Angie!

Email Print
FacebookTwitterShare

Oh Angie,
Oh Angie, when will those clouds all disappear?
Angie, Angie, where will it lead us from here?
With no loving in our souls and no money in our coats
You can't say we're satisfied
But Angie, Angie, you can't say we never tried…

~
The Rolling Stones, 1973

Today, the
Bundestag has elected Angela ("Angie") Merkel as the first
female Bundeskanzler in history. After a long and painful period
of negotiations, a grand coalition had been formed, reformed, re-reformed.
They finally succeeded in signing a coalition contract, which excluded
some of the worst problems Germany is facing nowadays.

Despite having
been warned by almost everyone and his granddaddy, the Merkel administration
is going to augment the sales tax (a.k.a. "Value Added Tax")
from sixteen per cent to nineteen per cent in order to save the
mandatory unemployment insurance system from collapsing. This will
be as effective as the raise from fourteen to sixteen per cent,
which was sold to the broad public as the saviour of our social
security system (mandatory as well). In 2006, the mandatory contributions
to the social security in Germany will exceed twenty per cent of
the gross income, despite all taxing. This year, for the first time
in German post-war history, the social security system will have
to borrow money from the state. People born after 1976 will have
to wait two more years for the social security benefits, retirement
age will be raised from officially sixty-five now to sixty-seven
then.

This sounds
nice, but reality sings a different tune: only a small minority
of the employees and workers are working till the age of sixty-five,
many retire at sixty, many more over fifty are unemployed or living
on social welfare as it is practically impossible to find employment
in Germany if you are over forty years old. Therefore, the raise
of retirement age only shifts expenses from one account to another
without curing anything.

The next issue
this oh-so-grand coalition tries to dodge is the overdue reform
of the German health care system. For people below a certain income
level, membership in one of the almost three hundred health care
providers is mandatory. What looks like a well-stocked market with
competition, is, on second look, a nightmare. The traditional Allgemeine
Ortskrankenkasse (AOK = common local healthcare corporation), founded
by Bismarck to please the socialists, is still the largest provider
and in control of the market. To make sure that this will not be
changed, the deficit this clumsy bureaucracy fabricates must be
paid by the other providers. Those providers who work economically
with their members' money are being permanently punished, as they
have to pay for the waste in the AOK. If you think that's all, think
twice, we’re in Germany: persons with higher income, civil servants
and self-employed people can take a private health care provider,
which is, though much more expensive that the mandatory ones, much
more attractive as well. Doctors' fees, hospital care and other
services are heavily regulated in Germany, and the mandatory providers
are paying less and less every year. Private providers can pay up
to three times more for the same service, they are paying for ethical
drugs where the mandatory providers try to enforce the prescription
of generic drugs only, therefore an incentive to join the private
providers does exist. By the way, most free-lance physicians would
long since be bankrupted by the policy of the mandatory providers,
if it weren't for the "private" patients. Now, our wise
and inspired leaders will restrict the payments of the private providers
to the level of the mandatory ones. At the same time they are whining
about so many physicians leaving Germany. These lousy patriots!

Dodged issue
number three: the tax system. About sixty per cent of the world's
tax law literature is about the German tax laws. To say that these
laws are beyond comprehension is a gross understatement. Neither
our tax attorneys nor our Finanzamt have a clue about what they
are doing. Revenue is being levied as well as split up between federal
government, states, cities and communities, the more complicated,
the better. Since the Schröder administration, several taxes
are being (ab)used to bail out failing Ponzi schemes such as social
security and unemployment insurances, and this seems to be the new
fashion. Our economy is severely handicapped with such a complicated
system, and lots of major and medium-sized enterprises are leaving
Germany solely for this reason. Czechia, Poland, the Ukraine, even
Belarus are thankful recipients of these benefits. The additional
three per cent augmentation of the income tax for higher incomes
will not be helpful either. We are going to see people who intend
to be paid for their performance leaving Germany in increasing numbers.

There are more
problems the Merkel administration is going to face, and that is
all they are going to do: administrate. By forming a coalition of
equal strength, there is no way to get anything done which requires
leadership. The unofficial stalemate situation of the Schröder
administration has now been cast into official contracts, and I
doubt that it will last the entire four-year period for which they
have been elected. That only 397 of her 448 coalition members voted
for her as the first German chancelorette, is a clear sign that
life will remain interesting for her.

This
election was a crucial one for Germany: Our country is at a parting
point where a decision had to be made between more state and more
control or more liberty, growth and stability.

Europe
has grown to be a nice and cozy place to live in. Really.

November
23, 2005

Ulrich
Biele
[send him mail] is
a consultant in Munich, Germany.

Email Print
FacebookTwitterShare
  • LRC Blog

  • LRC Podcasts