CDU later: Angela Merkel’s successor

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Hello and welcome to the Intelligence from the Economist. I'm your host, Jason Palmer. Every weekday we provide a fresh perspective.

On the events shaping your world.

China's leaders want to boost the country's faltering fertility rate, but they also push family values and want parents to be married. We examine the struggles faced by single mothers and the battle to make things more equitable. And the pandemic has driven loads of demand for mental health apps. And the supply is skyrocketing, too. But it's hard to put numbers to how much any of the apps helps. Many of them are worryingly sloppy with very sensitive information. First up, though, This morning in Germany's.

Parliament, auf deren Tribune, die geftsfurende Bundes Kanzleren, Frau Doktor Angela Merkel.

Outgoing Chancellor Angela Merkel was given a standing ovation by her colleagues shortly after members voted in her successor, Olaf Scholz. With his inauguration at the Presidential palace, he'll officially become the country's first new leader in 16 years. He's got some big shoes to fill. So what can we expect from the Scholz Chancellorship?

Well, Olaf Scholz in some respects is a classic German politician. Serious, sober, not especially exciting, highly competent, very experienced. Although in some respects, you might say that Mr. Schulz takes these characteristics to excess.

Tom Nuttall is the economist's Berlin bureau chief.

In an earlier phase in his career, he acquired the nickname Scholz Omat for this very robotic way he had of answering questions that were put to him by the press. And it's a habit that he has entirely shed since then.

And how is it that the Scholzer Mass became the most powerful person in Germany? What's his backstory?

Well, so olaf Scholz is 63 years old. He's one of the most experienced politicians in Germany. He's had a lot of experience at the federal level going back almost 20 years. Also at the state level he was the mayor of Hamburg and Hamburg is one of the city states in Germany, so that's an important role. He ran that city for most of the 2000 and tens. And in the outgoing coalition, Angela Merkel's last coalition, the grand coalition, in which his Social Democratic Party has served as the junior partner, he was Mrs. Merkel's vice chancellor, but more importantly the Finance Minister, which is the second most important job in German politics. So he will now hope to put that very wide ranging experience to use in the highest office in the land.

And you say he was already the second most important in terms of being Finance Minister. What lessons can we draw from his time doing that?

Well, the last few years have been very interesting for Olaf Scholz because for the first two years in government he was extremely sober, cautious, didn't want to acquire a reputation for free spending, which can be politically dangerous in Germany. So he stuck to the so called Schwarzenel, the black zero, the balanced budget policy that he inherited from his conservative predecessor. And he disappointed a lot of people who hoped that a Social Democrat in charge of Germany's Finance Ministry might lead to a more expansive fiscal policy, both in Germany. Germany, but also in Europe. But that all changed when the pandemic struck.

How do you mean?

So Olaf Scholz oversaw a huge period of fiscal expansion in Germany. An initial borrowing of 400 billion euros to fund furlough programmes and support to businesses and a whole load of other things. And his argument is always you save when the sun is shining so that when the rainy day comes, you're in a position to spend. And that's exactly what he was able to do. And that led to a very different sort of period. For, for Olaf Scholz, he was also, when it came to the EU's response to the pandemic, as Finance Minister, he was crucial in getting Germany to sign up to a deal, first with France and then for the EU as a whole, for a Massive Covid recovery program worth €750 billion. So as Finance Minister, it really was a game of two halves for Scholz. First, austere, competent, stolid, fiscally prudent, and then, when disaster struck, the appropriate fiscal response.

And what about beyond finance? What sense do we have for his broader vision for Germany?

So Olaf Scholz is not, I think, what you would call a visionary politician, but he did make some specific pledges on the campaign trail to lift the minimum wage, to ensure that the state pension remains stable, a few things on Social Security and so forth. But I think the thing really to watch is on the energy and climate transition. Olaf Scholz has said this is going to be the biggest challenge that Germany has faced in 100 years. The country has got some very exacting climate targets to meet, had some very specific goals on renewable energy in particular, over the next few years. There is no way that Germany is going to meet these targets unless the next government acts very quickly and very decisively on all sorts of things, from reforming planning processes to ramping up spending, on rolling out renewable energy and a whole host of other things.

