Basic Child Security: Madness in Motion

Above the desk of Family Minister Lisa Paus (Greens), there should be a sign that reads:

Due to significant deviations from its original purpose, her basic child security program has veered drastically off course. Initially designed to streamline and digitize social benefits for children, it has morphed into not just an additional social provision but also a fresh administrative entity, a novel legal entitlement, and consequently, an additional burden on taxpayers and the already stretched finance minister’s budget.

The current bill doesn’t empower children but rather her political adversaries. Paus' political opponents have increased significantly during this legislative process—even within her own party.

Five weaknesses make this law unrealistic:

Weakness 1: A Bureaucratic Monster is Born

The Children’s Basic Security Act will create a new authority in addition to the Federal Employment Agency and the social welfare offices. According to Paus, around 5,000 new administrative staff members would be needed to assist on applications and pay out these child-related social benefits.

According to the bill, this would result in annual costs of €408 million, which wouldn’t benefit children but rather the bureaucratic state. Paus cleverly explained her intention to the General-Anzeiger newspaper in Bonn:

The state administration will face the Herculean task of synchronizing data and avoiding double payments. In this process, millions of euros are bound to disappear.

Weakness 2: The State as a Guardian

Lisa Paus believes that the primary responsibility for children’s well-being lies not with parents but with the state: “With these 5,000 jobs, we want to shift the burden from the citizens to the state,” she says. Christian Lindner - like many Free Democrats - finds this reversal of responsibility “disturbing.”

According to a recent UNICEF report (2023), “1.3 million children in Germany are at risk of persistent poverty.” Without citing a source, Lisa Paus claims on the ministry’s website that there are 2.9 million children in Germany at risk of poverty, and she wants to expand the eligibility for state funds beyond that.

The ministry states that:

Lisa Paus aims to “weave a tight safety net for all children and their families.”

Weakness 3: Lack of Precision

To this day, it remains unclear what will actually change for children. The legal entitlement to the money still lies with the parents, not the children themselves.

Although paid-out child benefits increased by around 87 percent between 2000 and 2022 (data for 2023 has yet to be published), school teachers claim this money does not actually reach the children.

• According to a recent study by the Robert Bosch Foundation, more than one-third of teachers (37 percent) report a lack or insufficiency of school materials such as workbooks and notebooks.

• More students come to school without breakfast than before (30 percent).

• A quarter of teachers (24 percent) report increased sick leave before several-day class trips.

• Sixteen percent see more instances of students not paying for meals or paying late.

This means that the accuracy of today’s child support is questionable. As government spending increases, so does the neglect of schools. The state invests and subsidizes - but not in school supplies, class trips or children’s snacks.

Weakness 4: Lack of Commitment to Education

Georg Graf Waldersee, Chairman of UNICEF Germany, importantly noted during the presentation of UNICEF’s poverty report that:

Paus’ basic child security does not consider the notion that a joint educational effort by the state, parents and children provides the best protection against poverty.

Investments in the dilapidated education system, the structural integrity of schools, the teaching staff and the socio-psychological support of children are not associated with this type of child support.

It’s just a monetary expansion of the welfare state. Parents’ household finances are improved, but the education system is left to rot.

Weakness 5: High Additional Costs with Unproven Benefits

The minister doesn’t just want to consolidate existing social benefits; she wants to increase them. Thus, the planned “redefinition of the subsistence minimum.”

Currently, expenses for a child are calculated using the so-called “living space key.” This means that a child is allocated a share corresponding to the size of their room in relation to the total area of the home.

However, the ministry has identified a social gap that urgently needs to be filled with taxpayers’ money. The logic is as follows:

Children also use furniture outside their rooms. This is why the state must rethink everything and redefine the subsistence minimum.

