Energy 103, The proposed Jamaica coalition in Germany -- before the collapse

Until middle of this month, there was still hope of a possible “Jamaica coalition” in Germany – Black flag by CDU-CSU, Yellow by FDP and Green by the Greens. I posted these thoughts and news liniks from November 18-20, 2017 in my fb wall, reposting them here.

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Before, Merkel and CDU/CSU were chummy-chummy with Obama in the anti-coal, "save the planet" drama. Then pro-coal, climate realist parties AfD and FDP surged high in the Bundestag elections last Sept, CDU and SDP suffered big time. Now Merkel perhaps realizes that Trump is correct in allowing more coal power for highly-industrialized economies like Germany so Merkel won't give in to the Greens' blackmail of closing all coal plants just to have a coalition govt with them. The danger -- a collapse in negotiation would mean new elections.

"The Greens reject a yearly 200,000 cap on asylum seekers, which is one of the CSU's main demands....

Merkel has proposed to reduce the capacity of coal stations, by 7 gigawatts (GW) by 2020, instead of 5 GW as proposed earlier by the CDU/CSU and FDP, but the Greens insist on a 10 GW reduction.

The FDP and the Greens are also at opposing ends over the so-called solidarity tax, a 5.5 percent tax on incomes, capitals and companies. The end of the tax is a core FDP demand, which the Greens reject."

-- from the EU observer article, Nov. 17, 2017.

Meanwhile, this is fake news from The Guardian “German Greens drop car and coal policies in coalition talks with Merkel”, Nov. 8, 2017.

“It is clear to me that we will not be able to enforce a ban on internal combustion engines by 2030,” the Greens’ co-leader Cem Özdemir told Stuttgarter Zeitung.

The Greens are also prepared to modify their demand that the 20 most polluting coal-fired power plants in Germany should be shut by 2020."

https://www.theguardian.com/world/2017/nov/07/greens-scale-back-policy-demands-german-coalition-talks

 The Greens are outright watermelons, green outside, red inside.

Many watermelons and frequent climate junketeers and jetsetters are angry that Trump is not giving them more money for the expensive, thousands participants annual UN FCCC meeting, this year held in Bonn, Germany. Now the watermelons are extra angry that Merkel won't give in to their demands that Germany should close down many of its coal power plants.

"Germany's Merkel dodges coal deadline at climate talks", Nov. 15, 2017.

"Germany generates about 40 percent of its electricity from coal, including the light brown variety called lignite that's considered to be among the most heavily polluting fossil fuels.

"Coal, especially lignite, must contribute a significant part to achieving these goals," Merkel said. "But what exactly that will be is something we will discuss very precisely in the coming days."

http://www.kansascity.com/.../article184694013.html...

The watermelons are a big bunch of hypocrites. They lambast coal yet super-enjoy Germany's industrialization and its 24/7 electricity, 40% of which is from coal power. They also lambast other fossil fuel like oil yet they jetset by the thousands from many countries and cities, their airplanes and cars using oil, not water or solar.

Macron is less hypocrite when he lambasts coal because France is largely dependent on nuke power that produces about 75% of its total electricity supply. Next to Germany in having big coal power supply is Poland, which will host the UN FCCC 2018 meeting.

"Poland ready for SHOWDOWN with EU over climate change as Trump sends 74,000 tonnes of coal", Nov. 16, 2017.

"Prime Minister Beata Szydło has warned MEPs she will "throw it back at them" if they criticise her nation's carbon consumption at next month's EU summit.

And that could set the scene for more stand-offs next year, when Poland hosts the next round of UN climate talks....

The ruling Law and Justice party are unapologetically pro-mining, a belief shared by US President Donald Trump, who visited the country in the summer and said: "Whenever you need energy, just give us a call."

https://www.express.co.uk/.../poland-donald-trump-coal...

