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From a legal perspective, the situation is clear: the German government ignored the debt brake.
But this is just a sideshow. Much more important is the question of whether the debt brake really makes sense. And the first thing to note is that this concept is based on a confusion between business and economics. Money is the limiting factor for a company. But not for the state. He earns the money himself by going into debt. Whether an entire state can afford it depends only on physical production capacity, not on money.
For this reason, public expenditures are important in two respects. First, investments in infrastructure, education and health contribute to maintaining and strengthening the production apparatus. Secondly, the state must use its expenditures in a way that enables the potential to be evaluated.
The fact that Germany has had an export surplus for decades shows that, firstly, Germany is not indebted to foreign countries, and secondly, its production capacities are not sufficiently used by domestic demand.
No pressure to save upfront
When and what the state will spend needs to be decided according to current conditions. It is foolish to force yourself to save in advance. However, the important question is whether the government finances its expenditures by collecting taxes or borrowing from its citizens.
It is also important who these citizens are. In fact, only at most 10 percent of Germans have sufficient reserves to lend their government significant amounts of money. With every billion the government finances with debt instead of taxes, the dependence on this wealthy upper class increases.
It has long become so powerful and mobile that it can escape the taxation of “its” state and take refuge in tax havens created especially for it.
Switzerland has nothing to do with a weak Germany
Switzerland is still on the winning side in this position contest. Just look at 40-time Lidl billionaire Dieter Schwarz’s 600 million donation, which was ultimately funded by customers and employees and thanks to tax avoidance.
We still enjoy watching from a seemingly safe distance as Germany struggles with its debts and self-imposed debt curbs. But if our neighboring countries become even more politically and socially unstable due to lack of tax revenues, there will come a time when we will bitterly regret stealing their “big donors”.
Source :Blick
I’m Tim David and I work as an author for 24 Instant News, covering the Market section. With a Bachelor’s Degree in Journalism, my mission is to provide accurate, timely and insightful news coverage that helps our readers stay informed about the latest trends in the market. My writing style is focused on making complex economic topics easy to understand for everyone.
