Two classes before the law? Why politicians go unpunished for wasting millions

Millions burned, no punishment: The fatal signal of the new fiscal policy

Black Book and Mask Affair: When the rule of law turns a blind eye to the powerful

When citizens defraud the state, the justice system is supposed to crack down harder in the future – but what actually happens when politicians squander millions of euros in public funds or enrich themselves lucratively through their mandates? While the federal government is intensifying the fight against tax crime and intends to classify tax evasion as a serious offense, grave political misjudgments, opaque secondary income, and cronyism within their own ranks usually go completely unpunished. This palpable double standard is no longer just damaging Germany's economic standing. It is eroding the absolutely essential foundation of our democracy: trust in equality before the law. A stark look at a system that all too often turns a blind eye to the powerful – and the question of why this unequal treatment comes at such an enormous economic and social price.

When the law has two faces: Why equality before the law has become a question of the credibility of democracy in Germany

A statement from Berlin's government district has sparked debate in recent days. Federal Finance Minister Lars Klingbeil, presenting an action plan against tax and financial crime, declared that those who defraud the state and society should not be allowed to get away with it. Together with Justice Minister Stefanie Hubig, he announced a package of 26 measures, including harsher penalties for organized tax crime, the reclassification of tax evasion as a felony rather than a mere misdemeanor, and a new Joint Center against Tax and Financial Crime within the customs service. The initiative is economically sound, as tax evasion and welfare fraud deprive the state of billions of euros annually, funds that are desperately needed for infrastructure, education, and social security. However, the announcement also raises a question that extends far beyond fiscal policy: Does the same uncompromising standard apply to those who act on behalf of the state—that is, to politicians, heads of agencies, and public officials themselves?

Double standards as a systemic risk

How unequal consequences erode trust in institutions

The foundation of any functioning constitutional state is the principle of equality before the law. This principle demands not only formal equality in courtrooms, but also comparable social and political condemnation of misconduct, regardless of whether it involves a citizen fraudulently obtaining social benefits or a public official wasting public funds, awarding positions to cronies, or deliberately deceiving the public. From an economic perspective, trust in institutions is a factor of production. It reduces transaction costs, increases the willingness to pay taxes, and strengthens the propensity to invest in a country. If this trust is damaged by perceived double standards, so-called tax morale declines—that is, the intrinsic willingness of citizens to fulfill their obligations to the community. Empirical studies in tax psychology consistently show that the perceived fairness of the system is a stronger predictor of honest behavior than the severity of the threatened penalty alone. When citizens get the impression that different rules apply at the top, their willingness to cooperate decreases, and calls for harsher punishments for minor offenses seem increasingly cynical.

Taxpayer money without guardians

The Black Book as an annual portrait of public wastefulness

For over five decades, the Federation of German Taxpayers has published its so-called "Black Book," an annual documentation of exemplary cases of public waste. The current, 53rd edition for 2025/26 again lists one hundred cases in which, according to the federation, federal, state, and local authorities have carelessly handled taxpayers' money. Among the most prominent examples is the insolvent battery factory of the Swedish manufacturer Northvolt in Schleswig-Holstein, for which the federal government, through the KfW development bank, provided around €600 million in subsidies, now threatening taxpayers with a substantial loss of millions. Alongside these are more curious, but no less symptomatic, cases, such as a winter quarters for Hamburg's Alster swans costing over €7 million, a Kiel Welcome Center that, despite operating costs of €2.6 million per year, only placed five skilled workers, and a six-figure sum spent simply renaming a Schleswig-Holstein state agency without any substantive change to its responsibilities. This year, the Taxpayers Association is particularly critical of the so-called follow-up costs of investments—that is, the operating, maintenance, and administrative costs of public projects—which are often overlooked during the planning phase and can lead to a financial trap for the budget years later. It is remarkable that this form of waste is almost never prosecuted. A private individual who obtained comparable amounts of public funds through fraud would face imprisonment. In contrast, political misjudgments of this magnitude generally go unpunished for those responsible, even when the economic damage far exceeds that of typical fraud offenses.

