by Francis Menton at manhattancontrarian.com
I’m old enough to remember the German post-World War II “economic miracle.” (Their term was “Wirtschaftswunder.”). After more than ten years of government direction of the economy under the Nazis, followed by the devastation of the war, Germany after 1945, under economics minister Ludwig Erhard, adopted the model of low taxes and light regulation. The economy boomed for decades on end.
But Germany then gradually turned away from Erhard’s prescriptions. Today Germany is twenty or so years into the most aggressive green energy “transition” of any country with a large economy, with the government firmly in charge of picking the winners and losers in the energy sector. At this writing, Germany’s consumer electricity rates are in the range of triple the U.S. average. My January 3, 2023 post quoted a German energy market guru named Mirko Scholssarczyk forecasting yet further big increases:
“40 cents per kilowatt-hour [is] likely to be the new normal in 2023 and 2024, and . . . prices could even rise to 50 cents per kilowatt-hour after that.”
That would put German consumer electricity rates at about 4 to 5 times the U.S. average — assuming that the U.S. does not go down the same path and drive rates up the way Germany has.
Is anybody over there in Germany learning anything? Don’t count on it. A March 10 post at the site No Tricks Zone has the title “As German Economy Reels, Chancellor Promises Going Green Will Lead To ‘Economic Miracle.’” Yes, it will be a new “economic miracle” — but this time not led by free market entrepreneurialism, but rather by a government-directed and taxpayer-subsidized energy transition. Or at least that’s what German Chancellor Olaf Scholz claims to believe. NTZ links to a German-language site called Pleiteticker.de, and provides translations of the key passages:
“Chancellor Olaf Scholz is now promising a new economic miracle through investment in climate protection, regardless of the miserable economic situation in which the Federal Republic finds itself,” reports Germany’s new, critical online news site, Pleiteticker.de. . . . “Because of the high investments in climate protection, Germany will be able to achieve growth rates for some time, as last seen in the 1950s and 1960s,” said the Chancellor.
In Scholz’s vision, economic growth results from “investments,” so if the government just provides enough billions in compelled “investments” the economy is sure to boom — even if the “investments” are in things that would immediately go bust in an uncompelled and unsubsidized environment, such as wind and solar electricity generation or electric heat pumps for home heating. Basically, Scholz has the same economic vision as our President Biden.
NTZ quotes Pleiteticker’s reaction:
“Real wages most recently fell by 3.7 percent in 2022 compared with the same quarter of the previous year. At the same time, consumer prices rose by 8.6 percent, while food and energy prices increased by around 20 percent. Economists expect German GDP to fall in the first quarter of 2023, which would be the second time in a row – a recession. Major German companies, most recently BASF, are leaving the country.”