German politicians are fond of saying, “Work must be worth it.” But ever more people who work full-time need state benefits. And the new minimum wage hike is seen as disappointing.
Why more Germans can’t afford life on their wages
Easy! It is because Germans vote for exactly that. Again and again and again.
If it’s anything like my country, it’s also a lack of offering issue…
The left party has had a consistent affordable living and long term inhrastructure investment program.
But they are successfully attacked by the alliance from far right to supposed “liberal” press and politicians on a basis of “stealing peoples income”, “doesnt work in practice”, “evil communists”, “Putin friends”, “lgbt lifestyle party” and other attacks.
Meanwhile parties like the social democrats or greens have moved significantpy to the right, embracing neolibetalism and since a few years open Racism and unconstitutional authoritarianism.
Like in the US on the federal level these “progressive liberals” would rather bring the fascists to power than embrace “left” policies. Note that a lot of whatbis now attacked as “left” used to be standard among conservatives in the 50s-70s when it comes to taxation and public investment.
“Nur die allerdümmsten Kälber wählen ihre Metzger selber.” As true today as it was back in Berthold’s days.
Turns out, almost all do.
German efficincy
No mention of unaffordable rents massively increasing the cost of living.
The MSM is the same everywhere. Their oligarch-owners goal is to distract from the fact that the orphan crushing machine is identical everywhere.
Meanwhile, the productivity gains of the last 5 decades means that a 3 day work week should be the norm; instead, we’ll be lucky to retire at all if we live to 70.
This is not a Germany thing. It’s an everywhere thing, because the problem is capitalism and the wealth inequality it enables.
DW is not mainstream media owned by oligarchs, it’s funded by taxes.
DW is run by the federal government to further the image of Germany abroad. It is the equivalent in organization to Russia Today, Radio Free Europe and other government run foreign media outlets.
DW wants to promote an image of an open and discussive Germany, so they pick up on some issues as a reaction to the German issues already having become known, but they will not be proactive about it, e.g. run investigative Journalism.
Especially in regards to Palestine there have been huge turmoil as the DW arabic staff got very upset with the narratives they were told to push and now DW is backtracking a bit to not loose too much face with arabic speakers.
DW is run by the federal government to further the image of Germany abroad. It is the equivalent in organization to Russia Today, Radio Free Europe and other government run foreign media outlets.
Russia Today is a pure propaganda machine that was proven to present false information as facts multiple times. I’m not aware of DW being accused of that outside of Russia.
I don’t really care about DW, but the previous poster implied it’s oligarch-run mainstream media. It’s not.
I said it is equivalent in organization as it is a government run media outlet to further that governments interests abroad. DW is less blatant about it, but they definitevily push narratives and lies from the German government too.
Also Germany has the most “super rich” after the US and China. Germany definitively is an oligarchy, again just more subtle about it.
https://www.972mag.com/deutsche-welle-journalists-palestine-germany/
It’s just sad that every politician from the GroKo is so fixated on lifting the minimum wage, which wouldn’t bring much at all in the big picture, instead of reducing the enormous amount of various taxes that has to be paid from everybody’s salary, which is currently around 40%. SPD even plans to increase the amount of taxes that the middle-class, everyone with an annual salary between 66k and 100k will have to pay. And the politicians sell this as “taxing the rich”.
lifting the minimum wage, which wouldn’t bring much at all in the big picture, instead of reducing the enormous amount of various taxes that has to be paid from everybody’s salary
Lifting the minimum wage directly impacts the available income of the lowest income classes, who in turn spend most of their income on consumption, increasing domestic demand and thus also helping the economy.
Also, higher minimum wage gives unions a better position to argue for higher wages for their members. That in turn can put pressure on the general non-unionized wage level through competition for qualified labor, which we are told is in such short supply (“Fachkräftemangel”).Reducing income tax on the other hand primarily benefits those who pay the highest income taxes, i.e. those with high income.
Those people can afford not to spend their entire income but will instead put some if not most of these gains into personal savings, which effectively removes the money from economic circulation and does not help the economy.
