During the postwar era, para-public institutions were used to loosen the ties that binded the state to organized interests, and to create disharmony in the social policy field by making it subject to economic and political competition. These changes were driven by tightening resource constraints, with a larger share of the federal budget being consumed by subsidies to social security when increases in the contribution rates become no longer productive for the economy and no longer politically viable. Corporatist sharing and the delegation of control over the postwar welfare state in Germany...

During the postwar era, para-public institutions were used to loosen the ties that binded the state to organized interests, and to create disharmony in the social policy field by making it subject to economic and political competition. These changes were driven by tightening resource constraints, with a larger share of the federal budget being consumed by subsidies to social security when increases in the contribution rates become no longer productive for the economy and no longer politically viable. Corporatist sharing and the delegation of control over the postwar welfare state in Germany ended when governing bodies and other political parties could not control social policy and how this crowded out other political concerns. This chapter discusses what happened to public finance, specifically the fiscal crisis, in Germany during the postwar era.