Monday, May 16, 2016

The German stimulus package that dares not speak its name

If a country has a budget surplus and decides to spend pretty much all of it on a single project or a package of projects for a single purpose, it is often called a "stimulus package".

Of course, there are those who would disagree, reserving the term stimulus for a more or less dire economic situation. Since nobody describes the German economy as being in dire straits, this restricted use of the term "stimulus" would not apply. But if that same government pursues strict savings or austerity measures in other ares than those affected by the influx of cash, the blogster is willing to call the package a stimulus.

The stimulus package that dares not speak its name is the refugee spending of  just under 94 billion euros between now and 2020 announced by the German federal government just days ago.

Housing, health care, language courses and various other "integration" measures plus the "collateral pet projects", such as more police and more personnel for other government agencies, are the focal points of the spending effort.

To give you an idea of the size of the package in relation to overall government spending, the 94 billion are just under 3 times the annual defense budget of the country, or just under one third of the whole federal budget for a single year.

It is for a good purpose, obviously.

But it also comes on the heels of a damaging six months investigation into the costs of the refugee crisis published a week ago by Zeit Online. The question asked by the reporters was simple: how much do refugees cost the cities and counties?

In Germany, the land of bureaucratic detail and exactitude, nobody has exact figures on what is being spent for the refugees.
Of the one third of all German counties that even bothered to provide figures, some cite costs as low as 132 euros per refugee per month while the high is 1666 euros per person each month.

The state of Bavaria, the most vocal when it comes to criticizing the federal government's refugee policies, came out with a point blank: we do not collect any statistical data on refugee spending.

Imagine such a response from a less fortunate country, say Greece. Every single German politician would be furious, the media would rage.

At the same time, austerity for needy Germans is not over. The long term unemployed on the basic means tested Hartz IV scheme are seeing their meager benefits "adjusted", for instance, single parents will see support for a child changed from a monthly basis to the actual number of days the child is in their custody. Older beneficiaries are facing more job agency powers to force them into involuntary retirement by age 63, which means a lifelong reduction of their government retirement benefits because 63 is "early retirement", penalized with a 0.3% monthly pension reduction.

The German economy has been growing more than expected in the past year, thanks in part due to...spending on refugees. Strong consumer spending and low interest rates are given as the other major drivers.

[Update 6/5/2016] An interview with an academic researcher in Zeit Online makes the point: more people equals more consumption, more demand, more work. He is also, as the blogster has repeatedly stated, highly critical of the political "ghetto" rhetoric, and points at the highly beneficial results of ethnic networking.

[Update 12/21/2016]  In various reports in the past days, such as this one, we finally get some hard numbers. Between December 2015 and November 2016, some 34 000 refugees found work in Germany. But some 50 000 jobs for Germans were created as a result of the refugee crisis.

[Update 12/30/2016] It's official: in today's press, for example Spiegel online, German economists are quoted as calling the 0.3% increase in economic activity due to the refugee influx a "stimulus package".

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