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How Germany Is Helping Pull Europe out of Recession

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  • #16
    Originally posted by kato View Post
    German taxes - for corporations, and that's what counts regarding economic growth especially outside the domestic market - are rather low *. German unions, when compared to about any other nation with unions, are nearly powerless. And social services are paid mostly through insurance schemes, which don't appear on the federal budget (the government doesn't have any power over this money, which makes it a lot slimmer than those of other countries).

    *- total corporate taxes in Germany, depending on the city you're in, range from 22.825% to 33.325% of earnings for incorporated companies.
    Talking a "relevant" turnover, in the USA it's 33-35% - plus state and municipal taxation. The PIGS states, for comparison, are: Portugal 26.5%, Italy - 31.4%, Greece - 25%, Spain - 35%.
    Thanks kato, I always feel more informed after you post :). How does the insurance scheme work exactly? Obviously the government has no power over it, so who administers and monitors it? Keeping it off the books is probably a good position in keeping long-term commitments off the balance, though one could argue when it affects the deficit directly there's a more pressing need to examine it and keep it in check.

    The corporate tax figures always make me feel odd as I'm from a country that taxes at 10%, they all seem shockingly high.
    Although it is not true that all conservatives are stupid people, it is true that most stupid people are conservative.
    - John Stuart Mill.

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    • #17
      Originally posted by crooks View Post
      the tarts are nicer .
      The only Austrian tart I met was a right bitch. Oh wait, you're talking pastries aren't you....
      In the realm of spirit, seek clarity; in the material world, seek utility.

      Leibniz

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      • #18
        Originally posted by crooks View Post
        How does the insurance scheme work exactly? Obviously the government has no power over it, so who administers and monitors it? Keeping it off the books is probably a good position in keeping long-term commitments off the balance, though one could argue when it affects the deficit directly there's a more pressing need to examine it and keep it in check.
        Basically, there's two different schemes:
        • government bodies : For unemployment insurance and pension insurance. Budget is nominally completely separate from federal government, though these receive a federal subsidy (of currently 15% and 25% respectively), and can receive federal grants (have to be paid back) to balance their budgets. These "government bodies" aren't really part of the government. They are separate bodies legally monitored by the Federal Ministry of Labour and Welfare, but this ministry can't give any orders to them (with some exceptions - e.g. when it comes to foreigners and statistics).
        • public law corporations : Non-regulated associations without any subsidies, paid from contributions entirely. Currently formed by 22 industry associations providing accident insurance and some 200 health/care insurance providers. There are regulations that mandate e.g. the contributions, the minimum coverage, and a mutual fonds to provide some balancing.


        What the government is paying itself and retains budget power over is welfare. About €100 billion. The government actually pays the Agency for Work body to distribute that. There's some stuff that you obviously can't hand off to companies, such as health research, so there's a (very small) federal budget for that too.

        The end result is that the federal intake in Germany is only 7.15% of GDP (expenditure: 9.5%), which is really ridiculously low. Most countries tend to have intakes between 15 and 20% necessary to at least remotely cover their expenditures (e.g. Ireland: 15.8% intake, 25.4% expenditure ; USA: 16.9% intake, 24.9% expenditure).

        Although that might also have something to do with the extreme federalization in Germany in which a whole lot more tax money ends up at municipal and state levels. ;)

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        • #19
          Originally posted by gunnut View Post
          Faster than? Higher taxes than? Stronger unions than? More social services than?



          Of course not. That's why the PIGS are doing so well.
          The USA
          Where free unions and collective bargaining are forbidden, freedom is lost.”
          ~Ronald Reagan

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          • #20
            US unions are insanely powerful compared to German unions.

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            • #21
              Originally posted by kato View Post
              US unions are insanely powerful compared to German unions.
              Not sure how I follow that Germans have much better benefits and 40 perent higher Union membership. I understand striking is much less likely but the actual compensation packages should be the measuring stick.
              Where free unions and collective bargaining are forbidden, freedom is lost.”
              ~Ronald Reagan

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              • #22
                I honestly dont think its got anything to do with social spending or unions. Its down to simple fiscal discipline, and a strong manufacturing sector.

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                • #23
                  Originally posted by Marko View Post
                  I honestly dont think its got anything to do with social spending or unions. Its down to simple fiscal discipline, and a strong manufacturing sector.
                  To quote Al Gore:

                  "The debate is ovah!"
                  "Only Nixon can go to China." -- Old Vulcan proverb.

