Economy

Finger-Wagging Germany Secretly Accumulating Trillions In Debt

While giving the rest of Europe lessons on austerity, Germany has quietly been accumulating debt, a situation that will worsen with the planned social reforms and tax cuts.

Do as I say, not as I do (Ken Teegardin)
Do as I say, not as I do (Ken Teegardin)
Dorothea Siems

BERLIN - German Chancellor Angela Merkel appears intractable on the subject of austerity measures in Europe. And yet when it comes to budgetary rigor, Germany is actually not setting a good example, according to a report from the Berlin-based Stiftung Marktwirtschaft (Market Economy Foundation).

Instead of using the country's strong current economic situation to consolidate its position, "the federal government is planning a number of expensive gifts," says economist Bernd Raffelhüschen, noting in particular planned reforms of child care and health care, as well as pension and tax reforms.

The German debt has reached a record 83.2% of gross domestic product (GDP). To that must be added hidden implicit social security and pension debt. At 147% of GDP, this hidden debt significantly exceeds the official debt. If the government had to produce a profit and loss statement the way businesses do, it would have to create reserves amounting to the entire debt, which represents 230% of GDP.

However, as the government is not making the necessary provisions, that leaves them with a "sustainability gap" of 5.7 trillion euros, according to Raffelhüschen. "Before we rescue other countries we should rescue ourselves from ourselves," said the Chairman of the Stiftung Marktwirtschaft, Michael Eilfort.

Despite record revenues from taxes and social security payments following higher growth rates and the on-going jobs boom, the German government has not been able to put together a balanced budget. Because of the good state of the economy, however, the figures in Raffelhüschen's report show a decrease in total national debt for the third consecutive year. But the next recession will reverse the up trend – and the more paid out for benefits the stronger that reversal is.

Expensive reforms

The economist claims that the planned reforms to cut taxes --which have been blocked by the Bundesrat (the federal legislative body that represents Germany's 16 states)-- would have increased the total debt from 230% of GDP to 243%.

Raffelhüschen also says that healthcare reforms are not being financed. While contribution rates will be raised in 2013, the increased revenues will not be enough to cover a broader range of healthcare, for example for dementia patients.

The planned pension reform will be expensive long-term, particularly if the introduction of a "top-up" for low earners goes through. "It would represent a break with one of the basic principles of our social state, that is that all poor people should be treated equally," says Raffelhüschen. With a "top-up" of 850 euros a month, a poor senior would be getting better treatment from the government than a poor youth whose resources would be subject to review before benefits could be granted.

Also financed by debt would be the daycare money to be paid from January 2013 to parents whose toddlers do not go to a daycare center. "If you want this measure, it should under no circumstances be financed with borrowed money," Raffelhüschen says, because doing it that way means the children will end up paying for it.

Free Democratic Party (FDP) economist Hermann Otto Solms shared skepticism about the planned reforms. "If we expect other European countries to implement severe austerity measures, we have to set a good example in Germany," he said in reference to the daycare and "top-up" benefits. Consolidation should be our top priority right now, he added.

Read the article in German in Die Welt.

Photo - Ken Teegardin

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Society

What It Means When The Jews Of Germany No Longer Feel Safe

A neo-Nazi has been buried in the former grave of a Jewish musicologist Max Friedlaender – not an oversight, but a deliberate provocation. This is just one more example of antisemitism on the rise in Germany, and society's inability to respond.

At a protest against antisemitism in Berlin

Eva Marie Kogel

-Essay-

BERLIN — If you want to check the state of your society, there's a simple test: as the U.S. High Commissioner for Germany, John Jay McCloy, said in 1949, the touchstone for a democracy is the well-being of Jews. This litmus test is still relevant today. And it seems Germany would not pass.


Incidents are piling up. Most recently, groups of neo-Nazis from across the country traveled to a church near Berlin for the funeral of a well-known far-right figure. He was buried in the former grave of Jewish musicologist Max Friedlaender, a gravesite chosen deliberately by the right-wing extremists.

The incident at the cemetery

They intentionally chose a Jewish grave as an act of provocation, trying to gain maximum publicity for this act of desecration. And the cemetery authorities at the graveyard in Stahnsdorf fell for it. The church issued an immediate apology, calling it a "terrible mistake" and saying they "must immediately see whether and what we can undo."

There are so many incidents that get little to no media attention.

It's unfathomable that this burial was allowed to take place at all, but now the cemetery authorities need to make a decision quickly about how to put things right. Otherwise, the grave may well become a pilgrimage site for Holocaust deniers and antisemites.

The incident has garnered attention in the international press and it will live long in the memory. Like the case of singer-songwriter Gil Ofarim, who recently claimed he was subjected to antisemitic abuse at a hotel in Leipzig. Details of the crime are still being investigated. But there are so many other incidents that get little to no media attention.

Photo of the grave of Jewish musicologist Max Friedlaender

The grave of Jewish musicologist Max Friedlaender

Jens Kalaene/dpa/ZUMA

Crimes against Jews are rising

Across all parts of society, antisemitism is on the rise. Until a few years ago, Jewish life was seen as an accepted part of German society. Since the attack on the synagogue in Halle in 2019, the picture has changed: it was a bitter reminder that right-wing terror against Jewish people has a long, unbroken history in Germany.

Stories have abounded about the coronavirus crisis being a Jewish conspiracy; meanwhile, Muslim antisemitism is becoming louder and more forceful. The anti-Israel boycott movement BDS rears its head in every debate on antisemitism, just as left-wing or post-colonial thinking are part of every discussion.

Jewish life needs to be allowed to step out of the shadows.

Since 2015, the number of antisemitic crimes recorded has risen by about a third, to 2,350. But victims only report around 20% of cases. Some choose not to because they've had bad experiences with the police, others because they're afraid of the perpetrators, and still others because they just want to put it behind them. Victims clearly hold out little hope of useful reaction from the state – so crimes go unreported.

And the reality of Jewish life in Germany is a dark one. Sociologists say that Jewish children are living out their "identity under siege." What impact does it have on them when they can only go to nursery under police protection? Or when they hear Holocaust jokes at school?

Germany needs to take its antisemitism seriously

This shows that the country of commemorative services and "stumbling blocks" placed in sidewalks as a memorial to victims of the Nazis has lost its moral compass. To make it point true north again, antisemitism needs to be documented from the perspective of those affected, making it visible to the non-Jewish population. And Jewish life needs to be allowed to step out of the shadows.

That is the first thing. The second is that we need to talk about specifically German forms of antisemitism. For example, the fact that in no other EU country are Jewish people so often confronted about the Israeli government's policies (according to a survey, 41% of German Jews have experienced this, while the EU average is 28%). Projecting the old antisemitism onto the state of Israel offers people a more comfortable target for their arguments.

Our society needs to have more conversations about antisemitism. The test of German democracy, as McCloy called it, starts with taking these concerns seriously and talking about them. We need to have these conversations because it affects all of us. It's about saving our democracy. Before it's too late.

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