Germany: When the state becomes too merciful in the recession

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Terminal Burchardkai at the Port of Hamburg

Photo: Christian Charisius / dpa

There were times when it was considered good policy to simply let crises sink in.

Because crises have to be resolved - and people then lose jobs and money.

Because that somehow brings progress.

Just no help.

And just not from the state.

Market liberal weddings.

Today, even the FDP goes to great lengths to offer help in crises.

And to show that their ideas definitely and particularly benefit the poor.

The finding of who is poor seems open to interpretation.

And even the effort speaks volumes: In the past, the party environment used to openly promote favoring the top performers and those who were already well off.

It was still considered good form back then.

Behind this is a paradigm shift, or let's put it this way: At the height of the market-liberal era, the Socialists and the Greens relieved the top earners - today the FDP is also trying to come across as a party of social balance.

And, as is the case now in the energy crisis, everyone is in the process of giving lump sums to as many people as possible or reducing taxes – money from the state, in other words, with which the consequences of the crisis are to be absorbed.

It is surprising that the effort seems to be developing into a kind of knee-jerk relief competition: Who offers whom the fastest money from the state?

Whether through social-democratic flat rates – or through FDP species-appropriate tax gifts.

That sounds good at first, but there is a big problem: so much mercy neither solves the crises, nor does it seem to make people really happy.

Other things would help a lot more.

The pitfalls of financial aid

To avoid any misunderstanding: Today, only a few people who have gone astray spread the word that crises have a somehow magically creative effect.

The financial and corona crises have shown that state aid can save a lot in crises.

Otherwise a lot would have collapsed.

It is also true that in the acute energy price crisis, it is still better to pay a lump sum than to do nothing at all.

There are enough reasons not to simply let the war-related surges in inflation affect the people in the country.

The recipe has several pitfalls, including the occasionally discussed and understandable tendency of political parties to primarily serve their own clientele.

In addition, payments and charges differ in time - the enormous cost increases, for example due to higher petrol or food prices in the summer, are countered by a flat rate that is only coming now.

From a purely arithmetic point of view, this is not wrong, but it feels rather confusing.

And this confusion could explain why the federal government has so far received so little recognition for so much willingness to help.

It is not only psychologically but also economically efficient to only a limited extent to first allow damage to occur and then try to compensate for it.

As a leitmotif, it is always better to limit the damage per se where it threatens to occur, which was done at least temporarily with the tank discount.

Except that it should have been deducted from the fuel bill, as was well practiced in France.

The 9-euro ticket also falls more into the category of limiting the immediate damage instead of compensating for it afterwards with lump-sum payments.

Why both ended in the middle of the disaster is a mystery.

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The same applies to the idea of ​​introducing a cap for excessively rising energy prices, as the federal government is now planning to do with electricity prices.

Such instruments could also be designed in such a way that the relief occurs at the moment of stress - and not at some point.

What is correct for the acute crisis also applies much more fundamentally to what the great challenges of our time entail.

And it is even more relevant when it comes to such major regional upheavals due to new technologies, globalization or climate policy issues such as the phase-out of coal or the restructuring of the automotive industry.

Here, too, experience has shown that compensation from the state is not enough.

Neither in the American "rust belt", nor in the former British industrial regions, nor in East Germany did this contribute to the creation of new work there.

Which explains why populists found their way everywhere.

Much more state programs would be needed for this, with which in the case of foreseeable breaks, as is now the case in some automotive regions, it is ensured in advance that new industries settle;

and new, better work is created.

Then there is no need for compensation afterwards.

Most people don't just want to be compensated, they want to take control of their own destiny.

The principle is the same: It is right to compensate for extraordinary shocks such as the current energy drama - especially for those who were barely able to make ends meet.

But it is even better to absorb the shocks yourself.

Or, best of all, to ensure that people get properly paid work on reasonable terms again - and quickly earn their own money again.

The country cannot be saved with checks from the state alone.