Also extremely low incomes do not even pay income tax and thus would not benefit at all.tl,dr Higher mix wage is good for everyone (at least everyone who lives off labor) and primarily helps the poor, lower income tax is only good for some and primarily benefits those with high income.
None of the really “tax the rich”.
Although I would argue that a higher general wage level can help redistribute wealth from the rich to the working class.Lifting the minimum wage directly impacts the available income of the lowest income classes, who in turn spend most of their income on consumption, increasing domestic demand and thus also helping the economy.
Only around 3.7% of German workers earn minimum wage. Increasing their wages a little won’t move the needle on the economy. I generally support a healthy minimum wage, but Germany’s economic issues are systemic, and require much broader solutions. Making the cost of doing business even higher right now in Germany - which is what raising the minimum wage does - is antithetical to fostering weak economic growth. Industrial production in particular continues to decline, which is a big problem for Germany. Merkel’s strategy of going all-in on Russian natural gas turned out to be catastrophic. The cost of energy is just too high now for a raft of different sectors. I’m sure you’ve heard all of this before in economic analysis, but these are some of the primary issues and tactical solutions Germany should tackle.
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Cheaper energy. This is strangling industries which employ millions and have been the backbone of the economy for decades. Germany needs to build nuclear capacity ASAP, or begin importing massive amounts of Russian natural gas, or begin burning a lot more coal. For environmental, economic, and ethical reasons, I support nuclear. Renewables are about 4x more expensive than nuclear after imputing costs like storage and grid architecture [1].
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Germany needs to embrace efficiency at a cultural level. In 2023, 51 % of all point-of-sale transactions were made using banknotes and coins. I cite this not because I think cash is a perfect analogue for efficiency, but to underscore the distrust so many Germans have in technology. Most government departments still use fax machines. Germany’s internet infrastructure is just terrible. There is an astounding lack of digitisation across both the public and private sectors. This aversion to efficiency becomes an increasingly heavy anchor around the neck of the nation as the rest of the world embraces new technologies to build and serve more products and services, faster.
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Germany needs a new strategic focus in the economy. Even with cheap energy, industrial production can and will be done cheaper in developing nations. Their car industry is clearly unable to pivot to EVs, and it’s going to completely miss automated driving. Using VW software is like going back to a Nokia flip phone. They need to figure out how to invest in and excel at services and software. This is almost impossible to mandate at a governmental level in a democratic nation. This one will be the toughest to turn around and for this reason, my long term prognosis for Germany is poor relative to many other European nations.
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Restructuring Germany’s immigration system to block low and no skilled immigrants, and greatly simplify immigration for high skilled immigrants. Research by the ifo Institute concludes that the 2015 immigration wave has widened the implicit long-term debt burden, i.e., including future pensions, by almost 10 percent of GDP. According to this, every admitted refugee costs the budget around 225 thousand euros over the course of her or his entire life. [2] This problem is getting worse every year. Germany’s immigration system is very difficult to navigate, and can be quite hostile for legal, qualified migrants.
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Compounding all of the above is a declining fertility rate. Few countries have solved this issue, meaning [highly skilled and qualified[ immigration is more important than ever. I don’t think we can rely on improving native fertility rates.
When an economy is performing as poorly as Germany, economic stimulus is required. This means lower taxes and increased government spending. QE is not possible for those using the Euro so it might mean accepting higher levels of debt. This is a distinctly un-German proposition. The current government has secured the right to increase national debt but only in the context of Russian aggression. Debt by itself is bad, but if used prudently to stimulate the economy in the right direction, can be useful. I sadly do not trust the German government to invest it wisely. It’s much more likely to go towards manufacturing mortar rounds, and to pay for ever increasing social services.
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Lifting the minimum wage directly impacts the available income of the lowest income classes, who in turn spend most of their income on consumption, increasing domestic demand and thus also helping the economy.
…except when it doesn’t, because the ever-increasing contributions to the Rentenversicherung and Krankenversicherung just eat up all of the brutto increases, leaving people with effectively the same netto. Same applies for every wage increase for every other income class.
