Will Berlin’s Debt-Bomb Explode?
6th December 2022
Berlin is known for some of the most generous social programs in the entire country, and many hold the German capital up as an example of progressive policies that should be implemented elsewhere. However, there are some major catches.
For one, Berlin benefits from wealthier areas of Germany, with taxpayer money funneled into Berlin at the expense of states like Hessen or Bavaria. In fact, Bavaria alone pays up to €9 billion into the state fiscal equalization scheme, while Berlin takes in €3.6 billion. These payments are partially related to Berlin and other Eastern German states’ economic setback following the end of communism, which served as a major economic shock to the east of Germany at the time.
This money, in part, helps Berlin afford free daycare and schools along with free school lunches. “Afford” is a term used loosely though, as the city is currently sitting on a time bomb of debt amounting to €66 billion, with few signs of this debt slowing. From 2019 to 2021, the total debt level rose €8.3 billion, moving up 13 percent.
One of the most debilitating proglodyte myths is that Money Comes From The Government And That Money Is Free. Then reality, which sticks around even when you wander off into fantasy-land, arises to bite you in the butt. Hard.