What about outside Germany? On the European, on the world stage, where do you think things are headed?

So there is international experience there, but when it comes to issues that go beyond the sort of finance minister portfolio that he's been occupying for the last three and a half years, it's less clear. We don't have very clear ideas about his stance towards Russia. And of course, he may have a crisis to deal with very early on in his chancellorship, with the possibility of renewed conflagration on Russia's border with Ukraine. Similarly, many decision makers in Germany have started to think rather differently about the country's relationship with China in recent years. It's not immediately obvious whether Olaf Scholz goes along with this emerging consensus that Germany needs to take a tougher line towards authoritarian countries like China, to forge a stronger common European policy towards China and to work with the Americans on it. You will expect him to play a central role in European decision making. Every German Chancellor will. And at the very least, it's going to take Olaf Scholz a while to be able to adopt the sort of role that Merkel did inside the eu. So you're going to see a bit of a decision making vacuum at the heart of Europe, at least for, for the opening period of Olaf Scholz's chancellorship.

And Mr. Scholz may of course, face some tough decisions as the pandemic continues to play out. What are his stances on things like mandates and lockdowns.

So Olaf Scholz a couple of weeks ago came out in favour of obligatory vaccination for adults in Germany. He knows very well that Covid has the potential to derail his government very, very early on if he fails to get a grip on it. But of course, especially with Omicron, the trajectory over the next few months is very, very uncertain. So it' clear that Olaf Scholz and other leading members of his government are going to want to act very decisively in the early period of this government to make sure that this doesn't get out of control, imposing a vaccine mandate, which of course is potentially a very divisive thing to do. But in their estimation, that is the best way to ensure that this government is not immediately derailed by what I suppose would be a fifth wave of COVID in Germany.

And what about the leader that he's taking over from? What do we know about Mrs. Merkel's future?

Well, Mrs. Merkel hadn't given very much indication of what she wants to do after stepping down. But, you know, if you look around the world, look at some other leaders, we generally think that they offer largely some cautionary tales on what not to do. Two of the four French presidents at Angela Merkel outlasted have ended up being convicted of bribery. In Italy, prime ministers just hang around like a bad smell for years on end. They never really leave politics. You have some funny examples in places like the Netherlands and Sweden where you have politicians who go back to driving buses or collecting rubbish. I'm not sure I can necessarily see Angela Merkel modest, though she may be taking on those sorts of jobs. I think you're more likely to see her ending up perhaps visiting some of the universities around the world that have bestowed honorary degrees on her. Her husband still, who's an esteemed research chemist, still has a year of his contract to go to university in Berlin. So I think Mrs. Merkel is probably going to quietly shuffle away from the political world and may quietly shuffle towards the academic world.

Thanks very much for joining us, Tom.

Pleasure. Thanks, Jason.

Don't forget to take our survey. We're looking to get insights from listeners like you. Go on, be brutally honest. Tell us what you'd like more of or less of. Head over to economist.com intelligencesurvey or just click the link that's in the notes for today's show. We appreciate it. For a long time, China's government worried about exploding population growth. Now it fears the opposite. Last year, just 12 million babies were born in the country, a drop of almost 20% compared with the year before. The One child policy became two in 2015, and then this year, three. Despite the demographic decline, though, not all pregnancies are being welcomed.

I met Zhou Xiaoqi on a weekday evening after she'd finished work in a part of Shanghai that was once a French Concession. It's beautiful and leafy, and it's full of cool cafes like the one where I met Ms. Zo.

Stephanie Studer is a China correspondent for the Economist.

She told me that in 2016, she found out she was pregnant after breaking up with her boyfriend and decided that she wanted to keep the baby. So she started to gather information on policies to do with maternity benefits. But when she turned up at her Social Security center in Shanghai, they asked her for a marriage certificate, which she didn't have, and so they declined her application on that basis.

And is that standard practice?

Is she legally required to have that document?