Your points are valid, however please note I never advocated for just reducing the income tax alone, but rather the Abgabenlast that all workers have to carry. Primarily health insurance and pension insurance. These systems have become unsustainable (though I would argue they never really were, the issues were masked by a different age pyramid back in the day) and will have to be completely overhauled, the question is: will someone take the plunge and do this before everything collapses?
because the ever-increasing contributions to the Rentenversicherung and Krankenversicherung just eat up all of the brutto increases, leaving people with effectively the same netto.
I’m sorry, you might not mean that literally but too many people perpetuate the myth the taxes and or social security contributions eat up all wage increases or that people get even less due to higher taxes.
That is complete nonsense. The total tax and social security contribution would have to be at 100% for that to be true.If you want people to be able to afford more with their money, then I’d advocate for lower VAT and/or dropping the VAT for basic foods and products to 0%. That wold also help the poor more, serve as a better social redistribution measure and could contribute to more domestic demand.
If we are not talking about taxes but social security then I agree that there need to be significant reforms.
Hahahahaha! The core middle-class consists of people earning between about 1.850 EUR and 3.470 EUR for a single person.
Come one, is it you, Fritze Merz?
While that is, indeed, the core middle class, I don’t think it’s productive to act as if people earning more than the core (so exactly the 66k to 100k yearly) were somehow the bourgeouis that needed everything taken from them and taxed even harder. Especially considering that the capital tax in Germany is notoriously low. Not to mention the fact that everyone who earns >70k yearly will switch to private health insurance instead of the government health insurance, thus ultimately resulting in the state having even less money.
Think about the economy without money. There is a fixed amount of things that can be done with the available resources. That doesn’t change, no matter how wages or taxes are allocated. If taxes would decrease, inflation would compensate that.
If we want more, we need more. Cheaper resources or more profits from our products.
This is definitely a point, but Germany’s problem with the inefficient retirement and government healthcare systems (96 government providers? WHY?!) is a snowball that’s been accelerating downhill for a long time and that needs to be addressed ASAP. The systems need to be reformed, otherwise we’re looking at exponentially rising costs for both of those systems that will have to be paid by the average citizen. The health insurance providers are running on fumes money-wise and have already had to increase the contribution factor significantly, and this is just the beginning. It’s ironic how SPD says “Wir dürfen uns keine Denkverbote auferlegen” (roughly meaning “We shouldn’t be closed to any new thoughts”) while suggesting to raise the health insurance assessment threshold from ~5500EUR/mo to ~8000EUR/mo, thus hitting middle-class even harder than it already is, without changing anything about the system itself. This is pretty much the “We’ve been doing this for a long time already, why change anything?” mentality that hit Germans very hard when they had cheap gas cut off after having relied on it for several decades.
Unpopular opinion, but I actually like the competitive landscape in public health care in Germany. IMHO this is the best example for capitalism: you define exactly what each company has to deliver, and they can compete on:
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pricing
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service
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additional benefits
The nature of the strong regulation here makes them compete on actual relevant things, and they can’t externalize the costs (mostly).
I actually believe having just one public health care company would result in a worse service.
I would rather focus on the ridiculous increase in wealth inequality, in Germany, and around the globe. That’s the root of all evil.
Competiton is always good for the consumer, sure, but too much of it is wasted money. It should be maybe 5-6 Krankenkassen, maybe bump that to 8-9, but this should be in no case a double-digit number. This is in my eyes the sweet spot for both preventing the formation of a cartell and simultaneously offering a wide range of services.
Just think about it, the current 96 companies all have to have their own C-suite, most likely several hundreds of employees - for what? This is a huge waste.
About 95% of the money spent by the public health insurance company is „Leistungsausgaben“, I.e., paying out people for health related costs.
You can’t optimize that away, even when combining the companies. The remaining 5% is overhead. Having worked in a big company, I can tell you that big companies are not that much more efficient than small companies. In fact, the overhead is often even larger since there is lots more cross-communication involved between departments. In the end, everyone that is now a CEO would be an SVP instead, and barely anything would change.
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