Networks instead of performance

Why cronyism undermines the foundations of fair competition

Besides the sheer waste of public funds, cronyism is one of the structural problems that call into question the promise of equality inherent in the rule of law. This refers to the awarding of positions, contracts, or benefits not based on qualifications, but on personal proximity to decision-makers. Economically, this phenomenon is particularly damaging because it distorts the allocation of resources. When positions and contracts are awarded based on loyalty rather than competence, overall economic productivity declines because it is not the most capable individuals who benefit, but rather those with the best connections. This problem is by no means limited to a single party or political orientation, but permeates the entire political spectrum and all levels of government in Germany. Historically, it became particularly well-known in Bavaria as the so-called "amigo system," a term that originally described the close entanglement of politics and regional business in the 1990s and is still used today as a code for the structural proximity between public officials and their cronies. Political scientists point out that such networks emerge particularly where a party governs for long periods without a real change of power, because structures and personal dependencies can then become entrenched without being broken up by a change in the people involved.

The price of the mask affair

A cautionary tale about personal enrichment in the greatest crisis of the post-war era

Few recent cases illustrate the problem as clearly as the so-called mask scandal of 2020 and 2021. During the COVID-19 pandemic, several members of parliament from the CDU and CSU parties brokered deals for protective masks with federal and state ministries, receiving substantial commissions in return. The total commissions paid to the participating MPs are estimated to have amounted to approximately €11.5 million. Nikolas Löbel, a CDU MP from Mannheim, admitted to receiving around €250,000 in commissions through his company for brokering mask deals. Georg Nüßlein, the former deputy leader of the CDU/CSU parliamentary group, is alleged to have received a commission of €660,000 for brokering deals between a mask manufacturer and several ministries and the Bavarian state government. The initial payment was reportedly €1.2 million, but a bank in Liechtenstein stopped the transaction. Former CDU member of parliament Mark Hauptmann is suspected of having received almost one million euros through his own company for brokering mask deals, while former Bavarian Justice Minister Alfred Sauter was also under investigation for suspected bribery. Political scientists like Ursula Münch from the Bundeswehr University Munich categorized the affair not as a coincidence, but as an expression of the close ties between certain parliamentary circles and the business world, coupled with the risk that personal business interests become intertwined with the political mandate. A telling aspect of this case is that a significant portion of the transactions were not even punishable under existing law at the time of their discovery, because German law had long been inadequate in addressing the issue of elected officials accepting bribes. Only public pressure led to a tightening of the code of conduct, which raises the question of how many comparable cases never materialize into scandals simply because they remain hidden from public view.

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Side income in the shadows

How transparency rules leave loopholes that are exploited

Even outside of specific scandals, Germany suffers from a structural transparency problem regarding the outside activities of members of parliament. While members of the Bundestag are required to disclose their secondary income in ten tiered categories, an exception allows them to conceal the names of their clients if a contractual obligation of confidentiality exists. In practice, this leads to MPs working as consultants alongside their parliamentary duties, without the public knowing whose interests they are actually representing. For example, a former Federal Minister of Transport earned six-figure additional income as president of a chamber of commerce and as a self-proclaimed strategy consultant, without disclosing his consulting clients, even though he simultaneously chaired a relevant Bundestag committee. Lobbying watchdog organizations like LobbyControl have been demanding for years that the public's interest in assessing potential conflicts of interest must outweigh contractual confidentiality clauses between MPs and their business partners. While this form of concealment is formally legal, it contradicts the spirit of transparency rules and demonstrates how regulations can be designed to fulfill the letter of the law but not the purpose of oversight. This is precisely where a key difference lies compared to the treatment of ordinary citizens, whose income must be fully disclosed to tax authorities and social services, without them being granted comparable exemptions from confidentiality.

Germany's slump in the rankings

What the international corruption index reveals about homegrown weaknesses

An objective, albeit rough, indicator of the actual situation is Transparency International's annual Corruption Perceptions Index. In 2024, Germany slipped from twelfth to fifteenth place in the international ranking, with the organization citing weaknesses in freedom of information and party financing as the main reasons. In the current index for 2025, Germany improved its ranking to tenth place with 77 out of a possible 100 points, but compared to ten years ago, it still represents a loss of four points. The report's authors were particularly critical of the fact that Germany is even regressing in some areas of corruption prevention, such as public procurement law, even though, given the billions of euros in special funds allocated to defense and infrastructure, more, not less, oversight is actually needed. This observation is economically significant because the risk of misallocation and corruption structurally increases, especially during periods of high public investment, such as the one Germany is currently experiencing as part of its defense and infrastructure transformation. If control mechanisms are weakened at the same time, a dangerous combination of increasing funding and decreasing oversight is created.

