End of an era of plenty – Now only freedom helps

Inwhy doesn’t the chancellor dare to tell the simple truth? Namely, that a very long period of abundance is over for now, and now, at least for a while, the era of scarcity is approaching. This is not an unjustified revelation, but a factual declaration that supply at the moment and in the foreseeable future for the next few years will not be enough to meet all the demand.

The fact that what becomes rarer must therefore become more expensive is no more than simple economic logic. And you can and should trust that a responsible population will do so without using modern but rather oblique Anglicisms to pretend that crises, catastrophes, and wars can be overcome without a noticeable slowdown in prosperity.

Anyone sweetening things that go wrong is neither credible nor persuasive. Rather, it arouses the exact fears that he actually wanted to eliminate. Because common sense asks all the more why the Federal Chancellor acts as if he has everything under control.

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Although everyone has known for a long time from everyday experience when shopping, refueling or traveling that nothing is going as normal and cheap as it used to be, because scarcity is already a reality.

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What other bad news does the government expect that it does not trust the population with the courage and composure, understanding and pragmatism to deal with what is to come – without losing control or social rebellion?

Wouldn’t honesty be a smarter and more appropriate policy – that is, for democracy, an enlightened society, and economic success? Because that way it was possible to find solutions that start with the root and not with the symptoms of the faults.

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Of course, there can be heated disputes about who is to blame if supply does not meet demand. In fact, most of the reasons for this were their own fault.

They are politically wanted. The demand boom was sustained by the flood of monetary and fiscal policies. Low interest rates made it possible to live on credit and buy on credit. State aid to compensate for the effects of fighting the pandemic has done the rest to provide the population with a lot of purchasing power.

Cost-effective globalization strategy exhausted

At the same time, there were problems with the offer. However, they were not just the result of disruptions to global supply chains or the blocked Suez Canal. Airports without sufficient security staff and railways without drivers are equally lightly indebted to third parties.

More importantly, the cheap strategy of globalization has run out. Many global deals are no longer profitable when all efforts – including environmental and social shocks – are taken into account.

This also applies to traffic and mass tourism. Above all, however, the shortage on the supply side is a consequence of the political decision against nuclear energy and fossil fuels. However, under the current circumstances, a nuclear phase-out or climate neutrality is neither profitable nor easy to achieve.

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When demand exceeds supply, the solution is, at least theoretically, fairly simple: either increase supply or decrease demand, or better yet, do both. Therefore, part of political honesty is: first from fantasies of non-growth and the prohibitionist ideology, and instead proactively engaging in increased supply, innovation and new technologies.

“Dare to make more progress.” That was the claim and promise of the traffic light coalition just over half a year ago. The war in Ukraine and the Russian sanctions cannot and should not change anything. On the contrary, they are calling for “more progress” in particular.

Needless to say, the commitment to progress cannot be about understanding past growth. Increasingly cheaper consumption regardless of the environment, climate, mass poverty, exploitation, dependencies and the interests of future generations are leading to ruin.

Monetary and fiscal policy cannot meet all consumer wishes

However, a quality-oriented economic model that is based on progress in saving resources helps in the long run. This also includes charging those who cause harm and those who benefit from all the costs of their actions and activities.

Secondly it should be made clear to the public that neither monetary nor fiscal policy can meet all consumer and credit requirements. Central banks, and now even the ECB, at least initiated the interest rate returns, albeit too late. Further increases in key interest rates must and will follow.

The path chosen to fight the pandemic to the national economy has led to a dead end. The state should invest in infrastructure and education and ensure an effective safety, distribution and health policy. Maybe go ahead and save on everything else.

If allowed, the economy will dare to “make more progress” in the blink of an eye and will quickly make new business models pop out of the ground like mushrooms. He no longer needs state money for this. It needs “more freedom” – but it costs the state nothing. On the contrary: it brings more growth and therefore more tax revenues.

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Third admittedly, it takes time for growth impulses to take effect and supply to catch up with demand. Until then, supply should not be further constrained by political means.

Therefore, where it is still possible, avoid interventions that are inevitable in the long term but will continue to enlarge the supply gap in the short term. This is of course the case with the energy sector – a key area both economically and socially.

There is also a simple insight in the truth: if you want to save others, you must first survive on your own. Only a strong, intact economy and a stable society will be able and willing to meet the enormous challenges of scarcity, environmental problems and climate change.

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