Citizens’ income and a solidarity-based welfare state: Don’t be afraid of debt!

Who offers more? The CDU/CSU is planning relief worth 89 billion euros and the FDP even 138 billion euros. Cuts in the citizen's allowance are to help finance this.

The idea that this can work is based on economic theory assumptions that are long out of date. The logic that you have to save somewhere if you want to spend more somewhere else does not apply to states. In macroeconomic terms, it is like this: anyone who cuts the citizens' income ultimately cuts the companies. If the citizens' income recipients have less money to spend, the companies' turnover shrinks by exactly the amount of the cut.

Companies have three options to deal with this: cut wages, lay off employees or find other ways to cut costs. For large, efficient companies, the latter is not an option, but the alternatives are disastrous. If employees ask less because of their lower salary, for example, they will further reduce the company's turnover. The economy is in danger of entering a downward spiral.

If a company cannot sell its products because of a lack of demand, it will not invest. The only option left is for the state to make up for this gap in demand. But if the state wants to spend more, it has no choice but to take on debt. To this day, the nonsensical view persists that debt is harmful and leads to tax increases.

Let's take Japan, a country with a similar economic strength to Germany, which has a significantly lower levy and tax rate than we do. Critics will argue that Japan's national debt is around four times as high as Germany's. Nevertheless, Japan does not have a credit rating problem. And when the economy starts growing again, the national debt will also decrease.

However, especially in Germany, neoclassical economics is still often taught today, an economic theory that has been refuted in many respects and that sees debt as a terrible thing. Unfortunately, most people do not grapple with these issues, even though the question of national debt is central to economic growth and prosperity.

Back to the citizen's income: Contrary to what many people think, the citizen's income is a demand stabilizer that ensures that the demand of an unemployed person does not collapse completely. The citizen's income is also an essential part of our solidarity-based welfare state. And if we do not want our society to fall apart, then we should fight to preserve it. That also makes economic sense.