Germany went from envy of the world to the worst-performing major developed economy.
Germany went from envy of the world to the worst-performing major developed economy.
Germany racked up one economic success after another for most of this century. But the loss of Russian natural gas due to the war in Ukraine has dealt a severe blow to its industry through higher energy costs.
The key here is to have a conservative government for 16 years in a row to make absolutely sure anything innovative is made as hard as possible to achieve.
Germany was governed for the last 16 years by people that desperately want to live in 1996 because that is when their back didn't hurt and "everything was great" (?)
Don't forget the other 16 years under Kohl from 1982 to 1998. Basically we have been CDU governed for more than 3/4 of the last 40 years. And because people are upset that some changes are necessary now they are going to vote CDU again (or worse).
That is not what the article says at all though. It solely blames the SPD and current government. It‘s just good old German bashing without much substance.
Actually, there's this:
These outside shocks have exposed cracks in Germany’s foundation that were ignored during years of success, including lagging use of digital technology in government and business and a lengthy process to get badly needed renewable energy projects approved.
Other dawning realizations: The money that the government readily had on hand came in part because of delays in investing in roads, the rail network and high-speed internet in rural areas. A 2011 decision to shut down Germany’s remaining nuclear power plants has been questioned amid worries about electricity prices and shortages. Companies face a severe shortage of skilled labor, with job openings hitting a record of just under 2 million.
For some reason, they don't mention the CxU though. I am also annoyed that they don't mention the debt-stop mechanism which CxU added to the constitution and which FDP is now leveraging to make shitty economic decisions.
Basicly 16 years of stoping all green projects and then being hit by a fossil fuel crisis. The fact of the matter is that Germany had the lowest industrial electricity prices for decades, by moving the cost to households, which got some of the highest prices in Europe due to that. Gas was cheap and nearly not taxed at all. All of that in a system with clear caps on emissions and well something has to give.
Even worse a massive unwillingness to pay for infrastructure using debt. Germany is in good shape financially and it would be relativly easy to just pay for a lot of infrastrucuture. That is partly happening, but obviously there are also labour, material and time problems making this take years to finish.
Then there is a massive problem with consumption. Wages have not kept up with inflation, while there are worker shortages. Welcome to a perfectly working labour market. Anyway that obviously means less consumption in Germany, which hurts the economy.
However there is no reason that some good governance could not solve it and it is a fossil fuel crisis, which destroys industries based on processes we do not want to use due to climate change. It could be an extremly healthy crisis if managed well.
Wages have not kept up with inflation, while there are worker shortages. Welcome to a perfectly working labour market.
Not to mention the rising right wing anti-immigration rhetoric which doesn't make it easier to find workers elsewhere.
he fact of the matter is that Germany had the lowest industrial electricity prices for decades, by moving the cost to households, which got some of the highest prices in Europe due to that.
How so?
Two parts really. First of all Germany is using guranteed prices for renewables, but the plant operators still have to sell it on the electricity exchange. So when there is renewable elecricity the prices fall a lot. To still create a fair price the cost for those feed in tariffs obviously cost money, which was added on the electricity price of households and small companies.
The other one is lowering grid operating costs for large consumers to below market value. Those costs again needed to be paid, so they were added to households and small companies.
That ended up with half the cost of German household electricity being taxes and other payments to the government. That massivly delayed heat pump installations and electric car sales in Germany, as they were not able to compete as well with gas heating or combustion engines.
Every country will struggle in the near future. Some sooner, some later. To me it seams like we have reached the limits of what we can have. What we have is very badly distributed but it really comes down to how many things, how many computers, shoes, containerships, gold watches, private jets, truckloads of harvested corn, clothes and everything else can there be. We could redistribute and we could recycle but we're not doing both in any meaningful amount.
Remember, this metric of "worst performing county" takes only the economy into account and with limited resources there is no endless growth.
Btw. This doesn't mean we can't be happy. We're not the economy and we're not the stuff we own.
We’re not the economy and we’re not the stuff we own.
This realization is still extremely far out for a huge percentage of the German populace unfortunately.
I'd say it's more the whole western world as a whole, not just Germany.
Yes, that's true. After all, Germany is still more or less a welfare state with statutory health insurance and so on. To further undermine this in favor of economic competitiveness does not seem desirable to me, for example in view of the situation in America.
As a German who has been living and working overseas (mainly Australia) for over 5 years, coming back to Germany to visit is such a huge culture shock now. It's so much less developed compared to 20 or 30 years ago (or at the very least it stagnated), everything is slow and the economy depressing.
Even things that are meant to be easily done online like tax returns are a huge pain. You need to verify yourself by scanning your ID or getting a physical letter with a code sent to you. It's ridiculous. In Australia you simply log in into your myGov account and handle everything from visa applications, tax returns, health records, welfare payments, child support etc all on one website. It's super quick and easy.
And unlike Germany, government lingo is easy to understand and accessible. I feel like Germany is purposely trying to keep things as complex as possible to the point where many people have to hire an accountant for tax purposes
In Australia you simply log in into your myGov account and handle everything from visa applications, tax returns, health records, welfare payments, child support etc all on one website. It’s super quick and easy.
This sounds like a security and privacy nightmare. As much as german bureaucracy is over the top in many situations but having to wait one time for a verification-letter for your ELSTER-account is not among the problems.
It's not though because it's all 2FA.
