The "crowding out" effect, or crowding, is an economic phenomena and describes the impact of state Interventions or activities on private investment and generally to people's behavior. The Reichstag deputy Eugen Richter described this effect in the 19th Century very clearly with the example of the introduction of compulsory health insurance system by Bismarck 1883:
"There are in fact the health insurance laws suitable to suppress the development of registered assistance funds. In fact, from 1891 to 1895, the registered assistance funds decreased from 1891 to 1388, the national legal assistance funds from 450 to 263rd The number of members is on the inscribed relief funds of 838 481 to 671 668 and in the national financial assistance funds of 138 883 decreased to 60 543. The free assistance funds but are based solely on the contributions of workers, they are in a position to grant the workers several particular advantages. They may in particular allow a body independent of the individual local organizing the workers to remain with the move to another job within the same fund. "
The introduction of health insurance in Germany ousted ie a functioning system of private provision and private insurance . Eugen Richter described as applicable, government intervention, therefore, never lead to an improvement, but always in a deterioration the situation of those whose lot in accordance with the full-bodied announcements of politicians should be really improved. Thus lead tenant protection laws, implying direct or indirect rent limits to artificial shortage of rental properties, reinforcing the problem of housing shortages, because the economic law of nature lead to fixing prices below the market clearing price to a permanent shortage, as well as the gravity of anyone suspended can be.
"There are in fact the health insurance laws suitable to suppress the development of registered assistance funds. In fact, from 1891 to 1895, the registered assistance funds decreased from 1891 to 1388, the national legal assistance funds from 450 to 263rd The number of members is on the inscribed relief funds of 838 481 to 671 668 and in the national financial assistance funds of 138 883 decreased to 60 543. The free assistance funds but are based solely on the contributions of workers, they are in a position to grant the workers several particular advantages. They may in particular allow a body independent of the individual local organizing the workers to remain with the move to another job within the same fund. "
The introduction of health insurance in Germany ousted ie a functioning system of private provision and private insurance . Eugen Richter described as applicable, government intervention, therefore, never lead to an improvement, but always in a deterioration the situation of those whose lot in accordance with the full-bodied announcements of politicians should be really improved. Thus lead tenant protection laws, implying direct or indirect rent limits to artificial shortage of rental properties, reinforcing the problem of housing shortages, because the economic law of nature lead to fixing prices below the market clearing price to a permanent shortage, as well as the gravity of anyone suspended can be.
can be precise to observe two effects: the State or a similar compulsory collective tasks that were previously done to families or single individuals themselves Commits have stunted their own initiative. Why should save people or children, if there is a government pension guarantee? Why should we pay attention to his health, if the state promises a seemingly free medical care? Therefore, the social pension scheme leads to the aging of the population, the state of emergency and nursing care to the statutory unemployment insurance to unemployment. While this effect could best be described as a paradox of well-intentioned welfare state, the second phenomenon is a kind of boomerang effect: State-beneficiary groups to which special state protection laws are dedicated to learn this truth in a strong economic deprivation: workers special rights which the law can be given to increase the production costs in certain sectors of the measure of marginal costs beyond productivity. Annual leave, maternity protection, anti-discrimination and social rights are based economic claim against the owners. Permanent employees will be "false self" and temporary workers, younger women by men and people generally replaced by machines. Because for all public benefits, legal rights and guarantees must ultimately pay the company. If taxes and wage costs rise, such that the marginal costs are exceeded, remains only the task or operation of the bankruptcy. That is we have lost in Germany in recent decades, millions of jobs and thousands of enterprises not a mysterious, supposedly inevitable "structural change" due. It is simply the claim by government allocation constantly rising costs have meant that only survived the most productive, most competitive German companies. The losers of this failed policy, as always, the poorest and most vulnerable in our society, as all the jobs for so-called "low skills" might be lost forever.
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