Economics Minister Robert Habeck has declared 2023 the "Year of Industrial Policy". The creative minister wants to conclude “climate protection contracts” with selected large companies. If the corporations are willing to move in the desired direction, they will receive subsidies for capital and operating costs for 15 years.
Entire sectors, from the steel industry to the chemical industry to energy-intensive raw material producers, should be on the state drip to create the change to a green future.
Habeck's plan is reminiscent of the beginning of the energy transition that started two decades ago. Their record is devastating. Now Habeck wants to direct large parts of the industry by the state. For many entrepreneurs and managers, the term "transformation" is becoming more and more of a bogeyman. Because the promised tax money only goes to selected large companies. However, the foreseeable consequences of such a planned economy will ultimately affect all companies.
The industrial turnaround proclaimed by Habeck requires an omniscient state that knows in advance how progress will develop. But bureaucrats do not have this knowledge. It arises from the wealth of ideas and the willingness to take risks in the large number of companies and investors.
Experience has shown that a subsidy mentality does not lead to the future, but ensures that existing companies are preserved. For example, Habeck envisions a steel wasteland that produces green steel and relies on hydrogen for it. No one knows today whether this branch of industry has any future at all in view of the foreseeable permanently high energy costs.
If it depends on the subsidy drip, hardly any politician will dare to turn it off. Then you need buyers like the auto industry, which you can get with new state aid to buy the expensive German steel. Because the state always looks to the big players, Habeck's transformation does not bode well for small and medium-sized businesses in particular. In the concert of lobbyists, these find little attention.
An economic policy that opens up future opportunities should not create new subsidies over the years. Government aids are best used in fiscal bolster research and development. Because the self-interest of private investors ultimately benefits the entire economy. It is up to politicians to set realistic climate targets. If you let the prices sink in, the companies will find the most efficient way.
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