Inflation, Bankruptcies and Fears of Decline: Is This The Return of the Sick Man of Europe?
Nicole Geithner’s family, for example, doesn’t expect much from the relief packages. The most vulnerable, Geithner says, are always quickly helped when crisis strikes: The housing benefit is increased, child benefits are boosted, welfare payments will be adjusted for inflation, things like that. They are moves that she fully supports. And on the other side, “the rich” aren’t particularly vulnerable anyway. “They don’t care about three euros for butter,” she says. No one, though, is thinking about families like hers, she says. “We feel forgotten. And yet the middle class is supposedly propping up the country.”
At least the coalition tried to improve their approach with the third relief package. Many experts had criticized the first two attempts, arguing that the measures were too costly and, while they would provide a bit of help to everybody, the overall effect would be minimal. The government, they said, became fixated on cash handouts for everyone. Those who drive large, gas-guzzlers, for example, benefited the most from the summer rebate on prices at the pump.
The programs need to be far more targeted, argues Monika Schnitzer, professor of economics at Ludwig Maximilian University in Munich. Assistance needs to be directed at “those people whose income is so low that there is nothing left at the end of the month and who therefore simply cannot pay higher prices.” Schnitzer is an economic adviser to the government and has taught at Harvard and Stanford. And she’s rather perplexed by the third relief package. “At no point was it clearly spelled out how the 65 billion euros was arrived at,” she says.
Presumably because the government expected the enormous sum to have a greater political impact than the individual measures. The pool of recipients is again large, with more child benefits for families, energy allowances for students and pensioners, and housing benefits for a greater number of low-income earners.