The children’s entitlement, which has been expanded or, one could say, padded with their parents’ furniture, has consequences for the state budget, which the minister has so far calculated with very little precision. The ministry says:

For Lisa Paus, this is not a problem but rather a goal. She openly admits that her initial goal wasn’t just consolidation and digitalization:

That’s why her ministry presented the finance minister with an expanded budget of around €12 billion — but this money would only be for the initiation of the new social benefit. Lindner, however, only approved €2.4 billion for the Children’s Basic Security Act. According to the Ministry of Family Affairs’ calculations, these costs will rise dynamically to over €6 billion.

So, what’s critical are not the sums currently in the statute book but the legal entitlements that will be created in the future.

In conclusion, this shows how far apart Greens (Paus) and Free Democrats (Lindner) are in their assessment of the state’s financial capacity, as well as their views on citizens’ individual responsibility. The common ground isn’t exhausted, as is often claimed. It has simply never existed in social and financial policy. The dispute over basic child security didn’t cause it; it merely brought it to light.

• Insolvencies at a record high: Never before has the Leibniz Institute for Economic Research Halle measured so many company bankruptcies in Germany as last March.

• Mercedes-Benz experienced sales problems in the first quarter.

• The "Affordable Art Fair" opens today in Berlin - with 50 local, national and international galleries and the aim: art for everyone.

On December 8, 2021, Olaf Scholz was sworn in as the ninth chancellor of the Federal Republic of Germany. Since then, he “has puzzled Germans since he took office and is known as a chancellor who often doesn’t explain his policies but assumes that people trust him.”

That’s what Daniel Brössler, chief editor of the Süddeutsche Zeitung’s (SZ) parliamentary department, wrote in his new book “A German Chancellor. Olaf Scholz, the War and the Fear.”

We spoke with Brössler about the chancellor and his new book for the Pioneer Podcast. He covers Scholz’s office for the SZ, has accompanied Olaf Scholz on many foreign trips and has had three one-on-one conversations with him for this book. Brössler observes and accuses the chancellor of a certain carelessness in his public appearances:

But:

It also becomes clear, especially with complex issues like Germany's involvement in the Ukraine conflict, that the chancellor struggles to articulate his position accurately:

Brössler is also well-informed about the chancellor’s fitness level:

Nevertheless, the journalist believes that Scholz has a chance of being re-elected:

You can listen to the whole interview in German here.

Iran’s religious leader, Ayatollah Ali Khamenei, reiterated threats of retaliation for the attack on an Iranian embassy in Damascus, Syria. In a speech on Eid al-Fitr, the holiday marking the end of the holy month of Ramadan, he declared that the attack on the embassy meant:

Israel has not yet claimed responsibility for the attack on the Iranian embassy compound. However, Israeli Foreign Minister Israel Katz promptly wrote on X in Persian:

As Bloomberg reported that evening, U.S. intelligence agencies are convinced that an attack from Iran or groups backed by the Islamic Republic is “imminent.”

Israeli Prime Minister Benjamin Netanyahu claimed to have set a date for the Rafah offensive. He said:

His defense minister, Joav Galant, disagrees: Israel is still working on a strategy to evacuate the displaced civilians in the border town.

In a phone call with his U.S. counterpart, Lloyd Austin, he reportedly said that Israel intends to take care of the evacuation of civilians and the delivery of aid before launching an offensive in Rafah.

The Leibniz Institute for Economic Research Halle (IWH) has never recorded as many corporate insolvencies in Germany as it did in March of this year.

This means that 1,297 individuals and companies have gone bankrupt. This represents an increase of 35 percent compared to March 2002 and 30 percent compared to the March average in the years before the pandemic. Bankruptcies increased by nine percent, a big jump from the record set in February 2024.

The reasons for increased insolvencies: Increased costs due to higher interest rates, wages or energy prices are primarily responsible for the bankruptcies. Professor Steffen Müller said:

Another reason is the economic policy of the pandemic years, which also benefited many companies with unprofitable business models. Now, they are running out of government money and must file for bankruptcy.

