghold-wise, industrial locomotive-wise, it found itself defeated. And the Treaty of Versailles, I told you about, we talked about this, the conditions for war reparations were so grave that it was this data and the other that the Germans felt, OK, this is not fair. And then re-industrialization from scratch, almost scratch, re-industrialization, because when you look at even after World War I, Germany was devastated, physically devastated. So re-industrialization, an economic miracle when the world was going through economic depression, late 1920s, early 1930s, Germany was booming, miraculously booming, later under Hitler's reign, and then defeated again. So massive defeats brought with it all kinds of guilt, which probably had to be steamed off in one way or another. I mean, these are, I personally feel that these are reactions to all those political, military, as well as economic defeats of the period. So this is how I explain it personally. I've never studied these aspects of xenophobia, reactions against the Gastarbiter, what were the individual level reasons behind all of that that happened. But I tend to associate them with all of these defeats and the guilt and the shocks that German political economy went under. So that would be my short answer to that intense question. Gender-wise, men still dominate both management in German firms and also unions. So it's a man's world. This is the Western part of Germany, whereas in the Eastern part of Germany, things were different, greater social rights, economic rights for women. Also, abortion rights were much liberal in the East as opposed to the West. Anyone who's seen Goodbye Lenin, the movie Goodbye Lenin, a few of you. So remember the protagonist's mother who was a teacher, who was a leader, who was a model, who was an ideal woman figure in society. So German women have been, Eastern German women had more access to all kinds of economic social rights than in the West. But when you look at German lands in history, we've got a conservative welfare state. So women's rule had been relegated to the house. In fact, there were wartime posters, actually early 1920s, 1930s, which relegated the role of women to Kinder, Kühe, and Kirche. So Kinder is, again, help me, children, Kühe, kitchen, so the house, the foyer, and also Kirche, so church. So women's rules as mother and wives mostly confined to the house. So we have a quite conservative system in which we had lower levels of labor force participation among women historically. But this has been changing massively. And now we have about 2-thirds of all German women participating in the labor force. Gesundheit. And finally, generational gap, demographic pressures meant that the elderly, the German population is becoming old, it's aging. So imagine a workforce. We have an increasingly smaller population, part of the population, younger, who are more productive in terms of participation or contribution to the labor force, but also into the domestic economy In addition to this, we have larger expanding population, share of the population, expanding of the older workers and also the elderly. So we call this, we measure this ratio in demography and also in welfare state studies, what's called the dependency ratio. Excuse me, the older's, the elderly, it looks at the size of the elderly population, those outside of the labor force as a share of the active labor force. And this ratio had been increasing in Germany. So less and less number of people or lower and lower shares of the workforce or population had been producing, but an expanding elderly population who had been not contributing to the labor force and in production, therefore. So with those of you expanding and these of you contracting, shrinking, we have a higher dependency ratio, which means that we all thought that the German system was like a time bomb in the sense that it would explode someday because there are less number of people contributing into the social insurance system and more number of people relying on it. And in time, this is not going anywhere either. So it's not a matter of now, it's a matter of the future, meaning that these guys are aging and they're expanding and these guys are young, they'll be aging and they're shrinking. This meant incoming resources are shrinking, outgoing resources are expanding. That was why, back in the 1990s, we thought that many European economies were going to be facing pension time bombs because you'll be requiring pensions, these guys will be producing for you. The younger workforce will be producing, contributing with their productive powers and these guys, an expanding share in the population would be using all the resources that they had been producing and these guys had been shrinking and those guys had been expanding. So this was a metaphor that we used back in the 1990s of a pension time bomb, which didn't really happen to the extent that the doomsayers predicted because of rising productivity in due parts to rising productivity, technological advances, but also lower levels of exit from the labor force. We thought that the older workers would be exiting from the labor force, but this hasn't been the case at least to the extent that we thought it would. Any questions on the political economy? OK, let's take a break then.