"Mrs. Merkel’s failure comes despite astronomical costs. By one estimate, businesses and households paid an extra €125 billion in increased electricity bills between 2000 and 2015 to subsidize renewables, on top of billions more in other handouts. Germans join Danes in paying the highest household electricity rates in Europe, and German companies pay near the top among industrial users. This is a big reason Mrs. Merkel underperformed in September’s election.

Berlin has heavily subsidized renewable energy since 2000, primarily via feed-in tariffs requiring utilities to buy electricity from renewable generators at above-market rates. Mrs. Merkel put that effort into overdrive in 2010 when she introduced the Energiewende, or energy revolution." (Nov. 17, 2017) https://www.wsj.com/articles/germanys-green-energy-revoltgermanys-green-energy-revolt-1510848988

"It has already announced some 6,000 job cuts in its wind power unit, due to falling prices in major markets such as India and the US." (Nov. 16, 2017) http://www.bbc.com/news/business-42008269

'German Conventional Turbine Producer Siemens To Slash 6900 Workers Worldwide Due To “Energiewende”' (Nov. 18, 2017) http://notrickszone.com/.../german-conventional.../...

"At the 17-minute mark, Bernd Benser of GridLab-Berlin tells viewers that while grid operator Tennet had to intervene only 3 times in 2002 to avert grid instability, last year he says the number was “over 1000” times — or “three times daily”.

These intervention actions, known as redispatching, cost the consumer about a billion euros last year alone, says Benser. The SAT 1 voice-over warns that more power transmission lines are urgently needed if the Energiewende is to avoid “becoming a sinking ship“. (Nov. 11, 2017) http://notrickszone.com/.../german-media-report-power.../...

"Chief financial officer Markus Krebber said such a unilateral move by Germany, which had just contributed to making a pan-European CO2 trading mechanisms much stricter, would harm the economy and undermine the security of supply.

“Focusing on climate protection goals alone is not enough and will lead to fatal misallocations,” (Nov. 14, 2017), https://www.reuters.com/.../quick-german-coal-exit-would...

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See also:

Energy 99, Germany's FDP questioning or ditching Energiewende, October 04, 2017 

Energy 100, Bjorn Lomborg on World energy mix, October 19, 2017 

Energy 101, Disinformation and fake stories by the watermelon movement, October 22, 2017 

Energy 102, Germany's CDU/CSU and FDP rejecting the Greens' anti-coal agenda, October 31, 2017

Energy 102, Germany's CDU/CSU and FDP rejecting the Greens' anti-coal agenda

I like the development in the new German government. #1 CDU getting closer with #4 FDP (Free Democratic Party) in climate and energy policies while potential partner #5 Greens go more idiotic and watermelon-ic (green outside, red inside) in demanding zero coal power. The Greens have more commonality with #2 SDP and #6 Linke (commies). CDU is correct -- if they follow the Greens for the sake of coalition-majority, #3 AfD will greatly benefit and further expand as AfD is explicitly anti-renewables alarmism and cronyism. Germany having 3rd highest electricity prices in the world might move to 2nd or 1st if the Greens-SDP agenda will prevail.

https://www.thegwpf.com/climate-policy-threatens-to-crash-german-coalition-negotiations/

“If coal plants are closed down in Eastern Germany and thousands of workers are made redundant, very soon 30% of voters will support the Alternative für Deutschland (AfD),” Laschet warned. ... Prime Minister Laschet announced that he would not make substantial concessions: “If push comes to shove we will have to crash the talks.” He said that environmental policy was a bigger hurdle for the negotiations than immigration policy: “The latter is easier to settle than the closure of power stations.”

(translated to English by The GWPF)

http://www.spiegel.de/politik/deutschland/jamaika-sondierungen-armin-laschet-droht-mit-scheitern-der-gespraeche-a-1174776.html

"Kellner reiterated the Greens’ position that Germany should quickly close coal-fired power stations to help fight climate change, a position resisted by the other parties." 
October 26, 2017.
https://www.reuters.com/article/us-germany-politics/german-coalition-talks-stumble-on-migration-climate-idUSKBN1CV1FZ

"While all parties agreed in principle this week that they want to uphold the Paris climate accord, the FDP is pressing for a commitment to curb government measures to promote renewable energy, which help make German power prices the second-highest in the European Union after Denmark’s.

