Volker Wieland: Why German economic policy urgently needs a reboot (Münchner Merkur / Frankfurter Rundschau)

Prof. Volker Wieland calls for a fresh start in economic policy in a guest article in "Münchner Merkur" and "Frankfurter Rundschau" (Ippen Digital). Emissions should first be cut "where it is most cost-effective, instead of pursuing small-scale German sector targets made more expensive by bans and subsidies," Wieland says. He sees the right way forward not in industrial electricity prices, but in a "policy that allows sufficient time for the huge structural changes that are coming for us and our economy."

The accusations of nepotism in the morally superior Federal Ministry of Economics have developed into a scandal that is stirring the Republic, ending careers, and keeping the media public fully occupied. After the heat pump turnaround, the ministry is already preparing the next billion-dollar grave with the industrial electricity price.

One determined suddenly, energy is scarce and expensive. This after one despite energy crisis successfully interspersed to switch off six nuclear power stations, which were 2021 with 69 billion kilowatt hours (kwh) still for 12.6 per cent of the generation of current good. This is after continuing to prohibit the development of German shale gas deposits, which would be large enough to largely replace the gas imports from Russia previously planned until 2045. In 2022, coal-fired power generation was expanded. Coal now accounts for a good third of electricity generation. The climate sends its regards. Of course, we want to massively accelerate the expansion of solar and wind energy and produce or import a lot of green hydrogen. But the necessary infrastructure is lacking. That will take time.

It would be time for a fresh start in economic policy, starting with a pragmatic energy policy that first and foremost ensures a rapid expansion of the energy supply, and a European-oriented climate policy that caps greenhouse gas emissions across Europe by extending European emissions trading to buildings and mobility. This would first cut emissions where it is most cost-effective, rather than pursuing more expensive, small-scale German sector targets through bans and subsidies.

It needs a policy that allows enough time for the huge structural changes that are coming to us and our economy; a policy that quickly advances the necessary infrastructure and simplifies overlong, bureaucratic approval processes; a policy that deregulates and digitizes administration instead of tying up even more scarce personnel in court and administrative procedures; a policy that supports business in the transformation with advice and action, but please not by overriding the crucial signaling effect of market prices. What is needed is an economic policy that makes use of the market and competition, creates a competitive tax framework, and does not want to impose transformation out of mistrust of the market and accept increasing damage to Germany as a business location.

(Abridged version)