All federal ministers swear when they take office that “I will devote my energy to the well-being of the German people, increase their benefit, protect them from harm, uphold and defend the Basic Law and the laws of the federal government, fulfill my duties conscientiously and do justice to everyone become”. This is what our constitution requires.
In retrospect, one can studiously argue about whether all political decisions of the past actually increased the benefit of the people. What is indisputable, however, is that according to the Basic Law, every federal government is obliged to act in the interest of the well-being of the German people, even if this well-being is neither immutable nor objectively measurable.
Now Russia’s attack on Ukraine, which violates international law, must be condemned in the strongest possible terms. It is true that Germany is not obliged under international law to take sides in every criminal war in the world and to support it unconditionally.
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However, Russia’s war against Ukraine is different: it also threatens the security of Germany and its European partner states. An intensive discussion about sensible and appropriate reactions of German politics to this war is absolutely correct. Ignorance is not an option.
>> Also read here: Do we need an energy boycott against Russia now?
Therefore, everyone who bears political responsibility should weigh the pros and cons of various measures against each other, be it to settle a guilty conscience or to avert damage to the German people as best as possible. In addition, it is by no means certain that Russia would end its bellicose aggression in the event of such an energy boycott.
A recent study by Econtribute, the Cluster of Excellence of the Universities of Bonn and Cologne, came to the conclusion that an immediate ban on imports of oil, coal and, above all, gas from Russia would result in a short-term decline in German gross domestic product of between 0.5 percent and three percent result, but in the medium term the shortfalls would only amount to 0.2 percent.
Recessions do not affect all citizens equally
Since these losses were considered manageable, a number of well-known economists called for an immediate boycott of Russian natural gas, trusting in the validity of this model beyond doubt. On the other hand, calculations by the IMK, which is close to the trade union, based on comparable data, see an overall economic slump of around four to a good six percent. This would roughly correspond to the – still uncompensated – loss from the corona recession.
Ifo boss Clemens Fuest is therefore undoubtedly right when he states: “We are far from being able to predict what the (actual) consequences are.” Even if one assumes that the model used represents reality validly and the ones made Assumptions are fully correct, so the advocates of a boycott ignore the significant distribution issues associated with it.
Recessions by no means affect all citizens equally. During the financial crisis, employees in industry and banks were hit particularly hard, while trade, service providers and transfer recipients hardly felt anything from this severe economic slump to date. During the corona pandemic, large parts of retail, the event industry and the catering and hotel industry were hit particularly hard.
Understandably, the energy-intensive chemical industry in particular is currently warning of a total standstill in the event of such a gas boycott. At the world’s largest chemical site in Ludwigshafen alone, where almost 40,000 people work, almost all employees would be put on short-time work or lose their jobs if half the gas were suddenly missing.
“That could bring the German economy into its worst crisis since the end of the Second World War,” warned BASF CEO Martin Brudermüller. The steel industry would also be massively affected. And should production actually come to a standstill in the chemical and steel industries, soon no more cars will roll off the production line – with massive consequences for those who work there.
At most, public sector employees would be very little affected by such a destruction of wealth. They would not have to worry about their jobs or their pensions.
There are a wide range of advantages and disadvantages in an energy boycott
Now the desire to impose measures that could hurt the political leadership of Russia and help shorten the war is understandable. Nevertheless, the advocates of such calls for a boycott suppress the fact that their recommendations do not serve the common good simply because they are based on a modern econometric model. Because the indisputable assessment competence of economists is limited to questions of efficiency.
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A situation in which at least one person can be better off as a result of a measure without making another person worse off is considered efficient. With an energy boycott, however, the advantages and, above all, the disadvantages are widely spread – across people, companies, countries and, above all, over time. First of all, almost all citizens of Germany would be worse off – admittedly to varying degrees.
Prof. Bert Rürup is President of the Handelsblatt Research Institute (HRI) and Chief Economist of the Handelsblatt. For many years he was a member and chairman of the German Council of Economic Experts and an adviser to several federal and foreign governments. You can find out more about the work of Professor Rürup and his team at research.handelsblatt.com.
On the other hand, there may be a faster end to the war and, in the longer term, a hopefully safer world. Christoph Schmidt, the former chairman of the Advisory Council, warns that such recommendations should only be made taking into account the associated considerable risks for the German economy, and adds: “These considerations go far beyond economic model calculations.” A truly politely packaged one blame.
Ultimately, all political decisions are linked to distributional effects and are therefore always a question of a sense of justice. Even brilliant economists make it all too easy for themselves to make judgments about justice, studiously ignoring the fact that there is no objective measure of justice that would allow the benefit gains and benefit losses of the affected citizens to be balanced.
And aggregated data provided by national accounts do not say anything about the fate of individuals or groups. Because it is not enough if there is enough petrol in Germany overall, but at the same time the gas stations in East Germany have to close due to a lack of fuel.
Sometimes one can only be thankful when leading politicians do not allow themselves to be driven by published opinions or parts of their own party, but take their responsibility for the German people as a whole seriously. Therefore: kudos to Scholz, Habeck, Lindner and Co., who resolutely rejected this boycott recommendation by highly qualified economists!
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