John Ashcroft
01-16-2005, 01:01 AM
Welfare Uber Alles
Germany stops subsidizing a welfare layabout's Miami lifestyle. Hey, it's a start.
BY DANIEL SCHWAMMENTHAL (http://www.opinionjournal.com/extra/?id=110006165)
BRUSSELS--Rolf John was living the American Dream--German style. For several years, the unemployed ex-banker received about $2,400 a month in German welfare checks to pay for his Miami Beach apartment, living expenses and a housekeeper who also doubled as his driver.
This is, of course, much more money than Mr. John, better known in Germany as "Florida Rolf," would have ever received in the fatherland--but you see, it's not his fault that the cost of living in sunny Florida is so much higher than in Osnabrück, his rainy hometown in northern Germany. And Mr. John could not be expected to return to Germany because such an imposition might have worsened his depression, his psychiatrist feared.
Upon reading Florida Rolf's story in the mass circulation Bild-Zeitung in 2003, millions of Germans, this writer included, found themselves joining Mr. John in depression, wondering whether it's not an imposition for most Germans to live in their country. If you are forced to fork out half of your salary to the government so that it can pay for, among other excesses, Florida Rolf's year-round tan in a gated community in Miami, complete with swimming pool and sauna, you are entitled to occasional cynicism.
Granted, this is an extreme case, but it is also a symptom of a deeper malaise: Such abuse can only happen in a welfare system that has spun completely out of control. One third of Germany's GDP goes to social spending--and the trend points upward. As even Germany's punishing payroll taxes are no longer enough to pay for the country's burgeoning unemployment, welfare, health care and pension costs, the government is forced to pile on more and more debt, which has already reached 66% of GDP and keeps rising. Some 25% of the federal budget goes just to interest payments.
To complain about the "entitlement mentality" among his fellow Germans, as Chancellor Gerhard Schroeder just did a few months ago, is to miss the point. For the Homo oeconomicus germanicus, it makes perfect sense to demand and accept every possible government handout. After all, as long as Germans have a job (almost 11% of the work force is without one), they are paying a lot into the system. Moreover, when living on the dole is more profitable than hard work, it is absolutely rational behavior to queue for those welfare checks. It's the system that needs fixing, not the German people.
At last, this year will bring some progress. Not least thanks to stories like that of Florida Rolf, Germans are more ready than ever to accept economic reforms. Particularly within the mainstream media, there is broad agreement--bridging the usual left-right divide--that reforms are necessary.
Among the Continent's three big economies, Germany, France and Italy--which together account for almost 70% of eurozone output--Germany must be considered the one-eyed among the blind. It is not only ahead in the reform debate but has also actually begun to implement some reforms. While reform has come in fits and starts, one of the changes that recently came into effect will dramatically change Germany's hitherto incredibly generous unemployment benefits.
Until last year, Germany's unemployed received up to 67% of their last salary for one year and after that up to 57% almost indefinitely. Given this generosity, it is no coincidence that of the 4.4 million unemployed, more than 1.7 million have been jobless for a year or more. This January, though, the benefits for long-term unemployed were drastically cut. In return, the government broadened the possibilities for those out of work to beef up their welfare checks by taking up low-paying jobs. As a matter of fact, the unemployed will now have to accept almost any job or risk further benefit reductions.
This is all to the good. Sadly, however, the Schroeder government didn't have the courage to implement the necessary labor-market deregulation, such as easing hiring and firing rules, to help assure that all unemployed Germans suddenly expected to show more initiative can actually find work.
Moreover, except for some cosmetic changes, Germany hasn't even started to tackle its huge social security problem. As in most industrialized countries, Germany's society is aging, putting enormous pressure on the country's pay-as-you-go pension system. For U.S. citizens worried sick about their country's own social security liabilities, a word of comfort: If Germans had America's Social Security system, they would consider their pension problems solved. Mandatory contributions of only 12% of gross salary? That sounds like utopia in Germany, where contributions make up around 20% of gross salary. Even those calling the loudest for social security reform in Germany would think it an enormous success if the country were able to hold its current contributions stable--not very likely though under the current conditions.
The longer the government drags its feet, however, the more painful the inevitable reforms will be. One way or the other, the German dream will soon end. Six weeks' paid vacation, a 35-hour workweek and early retirement at 58 will soon be something German schoolchildren will read about in history books. As if remembering an era not yet quite lost, a theater in Hamburg recently organized an evening under the motto "No Work--a Hymn to Laziness," with songs and texts all in praise of sloth. In homage to Florida Rolf, the venue was decorated with tropical decors and the organizers offered cocktails and exotic food.
Florida Rolf himself, meanwhile, had to return home last May, despite his allergy to his homeland--but at government expense, of course. The public outrage about his welfare abuse triggered one of the fastest legislative acts in German history. In record time, the government passed the "Lex Florida Rolf" to curtail welfare payments to Germans living abroad. Mr. John immediately sued to be allowed to go back to Florida--with his welfare checks fully reinstated, naturally. The case is still pending, but who knows, Mr. John, now 65, may yet enjoy his state-funded retirement on Miami Beach, margarita in hand.
