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Challenging the Welfare State
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12141 |
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Section : |
CURRENT ISSUES
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| Issue
Date : |
3 / 1994 |
2,265 Words |
| Author
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Carl Johan Ljungberg
Carl Johan Zjungberg works with 7Fmbro, a free-market
institute in Stockholm. |
Europe hardly seems itself these days. People are troubled by events in eastern Europe and Bosnia, and recession has created additional problems. The social-welfare safety nets that were once a source of pride are now threatening to break up entirely. Even staunch supporters of public social security, like Jacques Delors, speak as if they represented free-market institutes. And Delors demands nothing less than a remaking of the traditional safety nets within the European Union (EU).
In many ways, Germany is the heavyweight member of the EU, and its problems are typical. Many Germans worry that Bonn's longtime commitment to health and social welfare has caused federal costs to skyrocket beyond what the country can afford. Sickness-insurance payments, for example, are 300 times higher than in the mid-1950s, notes Renate Merklein, who recently wrote a report on the subject for the Frankfurt Institute. Even so, people are not quick to relinquish benefits.
`By programming the security systems falsely, you simply give the recipients of public security the wrong signals," notes Gert Dalmanns, a Frankfurtbased free-market researcher. "No matter what you do, to keep up the promised service levels, our state must continue to pay out money, which it must either borrow on the open financial market or take in by [increased] taxes. As I see it, this cannot go on very long. The reason is obvious. There are no brakes on unwanted costs in a public system, although many have been slow to realize this fact."
Tax burdens have been heavy, and services are unequally distributed. Germany's age-old Krankenkassen, or sick-relief funds, are run on an odd set of principles. Risk coverage often varies greatly between regions and age-groups. What an individual must pay to the regional Krankenkassen varies between 8 and 16 percent of his income. This variance often creates a sense that the system is unjust.
Many people also question the redistribution that the public-insurance systems undertake. In 1988 it was shown that Germans age 65 or over owned as much as 33 percent of the national wealth. Many ask why the state must leave the old-age group's savings alone, reserving it solely for the heirs to receive when the seniors die.
Employers also complain, pointing out that they have carried an undue share of the cost of social services since the end of World War II. Social costs can amount to another 40 to 70 percent above the typical salary. Labor points out the
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