“We certainly have to reduce carbon dioxide,” the FDP’s Suding said. “In Germany, this is much more expensive than in other countries and we have to find a way to reduce CO2 emissions more cheaply. Of course, there won’t be a complete phase-out of coal by 2030.”

October 27, 2017.

https://www.bloomberg.com/news/articles/2017-10-27/coal-standoff-hinders-merkel-s-push-for-next-german-government

"According to Lindner (FDP):

The project of the century Energiewende [transition to green energies] has failed. None of the agreed targets will be reached. Climate protection is stalled, energy prices are rising and they are burdening us as electricity consumers, just as they are the industry and middle class. And not least of all it is becoming increasingly difficult to guarantee a secure power supply during the winter months.” 
http://notrickszone.com/2017/09/29/germanys-green-energy-project-close-to-death-eeg-feed-in-act-has-failed-has-to-go/#sthash.ZAheNnnr.RsV59Dyz.dpbs

It is good that both CDU/CSU and FDP are jointly resisting the deindustrialization goal of the Greens. One reason why AfD rocketed high to nearly 13% of the votes despite being created only 4 years ago is on the energy mini-suicide of the watermelon groups.
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See also:

Energy 99, Germany's FDP questioning or ditching Energiewende, October 04, 2017 

Energy 100, Bjorn Lomborg on World energy mix, October 19, 2017 

Energy 101, Disinformation and fake stories by the watermelon movement, October 22, 2017

Welfarism 5: Germany's Tax Hikes

Three weeks ago, May 12, I wrote this:

The government of Chancellor Angela Merkel found a solution to address Germany's financial needs to retain its expensive welfarism programs while avoiding budget deficit of 3 percent of GDP or higher -- by raising VAT from 16 percent to 19 percent. Taxpayers in the private sector naturally, raised howl as their money will buy less since the government will siphon off nearly 1/5 of the retail prices of the goods and services that they will consume. They protest, and rightly so, that their government has deemed it more important to raise already high taxes, than cut expenditures and pursue painful but necessary reforms in social security and the labor market.

The projected increase in government revenue from such 3 percentage point increase in VAT would be E8.1B ($10B) this year.

In addition, the government will also scrap selected tax rebates for individuals and introduce a 3 percentage-point top-up tax for high earners. In effect, this package of "tax reforms" is a double whammy of hikes in both income tax and consumption tax! Boy, if you're a politician and a high level government bureaucrat, what more can you ask? You got most of the money you want, forcibly taken away from the pockets of citizens, and spend that money on whatever programs you have in mind. From retaining if not expanding the already expensive welfare programs, to paying off large debts (principal + interest) accummulated through the years again, to finance the elaborate domestic welfarism and external military and foreign aid expenditures.

* But on the EU front, Ms. Merkel proposed slashing EU legislation by 25 percent in an effort to shrink the EU bureaucracy and encourage entrepreneurship (www.ft.com, May 11, 2006, "Germany proposes cutting EU laws by 25%", by Bertrand Benoit).
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Ms. Merkel ran on promises of more competition, smaller bureaucracy and tax cuts. Eight months into the office and she has already hiked VAT from 16 to 19 percent, effective January next year. In the works is another tax hike, possibly in income tax.

Why the double-whammy of tax hikes? You bet it, to finance welfare hikes. The new plan is to spur birth rate, to arrest the "greying" of the population, and encourage working women to have a family then return to work. This will necessitate expanding the already expensive and bureaucratic health care system, to cover children that would cost from €16 to €25 billion, or $20 to $31 billion.

Currently, around 90 percent of German adults are insured through 250 health care insurance companies, a system that eats up money with little accountability. Patients in the public system do not receive bills. Instead, the doctor is reimbursed through the patient's public insurance company. Conversely, in the private health insurance system, patients receive a bill that meticulously records the cost of each treatment.

