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August 29, 2024 - 4:00pm
Amid reports of Germany’s economy contracting, Vice Chancellor and Minister for Economic Affairs and Climate Action Robert Habeck has made a sub-optimal if predictable announcement. Citing renewables as Germany’s primary future energy source, Habeck said that manufacturing businesses should adjust their production according to the weather. German industry, he insisted, should produce more when the sun is shining or the wind is blowing. On still or cloudy days, production should be allowed to falter.
This is not the tack of an economy minister worried about his country entering a recession. While it would be easy to mock the Germans for all the unwise decisions in recent years which have accelerated the decline of a once-mighty manufacturing power, the country’s industrial production is still the highest in Europe, outpacing France and Italy combined. But there will be continental ramifications stemming from Germany’s decreased output. If the industrial heart of Europe is beating ever slower, the rest of the body will also become weaker. The times in which German economic strength could underwrite Greek or Italian debt will soon be over, and Southern European countries will have to address their structural economic problems. So, too, will Germany.
Germany’s problems are for the most part self-inflicted — if there were enough political will, its downtrodden fortunes could be reversed. While geopolitical events have accelerated Germany’s economic decline, this did not begin with the Russian invasion of Ukraine in 2022. Contrary to the widespread idea that everything can be pinned on the destruction of the Nord Stream 2 pipeline, inefficient sanctions on Russia, and an unavoidably harsh lockdown policy during the Covid-19 pandemic, German GDP has been stagnant since 2017.
A combination of too much bureaucracy, a misguided energy policy obsessed with wind and solar, and a business atmosphere hostile to start-ups has contributed to the current malaise. According to data from the German Chamber of Commerce, interest in starting a new company among the country’s population has declined by over 50%.
As with other Western nations whose state benefits systems have grown uncontrollably, for many people welfare pays more than actual work. The journalist Jan Fleischhauer calculated that a couple with two children is entitled to €2,502 euros per month, a sum that corresponds to a gross salary of €3,320 euros per month. According to the law, the state will cover the full rent of a family on welfare for the first year, regardless of the amount. Any installment payments for a single-family house will also be fully reimbursed. So, Fleischhauer writes, anyone who owns a house can simply forward the bank’s letter to the social welfare office. The reasoning is that the Government wants to spare welfare recipients the stress of moving.
The greatest madness (and there is no other word), however, continues to be energy policy. The fact that turning off fully functioning and paid-for nuclear power plants — to be replaced with new gas power plants — was celebrated by the Greens as an environmental victory itself shows that the people in charge are not to be taken seriously. There is a deep irony in the fact that the country’s primary producer of solar panels, Meyer Burger, is preparing to relocate to America because of how expensive German energy is. Habeck’s recent announcement essentially punishes those who want to produce independent of the weather. Apparently, the Economy Minister and his advisors believe that complex industries such as refineries, glassmakers, steel mills and aluminum smelters can simply turn production on and off at a moment’s notice.
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