When intelligence becomes a weapon

The partisan handling of accusations as a problem in itself

A recurring pattern in political discourse is the selective outrage over misconduct, depending on the political affiliation of the person involved. Allegations of cronyism or favoritism are regularly used to discredit political opponents, while comparable behavior within one's own party is downplayed or portrayed as an isolated incident. This dynamic can be observed in the public debate surrounding alleged cronyism within various parties, where competing political forces attempt to derive different political benefits from similar accusations, depending on which party is implicated and which elections are approaching. This partisan distortion damages the credibility of the public discourse as a whole because it creates the impression that the issue is not about the substance of the matter itself, but rather about tactical power grabs. From an economic perspective, this is an example of so-called selective rule application, where norms are not enforced consistently, but rather situationally and according to vested interests. Such selective application undermines the overall steering effect of rules, as rational actors learn that the actual probability of sanctions depends less on their own behavior than on the political constellation at the time of detection.

The economic price of unequal treatment

How a lack of consistency weakens Germany as a business location

From an economic perspective, the damage caused by unequal application of the law can be grasped in several dimensions. First, the perceived impunity of public officials reduces general compliance with rules in society, which empirically translates into lower voluntary tax compliance. Second, the misallocation of public funds through waste and cronyism leads to lower productivity of the capital employed, as projects are implemented not according to economic rationale but according to political calculation or personal connections. Third, the perception of structural corruption increases the so-called risk premium that international investors demand for their involvement in a country, since legal certainty and the predictability of government action are among the most important location factors for an economy. Fourth, the recurring pattern of scandals with no consequences weakens trust in democratic institutions as a whole, which can result in declining voter turnout and growing support for protest parties that politically exploit precisely this feeling of unequal treatment. The economic damage caused by the waste of taxpayers' money, as documented in the Black Book, may seem small in individual cases, but over a hundred cases annually and decades adds up to considerable sums that are lacking elsewhere, for example in education, infrastructure or defense capabilities.

What a credible state governed by the rule of law should provide

Structural reform approaches beyond symbolic announcements

To prevent the principle of equality before the law from becoming a mere platitude, several structural reforms would be conceivable. First, the disclosure requirements for members of parliament's outside income must be structured in such a way that confidentiality agreements with business partners can no longer override the public interest in information. Second, independent oversight bodies with genuine investigative powers are needed for the awarding of public contracts in order to identify cronyism early on, before it leads to billions of euros in misinvestments. Third, the criminal assessment of bribes by elected officials should be aligned with the standards that apply to white-collar crime or welfare fraud, so that the impression is not created that symbolic politics is directed primarily against the supposedly weaker members of the system. Fourth, a binding obligation to disclose and quantify the follow-up costs of investments in all major public projects would be sensible in order to avoid the budgetary trap of future years lamented in the Black Book. Fifthly, the investigation of misconduct should be more strongly decoupled from party-political cycles, for example through independent auditing authorities permanently equipped with resources that can investigate independently of election dates and government constellations.

Equality is not a discount for the powerful

Equal punishments, equal justice: Why political responsibility must be punished more severely

The demand that no one should be allowed to defraud the state and society without consequences is fundamentally correct and deserves support, regardless of its political affiliation. Precisely for this reason, however, this standard must also be consistently applied to those who represent the state and control its resources. The documentation of hundreds of new cases of waste every year, the recurring reports of cronyism across various political camps, the mask scandal with its multi-million-euro commissions, and the rather hesitant approach to addressing transparency gaps in secondary income demonstrate that reality still falls far short of this ideal. While Germany is not a country with systemic corruption by international standards, as its relatively high ranking in the Corruption Perceptions Index shows, the long-term negative trend and the persistent gaps in oversight of public procurement and party financing are a warning sign that should be taken seriously. A state governed by the rule of law that criminalizes tax evasion by its citizens as a crime punishable by up to fifteen years in prison, while simultaneously sanctioning the waste of taxpayers' money, cronyism, and deliberate deception of the public by public officials only with political resignation, risks precisely the loss of trust that it actually seeks to prevent with its harsh measures. Equality before the law is not a luxury for Sunday speeches, but the very foundation of legitimacy for any democratic order, and it begins where power meets checks and balances.