The debt brake, forcing balanced budgets, sounds like a good idea but actually turns out to be a terrible idea in practice. https://www.dw.com/en/what-is-germanys-debt-brake/a-67587332 https://www.bbc.co.uk/news/world-europe-67624009
Our finance minister and our chancellor just don’t want it.
The government can just direct government-owned corporations (e.g. Deutsche Bahn) to make new shares and purchase them with fresh money, thus giving the corporation a free cash infusion. Financial transactions are also not covered by the debt brake.
So they basically just couldn’t come up with a solution when trying to balance the budget. Definition of death by committee, which is a representation of the will of the people.
How can we do this better? This feels so important, yet it feels impossible if this is the outcome of telling our politicians they need to respect a budget.
Coalition politics only works if the members recognise the need for compromise and are competent enough to achieve it. I'd honestly expected German politicians to be better at this tbh.
It is also worth pointing out that the debt break means the government is incentivised to increase taxes as funding for their expenses.
As of now about 25% of the federal budget go towards retired people [1] (in addition to all mandatory "taxes" paid by working people).
The vast majority of the money is not spent on charity but is part of the societal deal that younger people support the elders. So the payments retirees get are the result of them paying into the system for 30 - 40 years.
The shrinking numbers of younger working people and the beginning retirement of baby boomers make this system unsustainable and politically very hard to change.
Something will give sooner or later but god knows what that will be.
[1] https://www.bundeshaushalt.de/DE/Bundeshaushalt-digital/bund...
On a societal level, it is more accurate to frame this as “the purchasing power the retirees get are the result of the dynamics of political power in the society”.
This is clearer because regardless of what any entity pays into whatever, a change in political power in the future can always change “the deal”.
Also, there are a few ways for deals to change. One is that payments promised in the future can nominally satisfy the original deal, but the purchasing power of those payments (which is really what people want) can be eroded, namely by government policy. So you can pay into the system all you want, but you might not be able to but what you expected you were going to be able to buy.
Another way is that if you are promised benefits, such as healthcare, then the quantity/quality of healthcare can be reduced. Longer wait times, less qualified personnel, less quality control in medicines coming from factories that are not being inspected as often, etc.
In addition the individual worker has been promised "you pay now and get security later" which makes it very hard to argue against. Your stereotypical grandma isn't suited to be framed as a "drain on society" and she isn't typically getting rich of it. It's the sheer amount of grandmas that is bringing the system to it's knees.
Much lying happened back in the day when it became apparent that birth rates would result in a lower standard of living for old people who worked all of their adult live.
Rather than let the system fail gradually or seek to reform it in general, politicians took the easy way out and started supplemanting it from the general budget and have been ever since.
I don’t blame the politicians, as it is impossible to get elected on a platform of reducing the biggest voting bloc’s (perceived) quality of life.
It’s just a structural weakness in democracy due to the way humans are, papered over by growth due to high fertility rates in previous generations and the resulting momentum that I think started petering out somewhere in the 1990s.
[1]https://de.statista.com/statistik/daten/studie/75248/umfrage...
They neglect infrastructure to focus on social security.
If they wanted to find the money, they trivially could.
And again, German debt levels are way lower than any other G7 country's. So there is no excuse.
Indeed. I think you figured out the issue. Politicians aren't elected to fix infrastructure, but to distribute taxes through the social security system.
"A democracy cannot exist as a permanent form of government. It can only exist until the majority discovers it can vote itself largess out of the public treasury."
-Elmer T. Peterson misquoting Alexander Tytler.
The reason the government can't go below the Existenzminimum is that this would be a violation of the constitution's guarantee of human dignity according to the federal constitutional court of Germany, not because it would annoy the poors.
Also there is documented corruption in almost all political parties in federal politics. Most of that corruption is legal though but the beneficiaries are decidedly not the recipients of the "social security system" but rather of public-private partnerships and subsidies.
If you think the poor are leeching off society then the same goes for the fossil fuel industry, the agricultural industry, car manufacturing and other industries that are heavily subsidised and benefiting for extremely specific tax exemptions and funding programmes. One of the biggest beneficiaries of the COVID relief programs in Germany unlike the US was not ordinary taxpayers but airlines and large manufacturing companies.
Any evidence that BMW, Mercedes and VW aren't massive net tax payers?
I had this conversation before, where someone claimed that e.g. the automotive industry was heavily subsidized. But when I looked into it I found absolutely no evidence.
The German government is directly supported by the massively successful German industry. It is the sole reason Germany can even afford it's welfare state. On it's face it is absurd to claim that that industry is tax payer supported, completely ridiculous.
>If you think the poor are leeching off society then the same goes for the fossil fuel industry, the agricultural industry, car manufacturing and other industries
Social security is the top expenditure point in the budget.
It would indeed be trivial to "find the money" but the neo-liberal FDP is acting as an internal opposition demanding both strict adherence to the self-imposed debt brake (which was put in place to allow for investment during economic downturns by avoiding unnecessary debt when things are going well -- except everyone promptly forgot about that justification) as well as neither enacting new taxes (e.g. additional tax brackets), raising existing taxes nor resuming the very moderate wealth tax we suspended (not abolished!) years ago for no good reason.
No? Even on the budget they are distinct items.
>And Germany still has an appalling amount of childhood poverty nevertheless.
Don't forget the homelessness, which is far worse than in the US. Not only is the social security expensive, it also quite ineffective.
>It would indeed be trivial to "find the money" but the neo-liberal FDP is acting as an internal opposition
Exactly. Even they are refusing to cut social spending.
> No? Even on the budget they are distinct items.
That's not a refutation, that's a technicality.
What is the function of social security? What would happen without it?
To reduce social conflict by subsiding people who, for one reason or another, are unwilling or unable to successfully participate in the labor market.
>What would happen without it?
I don't want to speculate, but at some point we are going to find out.