On the German love of predictability
Dear Reader,
There is a word in German that, for the life of me, I can’t find any real equivalent for in English. Planungssicherheit is easy enough to translate - it means “planning certainty.” But it doesn’t seem to actually be used in English beyond in some industry magazines.
Not so in German. Planungssicherheit is a word that has achieved an aura that means you can end any argument by deploying it.
That’s certainly the case in the current debate over whether the sale of combustion engines should be banned by the EU after 2035. Germany’s government is trying to block an EU edict to that effect, saying that combustion engines should still be permissible as long as they are powered by environmental ‘e-fuels.’
Now, you can go into the strengths and weaknesses of these synthetic fuels if you want. Some claim that such fuels have a big future. Others say that the energy loss in production is so large that it is “wishful thinking” to believe that they will ever play a central role in future transport.
But, much more important than letting the markets decide which side of the debate is right is apparently the need for the car industry to have Planungssicherheit.
Thus, in pushing Berlin to get back in line this week, EU commission president Ursula von der Leyen said that openness to new forms of technology is all well and good, but ultimately “we need to achieve Planungssicherheit for the car industry.”
Several industry bosses have nodded in agreement.
Audi CEO Markus Duesmann told Der Spiegel magazine that not banning combustion “would be fatal for the car industry… we need Planungssicherheit for our multi-billion euro investments.”
Der Spiegel has also chimed in on the side of planning security for those hard-up car makers. Of course Audi et al. need Planungssicherheit, the magazine argues: “The transformation of European mobility is a huge task that requires huge flows of capital… It helps if you can really be sure that everyone is in agreement and doing the same thing.”
Calls for Planungssicherheit go well beyond the boardrooms of the country’s car industry and their fans in the media.
These days everyone from the wind energy lobby, to pharmacies, to small-time bakers is demanding of the government: “Give us more Planungssicherheit!”
While Germans have an age-old reputation for needing 100% predictability, it was actually not always so.
Planungssicherheit as a word seems to have soared in popularity sometime around the end of the last decade. Search through newspaper archives from as recently as 2012 and you will only find it used in reference to a football clubs’ budgets or in some local news story.
Something quite fundamental seems to have changed in the intervening years.
Industries that would have once been expected to make their own decisions about how and when to spend their money now seem incapable of doing so without the government holding their hand.
Now, one could ask whose interests Planungssicherheit really serves. When governments set industry deadlines, taxpayers often end up footing the bill. The decision to shut down nuclear power by 2022 led to a multi-billion-euro golden handshake for the energy firms. The same happened after the coal exit.
This time around the car firms clearly expect taxpayer money to smooth the path for their road to new profits. Or, as Mercedes put it recently: “The e-mobility decree puts the onus on the state to provide the necessary infrastructure.”
Something similar has happened in the wind industry for years, where Planungssicherheit in practise means: clear the legal pathway to stop nimbies blocking us in court and fix electricity prices so that we don’t have to take on any financial risk.
Away from environmental issues, Planungssicherheit was used during the pandemic by firms that feared going bankrupt during lockdowns. They wanted gauranteed payouts to see them through.
It’s no coincidence that Germany has taken out more public debt in the last four years than in all the 70 years before that.
One could also ask just how effective the new zeitgeist of state planning really is.
An interesting article published by Die Zeit newspaper this week ran against the grain of accepted opinion by asking whether government targets and deadlines for everything from wind turbines, to e-cars, to hydrogen supplies was really achieving the desired objectives.
“Current job cuts at (industry giant) BASF could be only the first chapter for economic historians in 30 years' time in their work on the creeping deindustrialisation of a once rich country that was able to quickly agree on phasing out nuclear and coal power but failed to build up the alternatives,” the article warned.
“Layoffs due to high energy prices, power shortages because of the energy transition, and a political bureaucracy that delays rather than accelerates solutions - could it be that something is spinning out of control? That we are seeing the first signs of a failing ecological planned economy?”
Time will tell whether the planned economies of the 21st century do it better than those of the last century.
What members are reading:
Why historians still get so heated about the Reichstag fire of 1933
Burn after reading: tax tricks at the ‘Gazprom’ climate foundation
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Three questions / observations:
1. From my understanding, Germany has historically always had an industrial policy that at least informally favoured keeping heavy industry happy, correct? Since the iron and steel industry was allowed to mostly exit Germany in the 70s, is the goal to keep what domenstic industry remains? (I see one view of this, working in metals research)
2. The security and independence of the German energy supply was conveniently ignored until last year, when it no longer could be. If there is an overarching political-strategic goal (independence from Russian energy supply AND decarbonization) then inevitably "Planungsicherheit" must follow, inasmuch as major capital investments MUST be rapidly made, since there are only limited technological paths and options which can rapidly scale to the appropriate level (e.g. electrification).
-In your opinion, has the offical political-strategic goal not been clearly set? The French had a specific goal after the 1973 electricity crisis, and quickly removed foreign import dependence from their electerical supply. Does this need to be explicitly stated and passed into law in the Bundestag?
-Since any societal change of this magnitude (e.g. widespread electrification, movement away from fossil gas as an energy source) does require substantial investment, how much should the government direct the specific technological paths versus simply setting the targets?
3. The substantial and lasting economic damage to and decline of former industrial regions in the Ruhrgebiet was avoided through extremely smart government policy and planning. Unfortunately those effors were not nearly as successful in the former GDR Bundeslands, with the resulting inevitable political consequences, that those areas now support populists who offer few definitive economic plans but many policies directing anger at being left behind at other targets. Part of solving that problem must be rapidly bringing new large employers to those regions, preferably industrial ones. The new factories in Berlin-Brandenberg etc. are hopefully going to (partially) help some of these problems. For that to happen, there have to be incentives for companies to locate there.
-What kind of incentives are appropriate for this?
-How do we avoid swapping one dependence (Russian gas) for another (Chinese renewable energy technology)?
Jemand nannte es jüngst, Sozialismus mit menschlichem Antlitz.