May 17, 2015

Overseas, Underfunded: The German Welfare State Pt. 2


In America, every now and again you still come across a far right conservative who advocates for a laissez faire economy and the end to government welfare programs. However, most people have come to bzrwd3Urealize the importance of providing some amount of welfare; unless you are talking to Ron Swanson, that is.

(By the way, if you haven’t already, you should definitely watch the TV show Parks and Recreation. You can binge watch it on Netflix. You’re welcome in advance.)

There will always be a time in which productive American workers are unemployed for one reason or another. It would mean disregarding what they provided to our nation and its economy if we were allow them to slip into poverty.

However, there are inherent problems among more extensive welfare systems like Germany’s. Many people would argue that welfare payments can lead to laziness among the unemployed. I don’t completely agree. Rather, I would describe it as complacency.

For instance, if an unemployed German can sit at home and continue to pay his bills with the welfare check that he gets in the mail, what is going to provide the spark that inspires him to find a way back into the workforce? It is not that I believe he is a lazy person who is avoiding work, but that he is not uncomfortable enough to aspire for change. Bottom line, a person who is physically able to work, but is unemployed, should not be financially enabled by the government to continue with their normal lifestyle. They should quickly start to realize that if they remain unemployed, they will have to do without past luxuries.130914_600

As discussed before, the German welfare state is absurdly precarious, relying upon a strong economy and mostly youthful population. Over the past two decades, reforms have been devised to hopefully help ensure the sustainability of the German welfare state. It is important to consider that this system is new because it was made at the time of reunification in 1990. That means that this welfare system is just 25 years old and for that reason no one knows how long it can last.

The German welfare system is a tax dollar-burning juggernaut. Naturally, such a program requires an immense amount of funding in order to provide all of the guaranteed services. The German taxpayers pay dearly for this. On average, just over 50% of a German’s income goes to the government as either income tax or welfare contributions. That means for every $2 you make, you’ll only ever see $1. (In comparison, Americans pay an average of 30% of their income in taxes.) To me, this is a horrifying proposition.

When the Founding Fathers gathered in the form of the Continental Congress to construct the Declaration of Independence, they included in its preamble a line that continues to resonate, “Life, Liberty and the pursuit of Happiness.” My interpretation is that economic freedom would fall under the right to the pursuit of Happiness. Any government that collects half of what their citizens have earned is taking away a significant portion of their economic freedom.

In response to this, many people would point out how many services and benefits the Germans receive in return for their contribution. Their logic is flawed in some aspects. For example, let’s say you are a professional in your field and you are making $90,000 in yearly salary. $45,000 goes to the government and $45,000 stays with you. Let’s say that you have one child and now, at the age of 18, he is ready to go off to college. Just during his lifetime, you have contributed $810,000 to the welfare state under the idea that he will go to college without any additional costs. However, when it comes time, either you or he decides that the hopelessly overcrowded public universities will not provide him with a quality education. You both realize that many students in Germany now go to college simply because they can, not because they want to or have the desire to advance themselves through education. So, you look into one of the few private colleges. At this time you realize that you are sore-out-of-luck. A private college will cost you at least an additional $20,000 which you will have to cover with the 50% of your salary that you are allowed to keep.

This is where the importance of economic freedom becomes prevalent. Had you been able to keep more of your hard-earned money, you would have been able to make the decision of your child’s education on your own. Rather, the government takes your money and tries to assure you that sometime in the future, you’ll receive valuable services in return. I don’t know about you, but there is nobody I trust more than myself. I certainly don’t trust government officials to spend my money as carefully and efficiently as I would.

Within the German budget, healthcare is one of the most costly expenditures. It alone requires 27% of the national budget as of 2015, only behind the cost of the various social insurances, which eat 33% of the budget. The idea behind the German healthcare system is that when you are healthy, you pay into it so that it can support you when you are sick. Similarly, you pay into it at a young age so that you can live off of it when you are older (recall the Inter-generational contract discussed earlier). yi.aging.societyBasically, the program goes on the assumption that you are going to be sick at some point in time, so in the meantime you should pay for the people who are currently incapacitated.

The problem is, what if you don’t get sick? There are people who go through their lives without contracting an illness that they couldn’t afford to treat with their own money or personal health insurance. That means that there are bound to be people within the German healthcare system that never receive the services they’ve funded their entire lives. Meanwhile, they pay for all of the people that are bedridden with illness.

Again, the economic freedom that we have in the United States enables me to control my money and pay for what I need or want. When it comes down to it, the question you want to ask yourself is the following: Should personal health needs be the responsibility of the entire public? Personally, I find it hard to agree that my money should help finance the treatment of all the sickly and impoverished people in the country. That may just be the narcissism of a healthy 20-year-old talking, though.


There is no doubt that America is facing a number of challenges when it comes to providing welfare. Social Security is quickly drying up and lack of sufficient health care has pushed thousands into a bottomless pit of debt. We will see over the next few years how Obamacare is able to deal with the latter. In the meantime, Social Security needs to be reformed, reconstructed, redone; whatever you want to call it. Changes need to be made.

The German welfare state, undeniably, has seen success across the board in its first 25 years and receives approval ratings in the upper 90s. It is mainly a matter of whether you want so much of your money in the hands of the government, and if their system is sustainable in the long term. If you are okay with those principles, there are few better than the German welfare state.

You can go back to Part 1 by clicking here.

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1 Comment

  1. […] You can go on to Part 2 by clicking here. […]


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