I believe it was Milton Friedman who pointed out, many years ago, that you can have a welfare state or you can have open borders, but you can’t have both. Not for the first time, Friedman has been proved right the hard way.
German Chancellor Friedrich Merz has made it official:
The German welfare state is no longer financially sustainable, Friedrich Merz said on Saturday.
The chancellor argued for a fundamental reassessment of the benefits system as spending continues to soar past last year’s record of €47bn (£40bn).
In a state-level party conference meeting on Saturday, Mr Merz said: “The welfare state as we have it today can no longer be financed with what we can economically afford.”
The problem, in part, is that Germany’s economy has collapsed. Long the economic engine of Europe, Germany is now the EU’s worst performer, with GDP growing by only 1.6% since 2017 and actually falling for each of the last two years. Germany’s decline is largely due to its “green” energy policies, which have made it uneconomic to manufacture products in that country.
At the same time, welfare spending has risen rapidly:
Meanwhile, spending on social welfare has exploded, and is set to increase further this year as Germany’s population ages and unemployment rises. Although the majority of benefit recipients are German, large numbers are non-German citizens.
Merz, a corporate lawyer with little experience in government, is clear-eyed about what needs to be done:
He called on both the SDP and the Christian Democratic Union (CDU) to commit to making tough decisions and to forming a joint “anti-migration and business-friendly” coalition path.
But whether Germany’s governing class is up to the task is doubtful.