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                  • #24
                    Originally posted by Parihaka View Post
                    The only Austrian tart I met was a right bitch. Oh wait, you're talking pastries aren't you....
                    Eww, talk about crossed wires, wouldn't that add new and imaginative meaning to phrases like Viennese Finger, and Croissant?
                    Although it is not true that all conservatives are stupid people, it is true that most stupid people are conservative.
                    - John Stuart Mill.

                    Comment


                    • #25
                      Originally posted by kato View Post
                      Basically, there's two different schemes:
                      • government bodies : For unemployment insurance and pension insurance. Budget is nominally completely separate from federal government, though these receive a federal subsidy (of currently 15% and 25% respectively), and can receive federal grants (have to be paid back) to balance their budgets. These "government bodies" aren't really part of the government. They are separate bodies legally monitored by the Federal Ministry of Labour and Welfare, but this ministry can't give any orders to them (with some exceptions - e.g. when it comes to foreigners and statistics).
                      • public law corporations : Non-regulated associations without any subsidies, paid from contributions entirely. Currently formed by 22 industry associations providing accident insurance and some 200 health/care insurance providers. There are regulations that mandate e.g. the contributions, the minimum coverage, and a mutual fonds to provide some balancing.


                      What the government is paying itself and retains budget power over is welfare. About €100 billion. The government actually pays the Agency for Work body to distribute that. There's some stuff that you obviously can't hand off to companies, such as health research, so there's a (very small) federal budget for that too.

                      The end result is that the federal intake in Germany is only 7.15% of GDP (expenditure: 9.5%), which is really ridiculously low. Most countries tend to have intakes between 15 and 20% necessary to at least remotely cover their expenditures (e.g. Ireland: 15.8% intake, 25.4% expenditure ; USA: 16.9% intake, 24.9% expenditure).

                      Although that might also have something to do with the extreme federalization in Germany in which a whole lot more tax money ends up at municipal and state levels. ;)
                      So Germany is a sort-of 'onion' system, with sucessive lower-down layers of administration? I knew it was a Federal Republic, but didn't imagine it being that far away from the 'strongman' executive and central domination that France espouses. Bringing government lower down is always the best way to run a country, and while it's not quite Switzerland it's still pretty impressive, especially in a country on Germany's scale.

                      The 'seperation of entitlement and state' is also a good idea, I'd imagine it takes the politics that drive these decisions out of the decision-making process itself, while still maintaining a universal model, rather than a private, for profit one. The contributions process, is that like a mandatory 'health-tax', as in Australilia, or something voluntary? The second type sounds like a sort of private trust system.
                      Although it is not true that all conservatives are stupid people, it is true that most stupid people are conservative.
                      - John Stuart Mill.

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                      • #26
                        Originally posted by gunnut View Post
                        To quote Al Gore:

                        "The debate is ovah!"
                        Dude, post 4. Fiscal discipline was never in doubt, nor is it some sort of Reaganite safe word while you're getting whipped by the Monopoly man...and absolutely loving it, you free-market dog!*







                        * All the above is ironic and sarcastic based on your known amourous zeal for free markets :).
                        Although it is not true that all conservatives are stupid people, it is true that most stupid people are conservative.
                        - John Stuart Mill.

                        Comment


                        • #27
                          Originally posted by crooks View Post
                          So Germany is a sort-of 'onion' system, with sucessive lower-down layers of administration? I knew it was a Federal Republic, but didn't imagine it being that far away from the 'strongman' executive and central domination that France espouses.
                          Official onion layers in Germany:
                          - Federal Government
                          - State Government
                          - Municipal Government

                          The municipalities quite often (depends on state) are organized additionally in some sort of regional, district or county structure encompassing multiple communities; some of these (couple handful) even include having a joint own parliament at that level. In some states the municipalities may be broken down even further (e.g. in Rhineland-Palatinate there are socalled "Collective Communities" with own mayor, budget etc consisting of 3-12 small "localities" which are nominally semi-independent).

