Friday, November 10, 2017

Germany's working poor: Almost 1 in 10 Germans cannot pay their bills anymore

In the 'stream of semi consciousness' that is the reporting in German daily news on economic issues, the country's working poor drift in an and out of focus.

Mostly, they remain out.

The frequent claim that the media are giving bad news too much attention does not seem to hold up when it comes to debating the problems of those who work full time and still are over their heads in debt.

The latest short blip that tells us 1 out of 10 German adults cannot pay their bills anymore is only days old. The data are interpreted in somewhat different ways, with the more liberal ZEIT online pointing out that overall increase in the number of indebted households has slowed down.

The conservative WELT, however, sounds the alarm, calling the phenomenon "the erosion of the German middle class" because almost all of the increase over the past year has occurred in what German economists call "the backbone of society", the quasi mythical had working middle.

The main reasons for getting trapped in unmanageable debt are unemployment, family crises (separation, child support), and loans. Unlike in the US, unpaid medical bills are not a cause of major debt.

According to experts, reckless consumption is also not a factor.

Oh, and the numbers are expected to continue to rise, so expect calls to reduce the tax burden on the middle class.

Very soon, the question what to do about rising household debt will be replaced with the usual arguments, for example, blaming poor immigrants for the woes of the German middle class.

Squabbling over what to do with the surplus tax revenue is a much sexier topic than asking why the poor in this country face the same relative tax burden as the wealthy. For those of you who don't know how this is done: indirect taxes, like high sales tax, and other speciality taxes, like taxes on electricity, insurance policies, and a slew of others accomplish this, while giving those who pay high income taxes the opportunity to feel oppressed and exploited.


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