August 25, 2025

MILTON FRIEDMAN SMILES: Welfare state is not sustainable, says German chancellor.

The German welfare state is no longer financially sustainable, Friedrich Merz said on Saturday.

The chancellor argued for a fundamental reassessment of the benefits system as spending continues to soar past last year’s record of €47bn (£40bn).

In a state-level party conference meeting on Saturday, Mr Merz said: “The welfare state as we have it today can no longer be financed with what we can economically afford.”

Once the export champion of Europe, Germany’s economy has slowed dramatically since 2017, with GDP growing by only 1.6 per cent since then versus 9.5 per cent for the rest of the eurozone.

Germany’s economy shrank by 0.2 per cent last year following a 0.3 per cent dip in 2023 – the first time since the early 2000s the economy has retreated two years in a row.

Industrial production fell under the Left-leaning “traffic light” coalition of Olaf Scholz and continues to slide under the new government, with GDP declining by 0.3 per cent in the second quarter of 2025.

Meanwhile, spending on social welfare has exploded, and is set to increase further this year as Germany’s population ages and unemployment rises. Although the majority of benefit recipients are German, large numbers are non-German citizens.

In 2022, AP reported that “The U.N. refugee agency said Tuesday it’s giving its highest award to former German Chancellor Angela Merkel for her efforts to welcome more than 1 million refugees — mostly from Syria — into Germany, despite some criticism both at home and abroad.” Ten years ago, Jim Geraghty quipped:

But as Milton Friedman said in 1997, “It’s just obvious you can’t have free immigration and a welfare state.” But hey, Merkel was Time magazine’s Person of the Year in 2015, so that’s got to count for something, right? (Her Time magazine encomium reads like it was piped in from Bizarro World in retrospect.)

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Posted at 6:14 pm by Ed Driscoll