Daily Kos: State of the Nation

Der Gründungszuschuß

by brooklynbadboy

Sat Dec 04, 2010 at 02:30:04 PM PST

One of the fascinating things I learned about during my trip to Germany last September is that funny-looking word in the title (pronounced something like "grun dungs zoo shooss"). As Harold Meyerson pointed out in The Washington Post, Germany's economy is kicking butt. Republicans, of course, hate this. To them, a big government, heavily unionized, social democracy like Germany is supposed to be the poster child for the wrong way to do things. Yet Germany prospers. But here's something even they would have difficulty arguing with: Germany's government helps the unemployed start businesses with start-up capital. Maybe we should consider giving something like this a try.

Der Gründungszuschuss roughly translates into "start-up grant." It is a program for the unemployed that gives a monthly amount of seed capital for those on unemployment. The grant is means-tested and is paid on top of unemployment, health and other benefits. For example, a married couple with children can get a grant up to just under $32,000! A single person who is unemployed and has no children can get up to just over $25,000. The benefits are paid out over a period of nine months. After that, there is an extension of benefits called the "building phase" that pays an additional $400 per month for six months.

The German government expects that 20 to 30 percent of these businesses will fail. No matter. As policy, they've decided that they'd rather have people with an entrepreneurial bent out doing something rather than sitting around. This money isn't just thrown away. There are an extensive state-sponsored classes that must be attended to learn how to start a business properly. A carefully written business plan must be submitted to a board. The government also supplies free business consulting to help get the start-up off the ground and avoid pitfalls. There is an extensive array of government seminars to help grantees manage their businesses to success. A person can pull out of the program at any time without fault, including for being called back to work. In fact, even if one is called back to work, they can still complete the program. The government requires grantees to spend at least 15 hours per week on their start-ups. (I had one of those Michael Moore "You've got to be kidding me" moments on that one.) Want more? The grant is tax free.

I learned about Der Gründungszuschuss from a friend in Cologne. (You can learn more about it by reading here, provided you read German. But you may be able to use one of those translators.) His older brother was laid off from an internet service provider in 2008, got the start-up grant in 2009. He now has a small search optimization consulting firm with a partner and a secretary. In two years, he went from unemployment right into tax-paying independent businessman. And he put someone else to work and got some private capital off the sidelines.

Just imagine if we could get something like that going here.

via dailykos.com