A hopeful outlook: Layoffs are especially painful for employees. Parallel to the many bankruptcies, there is still a shortage of skilled workers. As a result, “the risk of unemployment and long-term income loss following an employer’s bankruptcy is currently limited,” according to economist Müller.

Moreover, “there is a silver lining on the horizon. The number of bankruptcies could start to fall slightly again in May.”

“The future is not a coincidence”— this is how Timotheus Höttges, CEO of Deutsche Telekom, opened his speech at this year’s shareholders’ meeting. After a successful financial year, Europe’s largest telecommunications company is well-positioned for further growth. With 300 million customers worldwide, the company intends to leverage its size advantage.

Not surprisingly, Höttges devoted a large part of his speech to Telekom’s innovations, including artificial intelligence.

Enrichment: Shareholders are to benefit from last year’s positive business development through a 10 percent increase in the dividend payout. The company plans to pay a dividend of €0.77 per share this year, representing a yield of 3.5 percent. For the year 2025, a dividend of €0.85 is expected.

The numbers:

Revenue: up 3.6 percent, about €93 billion

Profit: Up 6.9 percent to €40.2 billion

Free cash flow: Up 40.7 percent to just under €16.1 billion

In the first quarter of the year, Mercedes-Benz reported sales of 463,000 passenger cars — an eight percent drop compared to last year. The reasons for this were the ramp-up of new models and supply chain problems in Asia, which “temporarily dampened sales considerably,” explained the Stuttgart-based company.

Slump in China: In the People’s Republic, Mercedes-Benz suffered a twelve percent drop in sales, mainly due to the ramp-up of the long-wheelbase E-Class. With 168,900 vehicles, Mercedes sold more than one in three cars in the People’s Republic.

Different divisions, same result: at 47,500 cars, sales of electric vehicles (EV) were down eight percent from the same period last year. In the last quarter, one out of every ten cars sold was an EV.

The competition is improving: BMW sold around 595,000 cars in the first quarter, 1.1 percent more than a year ago. Fully electric vehicles (up 28 percent to 82,700) and luxury cars in the upper price segment (up 22 percent) did exceptionally well.

However, while BMW sales in Europe (up 5.5 percent) and the USA (up 1.2 percent) rose, deliveries in China fell by 3.8 percent to around 187,000 cars.

Chinese car manufacturers are increasingly using European ports as storage space for new cars. The operators of the port of Antwerp-Bruges, who run the busiest port in Europe for car imports, said:

The reasons: Car companies are unable to sell electric vehicles at the expected pace—the imported vehicles are piling up. In addition, port and car industry executives report that some companies have booked time slots for delivery without ordering onward transportation. Other car manufacturers confirm they cannot order trucks due to a lack of drivers and equipment.

The conclusion: If the ports' capacity is exceeded, this leads to fundamental economic problems—logistics issues, supply chain disruptions and massive costs.

Answers from China: In 2023, China recorded a 58 percent increase in car exports compared to the previous year. Wang Wentao, China's Minister of Commerce, said on Sunday that the rapid development of Chinese electric vehicle manufacturers was the result of continuous technological innovation, a well-established supply chain system and an unrestricted market environment. He naturally rejects the accusations of "overcapacity."

Is this art, or is it trash? The “Affordable Art Fair” opens today in Berlin, with 50 local, national and international galleries. The aim is art for everyone.

Hard facts: Visitors can discover contemporary (and affordable) art until April 14th at the Arena Berlin in Alt-Treptow. The ticket prices are also reasonable — under twenty euros for the entire weekend.

Mission: In the "Emerging Artists" category, artists who are not represented by a gallery can showcase their works. Furthermore, female artists hold a crucial role at the Berlin fair.

Background: The fair was founded in 1999 by Will Ramsay in London. He studied geography and owns his own gallery, “Will’s Art Warehouse.” He has always been passionate about art and has now established the “Affordable Art Fair” in 17 cities.

Ramsay said:

His mission:

Wishing you a wonderful start to your day. Stay informed. Stay with me.

Best wishes,