BERLIN Ten billion euros for a chip factory in Magdeburg, two billion for an elevator factory in Duisburg, five billion for a chip factory in Dresden…
These figures are not just any ordinary investment in German industry. The sums are taxpayers’ money, which Germany is now handing out to companies in record amounts directly from the federal and state budgets.
What the projects have in common is that only about 50–70 percent of private money is put into them. Germany has reserved a total of 200 billion euros of public money to support green investments in four years.
This is how it wants to campaign for deindustrialization, i.e. the flight of production abroad, above all to China and the United States.
For example, the state of Saxony is branded with a name Silicon-Saxonywhich is supposed to compete with Silicon Valley in the United States as a technology center and manufacturer of semiconductor chips.
Finns’ jobs are also at stake
Global economic giants China and the United States are fighting a brutal chip and trade war. It is also the reason for the artificial respiration of the German industry. Subsidies worth billions are needed because the economy is coughing even worse.
Germany is estimated to be one of the large industrialized countries the only onewhose economy will not grow this year, but on the contrary will weaken.
The cough has already caught on in Finland as well, whose exports to Germany decreased by 14 percent at the beginning of the year when the beginning of summer came. In particular, the export of machinery and equipment shrank by 30 percent.
At the same time, Finland’s own production and industry orders are in a clear decline. This can also reduce the need for work, i.e. jobs in the future.
The economic system has changed
After the corona pandemic, the world has changed so that there is no longer one world economy, but several economic blocs, says the Austrian economist interviewed by .
– Blocks work according to the logic of a political and no longer a common trading system, director Gabriel Felbermayr The Austrian Economic Research Institute of WIFO says.
In Europe, too, politics has an increasing influence. In Germany, those in power want to use state subsidies to buy the votes of the citizens and to dam, for example, the rapid growth of the extreme right, read more here.
According to Felbermayr, Europe’s well-being may be threatened to some extent when the world’s giants rattle their trade sabers.
– Europe is more dependent on international raw material markets than the United States. We don’t have as many metals or energy sources, and China is in the same situation as Europe. It means competition, says Felbermayr.
In his opinion, small countries have reason to fear competition from big ones.
– This [suuret valtiontuet] can weaken intra-European competition. The risk for small countries is significant: that technical innovations will take place elsewhere, for example in Germany or France.
Small countries: Lobatkaa
It is bad for the representative of a small country to go and tell his European big brothers to stop supporting the industry. The United States and especially Asian countries push theirs even more.
– Instead, Europe’s small countries must ensure that we also benefit from these subsidies in peripheral areas, says Felbermayr.
It means that the small countries lobby in Brussels and ensure, within the framework of common laws, that the new industry that receives state subsidies also includes business partners from remote areas.
– When Germany invests ten billion euros of public money in Magdeburg, it can mean that Finnish, Austrian, Portuguese and Greek companies will also get business there. But that requires political support, Felbermayr emphasizes.
“Like throwing money out the window”
In Germany, there are also many voices against huge public subsidies. Direct subsidies should not be given to highly profitable chip companies, especially when the jobs are not created for research and development, critics estimate. “Like throwing money out the window”, famous economist says.
Felbermayr is on the same lines.
– I see the risks for small countries, but based on the economic history, you can say: relax, take it easy. Large aid programs have rarely been successful in history.
– At first, when support flows in, money helps and jobs are created. But when the support stops flowing, growth stops. There is an opportunity for small national economies in that section.
The competition for the best insurance for small children is the EU’s internal market. If and when they are in danger, for example due to competition for state aid, representatives of small countries must clearly point out the problems.
– Everything that improves the unity of the European internal market is good for the small ones. Europe must grow together so that the advantages brought by even small countries are understood, says Felbermayr.
You can discuss the topic until Thursday evening, August 17. until 11 p.m.
More on the subject:
A “war of chips” is underway between the great powers, says a US professor – at its worst, it threatens the entire global economy.
Germany tames the energy crisis with a support package of 200 billion euros and a price ceiling – citizens are forced to be frugal when using gas.
Car factories are already turning off their machines because they don’t have enough microchips – We asked Ponsse, Nokia and Verkkokauppa.com how the lack of chips shows up.