Merz is attacking the German economy at a time when prudence is needed. The Chancellor is responding to warnings of job losses, deindustrialization, declining tax revenues, and an overstretched welfare state with public rebukes. Instead of dialogue, he is choosing confrontation, even though companies are not arguing politically, but acting economically. Investments are being postponed, locations reviewed, and jobs cut. With declining employment, both social security contributions and tax revenues for the federal, state, and local governments are falling, while expenditures continue to rise. Anyone who acts in this way is exacerbating risks instead of mitigating them.
Merz attacks the economy instead of the root causes
At the CSU party conference, the Chancellor launched a frontal attack on business leaders, dismissing their criticism as inappropriate. He declared that a state cannot be run like a corporation, thus avoiding substantive debate. This stance replaces analysis with lecturing, even though businesses aren’t demanding management methods, but rather reliable framework conditions.
Merz is not attacking individual voices, but a central early warning system. When the Chancellor delegitimizes warnings, it appears as isolation. A Chancellor who deflects criticism, however, loses valuable information from the field.
Warnings are fact-based, not ideological
The President of the Federation of German Industries described Germany’s economic standing as being in decline. This statement provoked political outrage, even though it is supported by economists. High energy prices, bureaucracy, and rising costs are measurably weakening competitiveness.
Merz attacks these findings indirectly by questioning those who deliver them. But the numbers cannot be ignored. International comparisons show that industrial relocation has long since begun.
Job losses affect the state and society
Job losses occur gradually, often without making headlines. Month after month, jobs disappear or move abroad. This job loss undermines the state’s financial foundation and simultaneously burdens its systems.
Not only is the welfare state under pressure, but the budget as a whole. Companies pay less tax, while income tax revenues decline. Unemployment leads to reduced consumption, which in turn lowers sales tax and energy tax revenues. This cascade of effects permanently reduces tax revenues.
Tax revenues are collapsing on multiple levels
Declining tax revenues are not solely a direct result of lower corporate taxes. They also arise indirectly from reduced employment and decreased consumption. These effects reinforce each other and cannot be offset in the short term.
Nevertheless, Merz rhetorically attacks the economy instead of acknowledging these connections. A chancellor who ignores economic chain reactions risks mismanagement.
The Welfare State Without an Economic Foundation Is Shaking
The welfare state only functions with value creation. If there are fewer contributors, pension, health, and long-term care insurance systems become unbalanced. Contribution increases further drive up labor costs and encourage new outsourcing.
At the same time, the government is approving additional benefits. The social security system is being expanded even though revenues are eroding. This policy exacerbates deindustrialization instead of slowing it down.
Businesses Hold the Power
It is unwise to antagonize those who control investment. Businesses finance the state, not the other way around. When trust is lost, location decisions follow. This reality cannot be moralized.
Merz is thus attacking his own revenue base. Those who drive away capital and labor weaken both growth and stability. A chancellor should moderate, not polarize.
Isolation of Economic Reason
Economics Minister Katherina Reiche is calling for a growth agenda and clarity in economic policy. But she remains isolated. Social policy projects dominate, while structural reforms are postponed.
The Chancellor attacks where listening is needed. Without a change of course, a spiral of job losses, industrial relocation, and declining tax revenues threatens. This ultimately endangers the state and society. (KOB)