Germany’s economic woes


Every time I come to Germany I become increasingly disgruntled at the economic incompetence of its leaders. Mind you, many of my criticisms apply not only to Germany, but to most of Western Europe excluding the UK. Of particular concern to me at the moment is a series of reforms of the German health system being proposed, which will require a massive injection of federal funding, with estimates ranging from 20 billion to 45 billion Euros. To finance this a multitude of different tax hikes are being promoted, including income, company and capital gains tax increases. At a time when Germany is running large budget deficits (to the point where it is violating EU budgetary requirements), unemployment rates are in the vicinity of 11% on average and 17% in the former East, economic growth is almost flat (around 1-1.5% and amongst the weakest in the EU), and taxes have already recently been raised (via a 3% VAT increase), is increasing government spending and hiking taxes really an even mildly sensible thing to do? It seems that even Germany’s leaders acknowledge how bad things have become with Chancellor Angela Merkel recently controversially proclaiming that Germany is “an economic basket case”. My question then is “Why the hell don’t you bloody well do something about it you so-called conservative? You’re the Chancellor aren’t you?”. Of course, it’s not completely fair for me to blame poor old ex-fellow-physicist Angela for all this. Politicians sometimes inevitably have to give in to social pressures, and in Germany there are immense social pressures against free-market reforms and in favour of the traditional European welfare state. Society would prefer ‘social justice’ over economic progress. My view on this differs somewhat. In my mind there’s nothing more socially unjust than having 11% of the working-age population out of work, and next to no economic growth, regardless of how much social security you pay them. All this does is deprive people of future prosperity, job prospects and social services. It’s all very well to spend money on social services, but one mustn’t forget that, in the long term, such spending cannot be funded without a strong economy.

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