Again this is another kind of "social engineering" by the politicians and the dominant political parties. They did some social engineering in the past, something that discouraged people from having bigger families, or from having a family in the first place. So, this new round of social engineering is to reverse that, to encourage people to have more babies, so that those children will work someday to finance the unfunded social security and health care currently enjoyed by their grandparents, and in a few years to be enjoyed by their parents.

If falling birth rate, and expensive, bureaucratic public health care are the problems, then I think new round of tax hikes and more welfare are not the answers. Instead, the government should (a) loosen the welfare system and cut taxes, allow individuals and households to assume greater responsibility for their families, from education to housing and health care. And government should (b) relax entry of migrants from other countries when demand for them by households and the citizens increased. How would these twin moves help encourage bigger families?

When parents have bigger disposable income and immigration is relaxed, they will hire nannies and domestic workers from abroad who will help them take care of their kids and the house while the couple is working and partying sometimes.

I have a German friend, a lawyer, who married a beautiful Filipina, also a friend, and they live south of Munich. They have a handsome son with a good Euro-Asian features (white skin, black eyes, and so on). Their son is a bit sickly sometimes, and the wife can possibly work if she wants to. So I asked my German friend why they will not hire a Filipina nanny to help them with the kids and household work. After all, the wife can find someone in the Philippines whom they can trust very well, and the pay is not expensive. My German friend said, "No Nonoy, it's very expensive to hire a nanny here. I can pay for her monthly pay, but I will also have to pay for her health insurance, social security insurance, unemployment insurance, and many other government-required insurance and welfare programs." Well, not to mention the difficulty of getting a work visa in Germany.

Germany's welfare vs. tax woes is a good case to watch for those in many poor countries. Many of our politicians, NGO and labor leaders, academics and media people, some businessmen, and foreign aid staff and consultants, "envy" the extensive welfare system of Germany and many European countries. They want to replicate many of those system in their respective poor countries, to "fight poverty". And so they are all one in justifying high and multiple taxes, especially in "taxing the rich", so the poor can be given generous welfare, from free education (elementary to university) to free hospitalization, and so on.

I say to them: don't arrogate personal responsibilities to the "collective"; don't assign parental responsibilities to government responsibilities; and don't confiscate parents' incomes for government and politicians' funding.

Related story, see http://www.iht.com/articles/2006/06/27/news/germany.php

* See also:
Welfarism 1: Dependence vs. Individual Responsibility, October 17, 2005
Welfarism 2: France Riots, Taxes in Welfare States, November 17, 2005
Welfarism 3: Spiraling Costs and Rent-Seeking, April 21, 2006
Welfarism 4: Italy's Fiscal Woes, Kid Glove to Criminals, May 29, 2006

Welfarism 3: Spiraling Costs and Rent-Seeking

A story today from the Financial Times reported, "Welfare costs threaten Merkel reform agenda". The related numbers from the same report are as follows:

* Spiralling welfare costs could add €4bn to Germany’s 2006 budget deficit and undermine Chancellor Angela Merkel’s efforts to bring her country’s finances under control

* faster-than-expected rise in the number of households claiming long-term unemployment benefits could bring this year’s deficit from a planned €38.3bn to well above €40bn ($49bn, £27.7bn).

* the number of households claiming “unemployment benefit II”, the most basic form of welfare support, comparable to the UK’s income support, has risen from 2.9m to 3.9m since its introduction 15 months ago.

* According to a labour ministry document obtained by the FT, the actual number is even higher. The document shows the agency’s monthly reports, based on samples, had underestimated the number of claimants by 200,000 a month throughout last year, suggesting today’s figure was around 4.2m.

* estimates total payments in 2006 could reach €28bn, well above the €24.4bn provided for in the budget.

* loopholes appeared in the system that have led to a flood of claims. Young jobseekers, for instance, have moved out of their parents’ homes and into their own flats in order to claim generous rent subsidies.

