Germany’s Welfare State Collapsing

"The welfare state that we have today can no longer be financed with what we produce in the economy."

Stephen Moore: Unleash Prosperity Hotline – Oh, how the mighty have fallen. After its economy was in literal rubbles after World War 2,  Germany had a miraculous comeback in the ‘50s, 60’s and 70’s and became the economic powerhouse of Europe again. The great economic historian, Mancur Olson, wrote an award-winning book called “The Rise and Decline of Nations,” which explained that  Germany’s economy was so destroyed they did not have a welfare state and politically powerful unions to contend with as most European nations and Britain did.

Tragically, Germany has built that welfare states back up, and sure enough it is facing a financial cliff. Chancellor Friedrich Merz has declared his country's 135-year-old welfare state bankrupt.

Speaking at a party conference this month, he declared:

"The welfare state that we have today can no longer be financed with what we produce in the economy."

He noted that In 2040, 100 workers will have to support 41 pensioners, compared with 30 right now.

Merz has pledged not to raise taxes on business while his coalition government is in office and called for promoting private pension plans. The debate he has touched off will have lessons for the U.S. Social Security system, which is projected to deplete its trust funds in 2034.

We will see if these reforms can stick and whether Merz can make Germany’s economy great again - or whether the powerful unions destroy them.