Lessons From Germany's Economic Contraction

Germany’s once-envied efficient economy is in freefall

Germany’s once-envied efficient economy is in freefall, and the climate change cult and European Green Deal are directly to blame. State policies subsidizing EVs and other products, shutting down coal and nuclear plants, and mandating forced conversion to untested, unimplemented “renewables” resources for energy have decimated industrial efficiency. Industries and blue-collar jobs are fleeing Germany for polluting, profitable operations in China, India, and elsewhere abroad. Will the United States follow suit?

As recent cold snaps in Europe and America push global natural gas prices skyward, Russian gas pipelines through Ukraine have been shut down for the first time since 1991. Germany has transitioned from Europe’s economic darling to its leading economic drag. Followed closely by France and the UK, similarly weighted by economically destructive climate fantasies, the latest blow to gas supplies compounds the crisis occasioned by the mysterious sabotage of Nord Stream 1 and 2, which delivered natural gas directly from Russia to Germany.

The result of this disastrous state-diktat policy experiment is the economic equivalent of a controlled building demolition – German industry’s most vital pillars have been blown asunder. Germany terminated massive EV subsidies at the end of 2023, and EV sales promptly fell 69%. Despite gushing economic promises of “high-paying jobs” in the renewables industry, Germany announces more lay-offs almost daily. Chinese companies, unhindered by escalating energy and regulatory costs, are leading in EV and other manufacturing technologies while spewing more chemicals into the ecosystem than if the same products were manufactured in Germany.

The climate cult is pushing jobs and pollution out of Europe, amplifying both for nations like India. German icon Volkswagon has threatened to close factories for the first time in its history, and recent layoffs of 35,000 (and wage reductions for 120,000) VW employees are harbingers of more to follow. Consumers are burdened by high energy prices for heat and travel. Fund managers and NGOs may be profiting from renewables manufacturing policies, but workers, consumers, and the ecosystem are all being systematically eviscerated in the boondoggle pursuit.

Will the US continue to follow Germany’s demonstrable folly? If the legendary German industrial model is being crippled by destructive climate change policies, the anemic American economy (with unpredictable tariffs looming) is similarly threatened.

However, there is hope stateside – the United States possesses precious natural gas supplies that Germany now lacks, and America has not shuttered its fossil fuel production. Renewables manufacturing, as well as the production of plastics, cement, steel, and fertilizers, all depend on high-temperature processes only available through fossil fuels or nuclear power. These fundamental industrial processes cannot be replaced with solar, wind, or other energy sources, as Germany is proving despite big plans to convert its entire economy to renewables overnight. Instead, cutting traditional energy production in Germany fueled a vicious economic cycle that further inflated natural gas prices.

As one market observer summarized:

The effect of the green agenda can be summed up as a long path to the gradual

degradation of Europe's energy security and a resulting path to deindustrialization.

The Ukraine conflict only exacerbated it….

The EU economy is already stagnated, with companies signaling a continued drive

toward deindustrialization of their domestic economy, while the New Year brings

many new challenges that threaten to accelerate the process.

Germany’s precipitous economic decline has not deterred climate fantasists in the US from continuing to push the same dangerous gambit here. As displayed in a Harvard International Review article, climate cultists simplistically attribute the blatant economic failures in Germany to the Ukraine War and slow implementation of climate policies stymied by a “paper-based bureaucracy” and consumer NIMBYIsm:

Though Germany’s fragile balancing act worked well for the better part of two

decades, its strategy fell apart when Russia invaded Ukraine and the West began to

heavily sanction Russian gas. Energy prices quickly rose 35 percent compared to

pre-war levels, leading to inflation and culminating in the serious economic woes

Germany experiences today.

Blaming Russia for Germany’s failed renewables policies is a watch-the-birdie distraction from the truth about the Green New Deal in the US and the EU’s essentially identical Green Deal. Harvard International Review perpetuates easily disproven tropes that “renewables” are somehow “clean” technologies preferable to the nuclear power that previously supplied German industry:

One of the main justifications for Germany’s departure from nuclear power is the

planned transition to renewable energy sources—a key reason why the Green party

has supported the decommissioning of nuclear power plants. While these sources

are indeed more sustainable than nuclear energy, which is not renewable, German

renewable energy infrastructure is nowhere near developed enough to provide

stable supplies to its massive industrial base.

The claim that “renewables” manufacturing – dependent on fossil fuels and generating a myriad of unregulated ecotoxins in production, distribution, and end-of-life disposal – is “more sustainable” than modern nuclear reactors is patently untrue. Leveraging this trope, once-prestigious Harvard’s naked-Emperor solution to Germany’s economic decline is to double down on renewables manufacturing:

Given restricted and uncertain natural gas supplies and a serious energy shortage

exacerbated by phasing out nuclear power, it appears most advantageous for

Germany to leverage all policy tools to transition to renewables as soon as possible.

However, the country’s transition to renewables has been notably lethargic, plagued

by a bureaucratic quagmire that threatens its energy security, environmental

commitments, and economy.

The opposite is the economic case: Germany’s “transition to renewables” has caused its economic decline, not the other way around. Europe’s Green Deal is flushing renewables industry (and academic) “stakeholders” with mountains of fiat currency while flushing factory jobs and German standards of living down the economic toilet. China, India, and other developing economies are reaping an economic boom at the expense of Western industrial health but also global environmental health – their industries produce renewables and other goods unhampered by Western environmental regulations (for Western-subsidized sale to Western consumers).

Sadly, Europe’s economic implosion is likely to accelerate sharply in the coming months. The United States is well advised to reconsider its rush to follow Germany’s once-lively economic canary into the climate cult’s poisonous ideological coal mine.

(Originally published at American Thinker.)