Dear Reader, Another week, another crisis. This time it’s the turn of Germany’s state finances. In my latest newsletter for members I went into the backstory of why Olaf Scholz set up an enormous shadow budget to finance his government’s climate policies -
(1) infrastructure spending should indeed be a separate category of bond financing, and many countries treat it separately (and/or finance it through provincial or municipal bonds).
(2) While *one-time, targeted subsidies* can have a specific role (in the case of Intel at Magdeburg) in getting or keeping a specific employer or potentially at some part of an industry that is deemed critical to national security (and securing EU / German chip production independent of Asia does count, since China is getting ever-more capable of taking Taiwan), subsidizing whole sectors' energy prices simply isn't economically sustainable .
-If cheaper energy were available then no subsidies would be necessary. Funnily enough, three high-quality, baseload, carbon-free sources got turned off last year...
Two valid points there -
(1) infrastructure spending should indeed be a separate category of bond financing, and many countries treat it separately (and/or finance it through provincial or municipal bonds).
(2) While *one-time, targeted subsidies* can have a specific role (in the case of Intel at Magdeburg) in getting or keeping a specific employer or potentially at some part of an industry that is deemed critical to national security (and securing EU / German chip production independent of Asia does count, since China is getting ever-more capable of taking Taiwan), subsidizing whole sectors' energy prices simply isn't economically sustainable .
-If cheaper energy were available then no subsidies would be necessary. Funnily enough, three high-quality, baseload, carbon-free sources got turned off last year...
Hey this is cool stuff! I am happy I found you!
Drop all subsidies and lower unemployment benefits