                          Edit, tax end distribution in Germany:

                          - Municipalities : 13.3% (€74.7 billion)
                          - States : 39.7% (€223.0 billion)
                          - Federation : 42.8% (€240.5 billion)
                          - EU : 4.2% (€23.6 billion)

                          - Total: ~ €561.8 billion (2009)

                          Originally posted by crooks View Post
                          while it's not quite Switzerland it's still pretty impressive
                          In some states we actually have the possibility of direct democracy at municipal level - with some hurdles, e.g. here in my town you need to get 10% of voters to sign to launch a direct vote on an issue. Unlike in Switzerland we don't stand on the market place and hold up our hands so everyone can see what you're voting for though.

                          Originally posted by crooks View Post
                          The contributions process, is that like a mandatory 'health-tax', as in Australilia, or something voluntary? The second type sounds like a sort of private trust system.
                          Basically, it's mandatory to take out insurance with most legal jobs. You file your insurance info with your employer, and the fees are automatically deducted from your salary - both employer and employee pay a portion of the premium in the German system, which is really just a trick on taxation (the employer part isn't taxed). There's some exceptions from some mandatory insurances for some people, e.g. for students and other people usually covered otherwise legally (you need health insurance to study in the first place, and you don't pay pension premiums because your student status automatically gives you a certain number of points towards your pension). The companies you contract with have to conform to certain standards (such as the ones mentioned; some such requirements, having been tightened up, have entirely kicked foreign healthcare providers off the German market in the past two years). But other than that you're free to choose. At least with health/care insurance, for the others you're basically stuck with a single provider.
                          These second type of insurance companies do work for profit btw. The company i have my health insurance with (TK, 7.7 million members) made €223 million profit last year - okay, on a budget of €14 billion that's not really much, but it's a profit.

                          Originally posted by crooks View Post
                          The 'seperation of entitlement and state' is also a good idea, I'd imagine it takes the politics that drive these decisions out of the decision-making process itself
                          Not necessarily. For example the current coalition are currently basically trying to ruin the basic-coverage health insurance industry by trying to have a law passed that would prevent them from offering top-up insurance schemes to their customers at extra cost (e.g. for lower dental co-pay or for single-bed rooms in hospitals). The usual conservative-liberal vs. social dispute.
                          Last edited by kato; 24 Aug 10,, 03:21.

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                          • #28
                            These second type of insurance companies do work for profit btw. The company i have my health insurance with (TK, 7.7 million members) made €223 million profit last year - okay, on a budget of €14 billion that's not really much, but it's a profit.
                            Maybe I don't understand what you wrote correctly due it being 4:30 am , but if by TK you mean the Techniker Krankenkasse, it does not work for profit. It is by definition a non profit organisation. What it can do (and currently does) is archive a surplus.

                            http://www.tk-online.de/centaurus/se...rmany-2010.pdf

                            Has some general information about the German health care system in general and the TK. Picked an english version for the convience of the other members here wo might want to read it. On page 33 you can see that the TK is a "Non-profit organization under public law"

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                            • #29
                              Having lived and worked here in Bavaria for so long I won't go into details of why the (NWO) €U. is bad for Europe but I will post a few links to an English news web page that carry stories on what is happening here, and how we the workforce are being forced to pay for every pipe dream that the Government have.

                              Medical insurance Top-up health fee dodgers face hefty fines - The Local

                              Pension's Leading economist calls for pensions at 70 - The Local

                              Holidays Business groups want holidays cut for growth - The Local

                              These are but a few points of recent doom and gloom, I won't even venture into the trade unions agreeing to the short time and the slashing of our yearly bonuses, and how employees were coerced to work full time during the short time period, with unspoken threats of if heads roll we'll start with those that didn't tow the line.

                              Why should Germany bail the rest of the €uro-zone out? I seem to remember there being criteria set in stone for those countries who wanted to join, well those who are now defaulting and burdening the other member states should be ejected out of the €U.
                              Yet another ex-tankie of 1 RTR origin.

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                              • #30
                                Originally posted by Tarek Morgen View Post
                                if by TK you mean the Techniker Krankenkasse, it does not work for profit. It is by definition a non profit organisation. What it can do (and currently does) is archive a surplus.
                                Actually, no. It is a Körperschaft des öffentlichen Rechts, a public law incorporated company under state control, yes. However that only means that:
                                a) in the specific area of Basic Insurance they may not turn a profit,
                                b) they aren't taxed since they are regarded as equal to a government body.

                                A public law incorporated company can sort of "separate" business units though, which then act as a regular Handelsgesellschaft. For TK, such a business unit are the private top-up insurances; it's getting (legally) harder for the companies to maintain these though. These "separate business units" can turn a profit.

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