Mr. Holznagel, the federal government and North Rhine-Westphalia are investing two billion euros in subsidies into Thyssenkrupp – and now the steel company is announcing massive job cuts. Are politicians being too careless with their citizens’ money?
Wooden nail: This example shows the different expectations. Thyssenkrupp needs money to remain economically fit and to transform the company. How this succeeds is a matter for management, the supervisory board and the owners. The state, in turn, provides tax money and expects that no jobs will be cut, production will remain in Germany and the entire company will become climate neutral. Often, many expectations of both sides are mutually exclusive – and that is why the state is repeatedly criticized. In some transformation processes, especially in the steel industry, the state is definitely called upon. The steel cannot yet be manufactured in an internationally competitive and climate-neutral manner. The question even remains as to whether this will ever succeed. Politics and society must be aware of this.
If you look back – in general – at public economic aid in recent years: was the tax money that flowed into the aid ultimately well spent? Or did it just help shareholders?
In recent years, Germany and especially the federal government have increasingly relied on subsidies for individual areas of the economy. The federal government and the state government of Saxony-Anhalt are currently promising almost ten billion euros for the construction of a chip factory near Magdeburg. We don’t know whether this will work. From today’s perspective, a lot of money was wasted in subsidizing the shipyards. Fundamentally, the general conditions in Germany are not right for the economy: high energy prices, high taxes and levies and a problematic state of the infrastructure. Unfortunately, subsidies don’t help everyone – only some people benefit! It would be better to improve the general conditions for everyone and then focus on competition.
How can a disaster like that at Thyssenkrupp be prevented in the future? Should subsidies only be paid against guaranteed benefits, such as job guarantees?
The state is not the better entrepreneur. That is why politicians must handle subsidies carefully and cautiously. Even asking for guarantees doesn’t help. The collapse of Philipp Holzmann AG, the bankruptcy of MV Werften in the northeast or, currently, the insolvency proceedings of the Galeria Karstadt Kaufhof department store chain show this clearly – the promises or guarantees of the managers are then of no use. Subsidies are intended to be a bridge for companies to be able to work innovatively. Therefore, they should only go to vital companies; they must be earmarked and limited in time. Anything else is an unjustified intervention in the market at the expense of all taxpayers.
