Germany reaps rewards of entitlement cuts

BERLIN — The financial crisis has turned Europe topsy-turvy, with governments freezing pensions, unions voting away privileges and a thick web of safety nets disappearing one strand at a time.

But as the role of the state is being reexamined, one country stands apart: Germany, where reforms a decade ago made the country less generous than some of its peers but also helped ease the blow when the rest of the world stopped snapping up BMWs and Bosch washing machines.

Now, as its neighbors are being forced to retrench, and the future of the euro appears imperiled, Germany’s social services are running surpluses, helped by taxes that are among the highest in Europe and difficult sacrifices its citizens have made to jump-start their economy.

Many Germans are peering across their borders and wondering why others can’t do the same, putting intense political pressure on Chancellor Angela Merkel not to appear too generous with bailouts. Other countries point out that Germany’s wealth depends at least in part on outsiders spending for German exports.

Read the rest here.