DThe German economy has little to celebrate in the 30th year of unity. The crown pandemic has suddenly choked off a long rise that has benefited all regions. There is no company in the East or West that is not more or less affected by political decisions regarding health protection. Much depends on the savings drop on the part of the state, which – although for the time being in individual cases – even engages as a shareholder to stabilize companies, see Lufthansa. In an economic crisis caused by a natural disaster, a great deal of state aid is needed. But the longer this exceptional situation lasts, the more the state can assume the role of entrepreneur: be it directly by acquiring more shares in private companies; whether indirectly, spending at political discretion, which private business deserves to be saved.
It is not without reason that he is not entitled to the role of an entrepreneur in the social market economy, and subsidies are also usually subject to strict competition scrutiny. After all, state-sponsored enterprises are instrumentalized not only by politicians in planned economies, as was the case in the socialist East Germany, for purposes beyond entrepreneurship. In return for the political influence of state-dominated firms on jobs, the climate or location decisions, governments provide them with regulatory and financial competitive advantages. This slows down private competition and undermines competition – to the detriment of customers, efficiency and economic dynamism.
Unfortunately, three decades after the collapse of the GDR state economy, politics in the country not only gained a more powerful position in the economy since fighting the virus. Even before that, at the federal and state levels, there was a growing tendency to use the state as an entrepreneur with the spongy “interest in society” argument. Even before the crown, Economy Minister Peter Altmaier (CDU) announced an industrial policy which praised the state’s entry into strategically important private companies as an “ultima ratio” to deter foreign investors.
Committing to vaccine development is a red flag
The background is the sharp transformation of the (car) industries in the East and West, which must catch up with digitization and meet increasingly stringent climate protection requirements, while the trade war between China and the United States is building a market obstacle. Now the virus provides another argument for state intervention, including large amounts of funding as the debt limit has been suspended. The “strategic” entry of the state into Curevac, a vaccine manufacturer, is a red flag. At the same time, there are signs that aid planned to tackle the corona recession in the short term will be excessively extended to delay an important structural change for the sake of jobs.