September 4, 2006

A true workers paradise

I was reading about Germany's chancellor Angela Merkel in this article at Japan Times and these two paragraphs jumped out at me:
No less than 41 percent of the voting-age adult population lives primarily on government transfers such as state pensions, full-scale public stipends, unemployment benefits, disability benefits, and social assistance. (In East Germany, the figure is a whopping 47 percent.)

Among those adults who actually vote, recipients of public transfers form a clear majority. Indeed, the upper 10 percent of income recipients pay more than 50 percent of aggregate income tax revenue, and the upper 20 percent pays about 80 percent, while 40 percent of income recipients pay no income taxes whatsoever. Small wonder that a huge majority of the population -- and even a slight majority of CDU voters -- prefer a strengthening of the welfare state to a more market-oriented system.
Isn't Germany supposed to be an Economic Powerhouse of the New Europe? Let us check with the CIA World Factbook for Germany:
Economy - overview:
Germany's affluent and technologically powerful economy - the fifth largest in the world - has become one of the slowest growing economies in the euro zone. A quick turnaround is not in the offing in the foreseeable future. Growth in 2001-03 fell short of 1%, rising to 1.7% in 2004 before falling back to 0.9% in 2005. The modernization and integration of the eastern German economy continues to be a costly long-term process, with annual transfers from west to east amounting to roughly $70 billion. Germany's aging population, combined with high unemployment, has pushed social security outlays to a level exceeding contributions from workers. Structural rigidities in the labor market - including strict regulations on laying off workers and the setting of wages on a national basis - have made unemployment a chronic problem. Corporate restructuring and growing capital markets are setting the foundations that could allow Germany to meet the long-term challenges of European economic integration and globalization, particularly if labor market rigidities are further addressed. In the short run, however, the fall in government revenues and the rise in expenditures have raised the deficit above the EU's 3% debt limit.
These numbers sure give me a lot of incentive to make money in Germany... Posted by DaveH at September 4, 2006 11:53 PM
Comments

What are the numbers here in the US? Offhand, I recall that the bottom 50% of Americans pays only 3% of the federal income taxes. We may not be far off.

Posted by: Mike at September 5, 2006 5:18 AM
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