Future

New Digital Freedom Showdown As European Leaders Push Tough Internet Privacy Laws

The European Commission will unveil an arsenal of legislative measures aimed at harmonizing the E.U. countries’ various approaches to digital privacy protection. Among the new laws is a “right to forget” clause, guaranteeing people an “out” from services

New measures are being taken to protect Internet users' bank details (Bertrand Hauger)
Renaud Honore

PARIS -- Imagine the horror of seeing embarrassing photos of yourself making the rounds on the Internet, or, even worse, your bank details – out there for everyone to see. In an effort to better protect Europeans from just such a scenario, the European Commission is set present an arsenal of legislative measures on the subject during a meeting scheduled for Wednesday, Jan. 25.

"It is about reviewing the 1995 directive, which had one major fault: it opened the door to as many interpretations as there are member states in the European Union," explains a European official. "The objective is to harmonize these interpretations."

The office of Viviane Reding, the European Commission for Justice charged with the project, often cites Google Street View as an example. In setting up the service, the American giant collected a treasure trove of personal details. Some countries, including France, condemned it. Others didn't react at all.

Brussels has decided to completely review the 1995 directive, which will establish new rules to be applied across the continent. The Commission warns of "substantial consequences' – including fines of up to 1 million euros, or 5% of the turnover of the business concerned – for anyone found guilty of breaking the new privacy guidelines.

"Right to forget"

With its range of legislative measures, Brussels is targeting both businesses and individuals, who will be able to control how their personal details are used more easily. They will also have to give their explicit consent before their details can be used in other ways. For children under 13 years old, parents' permission will be required.

A "digital right-to-forget" will also be introduced. "The day you want to close your Facebook account, Facebook will be obliged to delete all your personal details," explains the European official. This right-to-forget will not apply to newspaper archives.

Individuals will also have the right to request a copy of their details if they want to pass them from one provider to another. Finally, individuals must be alerted within 24 hours if the security of their personal details is ever compromised. Brussels is making a clear attempt to prevent something like the ‘PlayStation" episode – where Sony took a week to let clients know that their bank card numbers had been stolen – from ever occurring again.

From a business point of view, companies will now have just one set of hoops to jump through: those of the country where their headquarters are based. Likewise, if details need to be exchanged between two subsidiaries of the same company, located in different countries, the authorisation of just one national body will suffice. The Commission estimates that the harmonization of the 27 different legislations currently in force will save the European economy 2.3 billion euros per year.

Read the original article in French

Photo – Bertrand Hauger

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Economy

Merkel's Legacy: The Rise And Stall Of The German Economy

How have 16 years of Chancellor Angela Merkel changed Germany? The Chancellor accompanied the country's rise to near economic superpower status — and then progress stalled. On technology and beyond, Germany needs real reforms under Merkel's successor.

Chancellor Angela Merkel looks at the presentation of the current 2 Euro commemorative coin ''Brandenburg''

Daniel Eckert

BERLIN — Germans are doing better than ever. By many standards, the economy broke records during the reign of outgoing Chancellor Angela Merkel: private households' financial assets have climbed to a peak; the number of jobs recorded a historic high before the pandemic hit at the beginning of 2020; the GDP — the sum of all goods and services produced in a period — also reached an all-time high.

And still, while the economic balance sheet of Merkel's 16 years is outstanding if taken at face value, on closer inspection one thing catches the eye: against the backdrop of globalization, Europe's largest economy no longer has the clout it had at the beginning of the century. Germany has fallen behind in key sectors that will shape the future of the world, and even the competitiveness of its manufacturing industries shows unmistakable signs of fatigue.

In 2004, a year before Merkel was first elected Chancellor, the British magazine The Economist branded Germany the "sick man of Europe." Ironically, the previous government, a coalition of center-left and green parties, had already laid the foundations for recovery with some reforms. Facing the threat of high unemployment, unions had held back on wage demands.