* news that her fiscal consolidation plan may be in jeopardy could be a blessing for Ms Merkel. It should make it easier to justify a hefty, three-point increase in value-added tax planned for next January.

Never fails. People respond to incentives and shy away from disincentives. If you put a lot of incentives and subsidies on something (unemployment claims, house rental subsidies, etc.), then you'll have more claimants than what you expect. If you tax people more, like the planned 3 point increase in VAT, you'll discourage more investments and job creation that will solve your high unemployment, high unemployment claims spending. Many businessmen will still invest, of course, but not in home country where taxes are high and piling on each other. Many of them will do business elsewhere where taxes are lower, labor and environmental laws are more liberal, then send some income and profit back home.

Many left-leaning, welfarist, socialist and statist groups in the Philippines and other developing countries dream of following the welfare system of Germany, France and many European coutries. They want to force social equality by over-taxing and over-regulating the productive and hard-working people, give the money to guys who are encouraged by generous welfare, with the huge, thick and expensive layers of government bureaucracy and politicians as intermediaries.

Subsidizing personal irresponsibility and penalizing hard work is one formula for social equality and mediocrity. And this is the folly of socialism. As Larry Reed of Mackinac Center pointed out, "equal people are not free and free people are not equal". Not that Germany and other rich countries of Europe are largy socialist, they are still predominantly capitalist but the bureaucratic, high state welfare system and high taxes discourage certain individual initiatives and entrepreneurship of their citizens. European countries are just lucky that they have put up good and less corruptible institutions. Government personnel are less corruptible because of their high pay and generous allowances and pensions someday. But what was corrupted is the system of incentives and disincentives in society.

I guess this is one reason why a number of Asian countries are growing much faster than the rest of the world. Aside from certain philosophical and cultural ethics that drive their people to high ambitions, they are not burdened by strict government-mandated welfare standards and the energy-sapping bureaucratic regulations and taxes. For instance, people work 10 to 14 hours a day, 6 days a week (equivalent to 60 to 84 hours/week), and any government labor laws that limit people's work to only 35 or 40 hours/week are not strictly followed.

Rent-seeking and Government

In the book Government Failure: A Primer in Public Choice written by Tullock, Seldon and Brady (2002, published by Cato Institute, Washington DC), chapter 4 was entitled "The cost of rent-seeking", written by Prof. Gordon Tullock. Dr. Tullock defined the words "rent seeking" as "the use of resources for the purpose of obtaining rents for people where the rents themselves come from some activity that has negative social value."

Examples of rent-seeking are (a) trade protectionism, where the protected local industry benefits but the local consumers are worse off; (b) private monopolies, and (c) direct income transfers by government where A is taxed and B receives the money. The real cost of rent seeking, according to Tullock, comes from the distortion of the voting process. People vote for politicians and legislators who promise them special local projects, barely realizing that the cost of high taxes from many other taxpayers elsewhere, and the high taxes that they themselves pay to finance the special local projects elsewhere, is high.

But the indirect damage of rent-seeking, he says, is even worse than direct damage. Example of indirect damage is drawing a big number of intelligent and energetic people into an activity that has no social product, or may have a negative social product (example, political lobbying for special privileges and protections).

I would say that around 95 percent of all forms of government restrictions, from bureaucratic procedures in starting a business, to erecting rigid labor laws like setting up high minimum wages mandated by Congress, to welfarism financed by high and complicated taxes, are rent-seeking in nature. They are tying productive people's hands, siphoning off if not outrightly confiscating, their income and savings, and transferred to people often driven by envy and too lazy to accept personal responsibilities on things that ought to be their private domain. The huge government bureaucracy and long layers of politicians that stand in-between the people whose incomes are confiscated and the beneficiaries who wait for such wealth transfer, also eat up precious social resources.

* See also:  Welfarism 2: France Riots, Taxes in Welfare States, November 17, 2005