And it's not like you're forced to use it either, if you prefer to opt out you can still walk into a Govt service centre and be served in person without needing an appointment. Just walk in
Und nebenbei: Tausendmal besser als die ganzen Horrorgeschichten von Immigranten die monatelang auf einen Termin beim Einwohnermeldeamt warten weil alles zigmal länger dauert 🫢 Hier ginge das einfach online und während man auf das Visum wartet hat man ohnehin eine vorübergehende Aufenthaltsgenehmigung mit Arbeitsrecht usw. Deutschland ist dahingehend einfach ein Albtraum und überhaupt nicht der gegenwärtigen Situation angewachsen. Also laber mir nix. Lächerlich einfach
Norway also just has the same though spread over many sites and services, and also is two factor. The most common system is using a bank connected verification. Older people stick to the the old physical code generator that is shipped to you, while most use the more convenient "accept the phone popup" and input a pin there.
Its not the only way, but the one I use. And it works for a lot, down to insurance. It's honestly a great and somewhat safe (bar bad choices in developing the system of course) way to always have access to the big things if you need them. When I got a loan for my first house I pretty much only interacted through few phone calls and using my phone to access the bank and other relevant sites, while at work.
It is troubled in some ways, when that solution has technical problems it prevents access to a lot of other services. But even with delay, that seems way more fast than waiting for mail. It's also the very epitome of a system that fully has you tracked and connected through an online ID across platforms. But Norway isn't quite dystopian yet at least. I also think it gives you some trouble if you are immigrating or living here medium term, since you do not have access to all of this immediately.
expired
i remember seeing videos of french firefighters getting attacked by police during protests. The image was completely surreal and very eye opening as to how dysfunctional french government is.
Christian Kullmann, CEO of major German chemical company Evonik Industries AG.
Kullmann is for it: “It was mistaken political decisions that primarily developed and influenced these high energy costs. And it can’t now be that German industry, German workers should be stuck with the bill.”
Well, I mean, if you want the German government to cover the cost, they don't magic money up out of the air. They get it via taxation of industry and workers.
If what you're saying is "I am running a company in an energy-intensive industry and I want subsidies paid for by non-energy-intensive industry," okay, but you're still pulling it from industry and workers.
Those companies had decades to transition their production processes to be more efficient and most of them actively lobbied against such policies that would enforce it onto them. 🎻
magic money up out of the air
I am not an economist by any stretch but I've understood this much: The ECB literally can create money out of thin air. The issue is just that money in and of itself is meaningless. The interesting bit is the ratio of money in circulation vs. goods/services available for purchase.
Even expanding the money supply doesn't "magic money up out of the air" in the sense to which I'm referring.
If the ECB expands the money supply, it generates inflation. That effectively taxes everyone holding euros or euro-linked assets and transfers the real wealth associated with that to whoever winds up with the new money being created.
Actually, it can't. The issue is not printing it, the issue is issuing it: The way reserve banking works is that when the central bank wants to increase the amount of money in circulation it lowers the interest rates banks have to pay for ECB euros, which the banks then use to give out loans in private bank euros (hence reserve bankings -- the banks can lend out more book money than they hold in ecb money).
The reason why the Eurozone has been in deflation or just barely scraped past is that the banks weren't willing to give out loans -- they were consolidating, reducing risk, because believe it or not they don't like being nationalised and having bureocrats breathe down their neck. (if nothing else that gets in the way of shady business).
There were talks about "helicopter money", that is, right-out giving every citizen money, no questions asked, to spend, an excellent idea but the thing never materialised not in the least because the infrastructure to do it simply isn't there and getting politicians to cooperate in something that looks suspiciously like a UBI (even if short-term and all in all a low amount) is an uphill battle. It's probably one of the reasons why the ECB is now thinking very loudly about a digital euro as then they could simply do it based on the stability mandate they already have.
Every other country in the world just issues bonds/debt to generate this "magic money up out of thin air". Yes it's eventually paid back through taxes but you fix the problems and then the industries your helping pay it back over time. That's how debt works.
As you point out, if it issues bonds, the government is going to pay that back, plus interest.
The issue isn't that Germany cannot get access to capital. The issue is that he can't assert that industry and workers shouldn't be hit with the bill, because they're going to be paying it, one way or another. It might be companies in a different sector than his own, which I expect is what he hopes to see. But one way or another, it's going to be workers and industry.
This is the best summary I could come up with:
Germany risks “deindustrialization” as high energy costs and government inaction on other chronic problems threaten to send new factories and high-paying jobs elsewhere, said Christian Kullmann, CEO of major German chemical company Evonik Industries AG.
From his 21st-floor office in the west German town of Essen, Kullmann points out the symbols of earlier success across the historic Ruhr Valley industrial region: smokestacks from metal plants, giant heaps of waste from now-shuttered coal mines, a massive BP oil refinery and Evonik’s sprawling chemical production facility.
After Russia cut off most of its gas to the European Union, spurring an energy crisis in the 27-nation bloc that had sourced 40% of the fuel from Moscow, the German government asked Evonik to keep its 1960s coal-fired power plant running a few months longer.
These outside shocks have exposed cracks in Germany’s foundation that were ignored during years of success, including lagging use of digital technology in government and business and a lengthy process to get badly needed renewable energy projects approved.
A 10 billion-euro ($10.68 billion) electrical line bringing wind power from the breezier north to industry in the south has faced costly delays from political resistance to unsightly above-ground towers.
Germany grew complacent during a “golden decade” of economic growth in 2010-2020 based on reforms under Chancellor Gerhard Schroeder in 2003-2005 that lowered labor costs and increased competitiveness, says Holger Schmieding, chief economist at Berenberg bank.
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