Germany stops subsidizing a welfare layabout's Miami lifestyle. Hey, it's a start.
BY DANIEL SCHWAMMENTHAL (http://www.opinionjournal.com/extra/?id=110006165)
BRUSSELS--Rolf John was living the American Dream--German style. For several years, the unemployed ex-banker received about $2,400 a month in German welfare checks to pay for his Miami Beach apartment, living expenses and a housekeeper who also doubled as his driver.
This is, of course, much more money than Mr. John, better known in Germany as "Florida Rolf," would have ever received in the fatherland--but you see, it's not his fault that the cost of living in sunny Florida is so much higher than in Osnabrück, his rainy hometown in northern Germany. And Mr. John could not be expected to return to Germany because such an imposition might have worsened his depression, his psychiatrist feared.
Upon reading Florida Rolf's story in the mass circulation Bild-Zeitung in 2003, millions of Germans, this writer included, found themselves joining Mr. John in depression, wondering whether it's not an imposition for most Germans to live in their country. If you are forced to fork out half of your salary to the government so that it can pay for, among other excesses, Florida Rolf's year-round tan in a gated community in Miami, complete with swimming pool and sauna, you are entitled to occasional cynicism.
Granted, this is an extreme case, but it is also a symptom of a deeper malaise: Such abuse can only happen in a welfare system that has spun completely out of control. One third of Germany's GDP goes to social spending--and the trend points upward. As even Germany's punishing payroll taxes are no longer enough to pay for the country's burgeoning unemployment, welfare, health care and pension costs, the government is forced to pile on more and more debt, which has already reached 66% of GDP and keeps rising. Some 25% of the federal budget goes just to interest payments.
To complain about the "entitlement mentality" among his fellow Germans, as Chancellor Gerhard Schroeder just did a few months ago, is to miss the point. For the Homo oeconomicus germanicus, it makes perfect sense to demand and accept every possible government handout. After all, as long as Germans have a job (almost 11% of the work force is without one), they are paying a lot into the system. Moreover, when living on the dole is more profitable than hard work, it is absolutely rational behavior to queue for those welfare checks. It's the system that needs fixing, not the German people.
At last, this year will bring some progress. Not least thanks to stories like that of Florida Rolf, Germans are more ready than ever to accept economic reforms. Particularly within the mainstream media, there is broad agreement--bridging the usual left-right divide--that reforms are necessary.
Among the Continent's three big economies, Germany, France and Italy--which together account for almost 70% of eurozone output--Germany must be considered the one-eyed among the blind. It is not only ahead in the reform debate but has also actually begun to implement some reforms. While reform has come in fits and starts, one of the changes that recently came into effect will dramatically change Germany's hitherto incredibly generous unemployment benefits.
Until last year, Germany's unemployed received up to 67% of their last salary for one year and after that up to 57% almost indefinitely. Given this generosity, it is no coincidence that of the 4.4 million unemployed, more than 1.7 million have been jobless for a year or more. This January, though, the benefits for long-term unemployed were drastically cut. In return, the government broadened the possibilities for those out of work to beef up their welfare checks by taking up low-paying jobs. As a matter of fact, the unemployed will now have to accept almost any job or risk further benefit reductions.
This is all to the good. Sadly, however, the Schroeder government didn't have the courage to implement the necessary labor-market deregulation, such as easing hiring and firing rules, to help assure that all unemployed Germans suddenly expected to show more initiative can actually find work.
Moreover, except for some cosmetic changes, Germany hasn't even started to tackle its huge social security problem. As in most industrialized countries, Germany's society is aging, putting enormous pressure on the country's pay-as-you-go pension system. For U.S. citizens worried sick about their country's own social security liabilities, a word of comfort: If Germans had America's Social Security system, they would consider their pension problems solved. Mandatory contributions of only 12% of gross salary? That sounds like utopia in Germany, where contributions make up around 20% of gross salary. Even those calling the loudest for social security reform in Germany would think it an enormous success if the country were able to hold its current contributions stable--not very likely though under the current conditions.
The longer the government drags its feet, however, the more painful the inevitable reforms will be. One way or the other, the German dream will soon end. Six weeks' paid vacation, a 35-hour workweek and early retirement at 58 will soon be something German schoolchildren will read about in history books. As if remembering an era not yet quite lost, a theater in Hamburg recently organized an evening under the motto "No Work--a Hymn to Laziness," with songs and texts all in praise of sloth. In homage to Florida Rolf, the venue was decorated with tropical decors and the organizers offered cocktails and exotic food.
Florida Rolf himself, meanwhile, had to return home last May, despite his allergy to his homeland--but at government expense, of course. The public outrage about his welfare abuse triggered one of the fastest legislative acts in German history. In record time, the government passed the "Lex Florida Rolf" to curtail welfare payments to Germans living abroad. Mr. John immediately sued to be allowed to go back to Florida--with his welfare checks fully reinstated, naturally. The case is still pending, but who knows, Mr. John, now 65, may yet enjoy his state-funded retirement on Miami Beach, margarita in hand.