"Up until the Covid-19 crisis, Germany had achieved strong economic growth with both high and low unemployment," says Michael Holstein, chief economist at DZ Bank. However, it never made important decisions for its future.

Another economist, Jens Südekum of Heinrich Heine University in Düsseldorf, offers a different perspective: "Angela Merkel profited greatly from the preparatory work of her predecessor. This is particularly true regarding the extreme wage restraint practiced in Germany in the early 2000s."

Above all, Germany was helped in the first half of the Merkel era by global economic upheaval. Between the turn of the millennium and the 2011-2012 debt crisis, emerging countries, led by China, experienced unprecedented growth. With many German companies specializing in manufacturing industrial machines and systems, the rise of rapidly industrializing countries was a boon for the country's economy.

Germany dismissed Google as an over-hyped tech company.

Digital competitiveness, on the other hand, was not a big problem in 2005 when Merkel became chancellor. Google went public the year before, but was dismissed as an over-hyped tech company in Germany. Apple's iPhone was not due to hit the market until 2007, then quickly achieved cult status and ushered in a new phase of the global economy.

Germany struggled with the digital economy, partly because of the slow expansion of internet infrastructure in the country. Regulation, lengthy start-up processes and in some cases high taxation contributed to how the former economic wonderland became marginalized in some of the most innovative sectors of the 21st century.

Volkswagen's press plant in Zwickau, Germany — Photo: Jan Woitas/dpa/ZUMA

"When it comes to digitization today, Germany has a lot of catching up to do with the relevant infrastructure, such as the expansion of fiber optics, but also with digital administration," says Stefan Kooths, Director of the Economic and Growth Research Center at the Kiel Institute for the World Economy (IfW Kiel).

For a long time now, the country has made no adjustments to its pension system to ward off the imminent demographic problems caused by an increasingly aging population. "The social security system is not future-proof," says Kooths. The most recent changes have come at the expense of future generations and taxpayers, the economist says.

Low euro exchange rates favored German exports

Nevertheless, things seemed to go well for the German economy at the start of the Merkel era. In part, this can be explained by the economic downturn caused by the euro debt crisis of 2011-2012. Unlike in the previous decade, the low euro exchange rate favored German exports and made money flow into German coffers. And since then-European Central Bank president Mario Draghi's decision to save the euro "whatever it takes" in 2012, this money has become cheaper and cheaper.

In the long run, these factors inflated the prices of real estate and other sectors but failed to contribute to the future viability of the country. "With the financial crisis and the national debt crisis that followed, economic policy got into crisis mode, and it never emerged from it again," says DZ chief economist Holstein. Policy, he explains, was geared towards countering crises and maintaining the status quo. "The goal of remaining competitive fell to the background, as did issues concerning the future."

In the traditional field of manufacturing, the situation deteriorated significantly. The Institut der Deutschen Wirtschaft (IW), which regularly measures and compares the competitiveness of industries in different countries, recently concluded that German companies have lost many of the advantages they had gained. The high level of productivity, which used to be one of the country's strengths, faltered in the years before the pandemic.

Kooths, of IfW Kiel, points out that private investment in the German economy has declined in recent years, while the "government quota" in the economy, which describes the amount of government expenditure against the GDP, grew significantly during Merkel's tenure, from 43.5% in 2005 to 46.5% in 2019. Kooths concludes that: "Overall, the state's influence on economic activity has increased significantly."

Another very crucial aspect of competitiveness, at least from the point of view of skilled workers and companies, has been neglected by German politics for years: taxes and social contributions. The country has among the highest taxes on income in Europe, and corporate taxes are also hardly as high as in Germany anywhere in the industrialized world. "In the long run, high tax rates always come at the expense of economic dynamism and can even prevent new companies from being set up," warns Kooths.

Startups can renew an economy and lay the foundation for future prosperity. Between the year 2000 and the Covid-19 crisis, fewer and fewer new companies were created every year. Economists from left to right are unanimous: Angela Merkel is leaving behind a country with considerable need for reform.

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