So it is pretty standard practice for mothers who have never been married not to receive maternity benefits, which in a wealthy city like Shanghai, could amount to between 30,000 yuan, which is almost $5,000 to 120,000 yuan, four times that. So we're talking about a lot of money. In China's laws, there is no explicit ban on being able to procreate without being married. Indeed, the marriage law guarantees the same rights to children born out of wedlock as those born into it. But the problem is that the law does say procreation involves a husband and wife. And so what local authorities have done is to take that to mean that unwed mothers are in violation of family planning regulations. In practice, that means that some single mothers even have to pay what is known in the jargon as social maintenance fees, which is what couples who have had more children than China's quotas allow must also pay. And that can add up to several years of working class income.

So why this disconnect if the law doesn't demand it, but the people in these Social Security centres do?

Well, fundamentally, China is still a pretty socially conservative place. The Communist Party wants to maintain traditional family values which stress the importance of heterosexual marriage above all. It's worth noting, in fact, that lesbians whose unions are not recognized in China are also denied these maternity benefits.

And so in that sense, Ms. Zhou's situation isn't uncommon.

It isn't uncommon, no. In fact, things can get very difficult for them because of these conservative attitudes among policymakers. So it used to be that children of unmarried mothers were also denied household registration papers, known as hukou, and these are pretty much essential to obtain identity documents, to enrol at state schools, and even receive subsidised health care in local hospitals. In 2016, however, the Central government reminded local officials that these children should be given these registration papers, and that seems to have worked.

So it sounds as if things are.

Getting a little better, at least.

Yes. Well, one thing to note is that there is one region that's doing better than others, and that is the southern province of Guangdong, just across the water from Hong Kong. And it's the only place that single mothers routinely receive their maternity benefits. And that is thanks to an overhaul of its local family planning policy in 2016. And then you have some women like Ms. Zhou, who have decided to start fighting back, who are contesting the decision of local Social Security centres to deny them these benefits. Ms. Zhou sued two Shanghai government agencies in 2017 and 2018 to get equal treatment. That made her the first single mother to sue the government for these benefits. Now, she did lose every case over the course of almost four years. But she has emboldened some other mothers also to take employers to court, which can be easier than suing the government, because in some provinces, it is firms that are responsible for paying employees during maternity leave. Those companies then claim the money back from the state. But what's happening is that employers refuse to give that pay to women when they are single mothers because they suspect the government will not pay them back.

And I guess in some sense, the conservative values that are on show here are somewhat in conflict with a changing world. And some change also in China about people getting married later or having children later, or tolerance of LGBT communities and so on. There is a growing tension here, isn't there?

I think that's absolutely right. Attitudes are changing far more rapidly, especially among young Chinese, than among officials in China. So just 8 million couples got married in China last year. That number has been falling for seven years in a row now, as cohabitation is becoming more common and more acceptable socially. In fact, as far back as 2015, there was an unmarried mother who launched a crowdfunding campaign to help raise money to cover her social maintenance fee. And she managed to raise far more than she had hoped to just overnight from strangers who thought that this was not okay to be denying these maternity benefits to single mothers.

But there are signs of change here between campaigning mothers and generational change. Where do you see this heading?

Some things are shifting among policymakers in China. In particular this year, the single mothers that I spoke to said that they felt quite hopeful about the shift. In May to a three child policy. Officials have done this because they want to help boost the birth rate. China's fertility rate is already among the lowest in the world with just 1.3 children per woman, and local governments have responded to that by encouraging citizens to procreate by giving them longer parental leave and more generous subsidies. The problem is that in all this, single mothers are still being left out of the conversation. But as Chen Ya Ya, a feminist scholar at the Shanghai Academy of Social Sciences, points out in a recent essay, if only those single mothers were more accepted by both policy and by society, China's birth rate might tick up quite significantly. She points out that in the oecd, the number of births out of wedlock, as a proportion of the total, rose from 6% in 1960 to 40% in 2016. The big question is, what's more attractive to officials? Is it pushing up the birth rate or is it keeping control over women's fertility?

