Looking from afar, the strategic decisions the SPD has taken -- remaining in coalition with the CDU/CSU, supporting austerity, even backing the Hartz reforms -- look stupid and wrong. They are wrong, but probably not stupid. Thread:
The German economic model relies overwhelmingly on maintaining a competitive export sector. Export competitiveness requires low labour costs and restrained domestic consumption. journals.sagepub.com/doi/abs/10.117…
The Hartz reforms -- and the general dualisation of the labour market (tandfonline.com/doi/abs/10.108…) -- helped keep costs down and contribued to Germany's good economic performance during the financial crisis 
How could the SPD support damaging their core supporters like this? The thing is, their core supporters are not economically marginalised non-standard workers but actually blue and white collar workers with permanent full-time employment contracts. users.ox.ac.uk/~polf0050/Rued…
The SPD essentially through the poor and marginalised under the bus in order to protect the jobs of their core supporters -- largely unionised blue and white collar workers with high job security.
The trouble is that you can't win an election with just these voters. Especially when your policies create a growing underclass of non-standard workers (by supporting dualisation) and alienate the part of your base in the public sector (by supporting austerity).
Sticking with the centre, supporting austerity, and undermining precarious workers may have been rational in isolation but has resulted in the SPD losing all but its relatively small base of core supporters. It remains to be seen whether than can rebuild in the future.
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