One way to understand a country is by looking at how public money is being spent in a manner that subsidizes industries or services.
Subsidies come in different flavors, for example out of tax revenues, out of loans taken on by a government for the purpose, or out of fees and levies set up specifically to subsidize an industry or activity.
The first two are the most politically controversial, especially in a world where neoliberalism reigns supreme. In the U.S., the only sector that can very much enjoy next to unlimited tax and debt funding has been the military with its twin, law enforcement.
The advantage of the third is that is can be sold as "limited", "targeted", and "temporary".
A fourth, and special, version of subsidies is caused by government inaction. A well known example for this is the consequence of a government refusing to raise the minimum wage or of enforcing it. This is how, in Germany, the taxpayer subsidizes your Porsche sports car, or the famous Walmart statistics in America, where taxpayer money lifts the income of Walmart workers to a "living" level.
For Germany, the blogster thinks, the last major subsidy based on a taxation measure was the "solidarity levy", a tax hike on income put in place in the early 1990s. The surcharge was introduced for one year with the express aim of paying about 20% of the cost of the first Gulf War. The fact that Germany paid for a war in which it did not participate with military forces is little known outside of Germany, and today, even most Germans have forgotten the original reason for the levy. When the levy came up for renewal, it was swiftly repurposed as covering the costs of German reunification. In 2017, the "temporary" surcharge is still around - despite a booming economy and record federal tax surplus.
No surprise then, that the special levy approach has been the preferred variant for decades, and German governments of all political stripes have been expert at using this scheme.
One such levy is the "vocational training levy", a 900 Euro a year surcharge payable by individuals and small companies that do not offer vocational training under the traditional German vocational training system. The revenue is used to subsidize those companies/institutions that offer vocational training.
Of all German subsidy schemes, the green energy scheme is the most widely known. Successive German governments have praised their support for renewable energy and put money into the effort. While tax revenues are used across Europe to subsidize coal and nuclear power, the green scheme was designed as "paying for itself" through a surcharge on consumer power prices.
The PR effort paid off for a while. Nobody would feel a sense of dissonance when they cited the two major German accomplishments as "automobiles" and "going green".
The result is that German private households pay next to 30 cents for a kilowatt hour of electricity and billions are poured into subsidies, much of them to keep energy intensive industries alive. Since the "green energy surcharge" worked so well, they added another surcharge for grid maintenance and extension and slapped the 19% sales tax on top.
The ultimate test of a subsidy is this: the industry that benefits complains that subsidies are too high. This is such a rare, outlandish occurrence, it is well worth repeating.
Beneficiaries complain that subsidies are too high.
Note that the article is from 2012. What has happened since? Not a whole lot, although 2017 will finally see the abandonment of the 20 year income guarantee for green electricity producers.
Under the current scheme, German wind energy producers are guaranteed eight years of 19.5 cents per kilowatt hour, then two years at 15 cents, and another ten years at 3.5 cents.
The price for a kilowatt hour at the electricity exchanges stood at 3 to 4 cents per kilowatt hour.
When the blogster turned the computer on, the machine drew power at 9 times the price paid by the utility company at the exchange.
Two weeks ago, in April 2017, the press announced the first German offshore wind power park that won't use any subsidies. Though hailed as a big step forward, the levy on consumer prices won't be going down anytime soon because of the 20 year price guarantees for existing installations.
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