April 14, 2024 - 2:00pm

One of the greatest myths about capitalism is that companies like competition — or, for that matter, their customers. The truth is that in an ideal world, from the corporate perspective, one would hold a monopoly in supply and serve one customer with deep pockets.

Keep this in mind when trying to understand the seemingly never-ending story of German deindustrialisation. A few years ago, the “Federation of German Industries (BDI)” that represents more than 100,000 companies was celebrating the much vaunted “Energy Transition,” putting up almost no resistance against the phasing out of Germany’s world class nuclear power plants. This is even more remarkable, since the latter was finalised under the conservative and supposedly economically liberal chancellor Angela Merkel.

It is therefore not without irony that the head of the BDI, Siegfried Russwurm, is now criticising the “toxic” and “dogmatic” climate and energy policy of the current government. One can be critical about minister of the economy Robert Habeck, but his plans were never a secret and were well-known by German industry. Take, for example, the fact that most German automakers have been fine with the proposed 2035 EU combustion engine ban. Now all of a sudden they have had a change of heart.

One wonders why, but the answer could be the sudden and unexpected end of government subsidies for buying EVs. Not surprisingly, sales are now plummeting (in the case of Volkswagen, by 24%) and consumers are returning to cars with an internal combustion engine. Having suffered under policies they never resisted in the first place, German industries are now pursuing the tactic of burdening the taxpayer with the bill for their oversight: they claim the Government should subsidise companies so they remain competitive and avoid moving production abroad.

Mr. Habeck, it seems, is happy to oblige: in 2023 alone, Germany paid €4.2 billion in subsidies, and there is no end in sight for 2024. The German newspaper Die Welt has called Habeck “the minister drunk on subsidies”, and even the European commission is getting worried that Germany is moving from a free market to a government-run economic scheme.

What is truly happening, however, is that German companies are blackmailing the Government and taxpayers into providing massive assistance while threatening to leave the country and produce elsewhere. This amounts to a gigantic Ponzi scheme where significant parts of the German industry participated in policies that were always suicidal — banning ICEs, ending nuclear power, or the energy transition — in the hopes of making quick and easy cash from government subsidies.

During the energy crisis, Germany alone accounted for more than half of industry subsidies throughout the entire EU, yet German industries could muster no significant resistance to call for a U-turn in energy policies. The Government, of course, happily complied with this scheme, since it could claim successes for their environmental policies while in fact chipping away at the pillars that made Germany an industrialised nation in the first place.

Unfortunately, every Ponzi scheme must come to end, and this is what we are witnessing right now.


Ralph Schoellhammer is assistant professor of International Relations at Webster University, Vienna.

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