Germany: The Hypocrisy of Republican Economic Policy
BY ARI MOSES
The Republican Party frequently condemns the Democratic Party for deficit spending, but what alternate economic policies do they have in mind? According to members of the party, Republicans want austerity measures and wish to cut financing for most social programs. Yet, they praise the German economic system; Representative Joe Wilson extolled the “German (Economic) Miracle” on the House floor. However, do conservatives truly want an economic system remotely similar to Germany’s social market economy?
The current German government runs massive welfare programs as well as other social programs in order to ensure that their citizens have a set minimum quality of life. These social programs include the Kurzarbeit Program, strong unions, and extensive vacation benefits. John McCain, on the other hand, recently proposed that citizens should “[work] a second job [and skip] a vacation,” a sentiment that is wholly incompatible with Germany’s social market economy.
Unemployment, Welfare, and Vacation Benefits
Prominent Republicans, such as Senator Mark Kirk and Senator Jeff Sessions, have both argued against expanding unemployment insurance in the United States. Yet, in Germany, unemployment benefits are increasing. Both the employer and the employee pay the government for unemployment insurance, a stark contrast to the United States’ method, where the tax liability falls solely upon the employer. The German government provides unemployment insurance for a longer duration while also maintaining a higher level of compensation. Germans receive a minimum of 60 percent of their previous wages, whereas in the United States, the rate of unemployment benefits is lower than 50 percent of previous wages. The same Republicans who shut down the United States government over an individual healthcare insurance mandate praise Germany, a country that enforces a mandate on all citizens to contribute to the national unemployment insurance fund.
In Germany, the unemployment rate has remained below 6 percent for the last few years, drawing admiration from the Republican Party. However, this achievement was accomplished because of the Kurzarbeit program, which dictates that German workers must accept lower wages and less pay for an agreed upon amount of time. This program relies on the enormous power of unions in Germany to create agreements with employers, resulting in low unemployment. For example, in a recession, labor demand by firms in the United States declines, leading to layoffs and unemployment. Meanwhile, social programs in Germany grant more flexibility to employers, allowing them to reduce labor hours instead of enacting layoffs, generating limited to no rise in unemployment.
Similarly, the vacation benefits that laborers receive in Germany are much more generous than those of their American counterparts. A German worker is legally entitled to four weeks of paid vacation a year plus additional leave time, resulting in 20 percent lower annual working hours – American workers are not entitled to any paid vacation. Germany may have a lower GDP per capita and lower worker income than the United States, but German laborers have more benefits, which makes up for the difference.
Republican Ambition
Why, then, do Republicans praise only the German economic model? In the years following the global financial crisis, the US economy has grown alongside the German economy.
The Republican viewpoint asserts that the Democratic president, and the entire Democratic Party have hurt the economy through deficit spending. Contrary to their argument, the massive stimulus package enacted by the president has achieved substantial GDP growth.
In order to gain more Congressional seats, the Republicans have been, for lack of better phrasing, misleading the American people though a misinterpretation of German economic success. The Republican view that Germany only enacts austerity policies is incorrect; in fact, their large social welfare programs can be interpreted as a stimulus package designed to incentivize employers to retain workers.
The hypocrisy demonstrated by the Republican Party serves only to weaken and fracture the nation they swore to protect. Republicans claim to admire the German social market economy, yet, when any legislation proposed in the United States even resembles that of the German system, conservative Republicans ardently refuse to support it. The stubborn behavior of some in the Republican Party has stymied economic legislation to fund government social programs. This party no longer acts in favor of the American people; they act counter-productively, stymieing economic development instead of enhancing growth.