Stephanie, thanks very much for your time.

Thank you, Jason.

According to a lot of psychiatrists of both the professional and the armchair variety, smartphones can be a drain on mental health.

Sorry, I should silence that.

All the notifications, work, emails at any time of day, all those airbrushed social media lives that can cast a shadow over your own smartphones, of course, aren't all bad. They can connect people to therapies of all sorts. Apple's store has more than 20,000 apps aimed at improving mental health. The question is how to measure the quality of the therapies on offer and how to be sure that all those apps are keeping your most private information private.

Mental health apps are a pretty broad category.

Ore Ogunbi is the Economist's healthcare and consumer correspondent.

Some of them are connecting you to real therapists and helping you deal with depression and anxiety, and others are helping you through meditation. It can be everything from games to telehealth conduits.

And why is the sector of mental health apps booming so much?

So we've seen a lot of pandemic induced growth and because mental health support is actually quite expensive and quite difficult to access, some people have to wait for months. Then there's been a lot of demand for mental health support, but not very many services that are actually filling that gap. And so apps have come in quite handy.

So at a time of increased need, this is kind of a win for all involved, those who want the help and those who want to provide it.

Well, for the most part, yes. But there are a couple downsides. So John Torres, who is a professor at Harvard Medical School reviewed 650 popular mental health apps and he's described their privacy policies as abysmal. This kind of carelessness obviously comes with consequences. For example, last year in Finland, Verstamo, which is a big therapist network that was backing up patient notes online, was hacked. And 30,000 patients had their really intimate notes covering everything from pedophilic thoughts to extramarital affairs being shared with the world. So after the hacking, the authorities got involved and Verstamo was taken to court. They filed for bankruptcy and have now shut down. The lawyers who are actually defending the victims who are affected by Vestamo will tell you that people have lost trust in the Finnish healthcare system. And I think mental health apps need to take that into more consideration.

But an even bigger concern, though, is how much these companies are taking care of mental health itself. How are these companies doing on that score?

So the thing is, with these apps, they were designed to be used to complement people who are actually getting proper therapy. But a lot of people who can't access therapy and who can't afford it are using them instead of conventional therapy. But because they're being marketed as apps, what is emerging as the most popular apps are the ones that are best marketed, not necessarily the ones that are safest or most effective. So, for example, you have lots of these apps that are basically marketing themselves as clinically validated. But actually that's quite difficult to prove in the area of mental health.

Surely there's a role for regulators here, though. If something is clinically validated, making those kinds of promises is the sort of thing that regulators should be keeping an eye on.

Well, yeah, there should be, but there isn't much. In the us, for example, the Food and Drug Administration only considers a lot of these apps, wellness apps, so they're regulated with that in mind, which is not very much because they're not considered medical software or medical devices. But regulators elsewhere are beginning to look into the issue. So Petra Hugendorn, for example, was commissioned by the European Commission to lead the development of a new ISO standard which ranks how apps are doing in terms of user safety, data security, and basically whether they do what they say on the tin. But until these kind of standards are backed up with legislation, it's just a valiant effort.

So do you think these concerns and these slip ups with privacy and so on and real questions about efficacy will slow down this industry?

I think it's still a bit hard to tell. Mental health tech companies raise nearly $2 billion in equity funding in 2020, and that's a lot of money. You know, we're seeing more late stage deals, more high value mergers and the industry is definitely maturing. Investors are clearly paying attention. But these trust issues are raising questions and there's evidence that some of the hype around these apps might really be slowing. Talkspace isn't doing very well anymore. Their co founders and their CEO all left last month and the company reported $20.8 million in third quarter losses this year. So that's 10 times worse than the same time last year. I guess we just have to wait and see what the next wave of these apps actually have to offer.

Ore, thank you very much for your time.

Thanks for having me, Jason.

That's all for this episode of THE Intelligence. If you like us, leave us a rating rating and a review and you can subscribe to the economist@exterator.com intelligenceoffer. The links to subscribe and to take our survey are in the show notes. See you back here tomorrow.