Brussels does not limit itself to promoting the settlement of chip factories with more than 30 billion euros in subsidies.
(Photo: Reuters)
Technological sovereignty, secure supply chains, modern industrial policy – these are the new terms that seem to be gaining supremacy over the political-economic discourse: in Berlin, in Brussels, but also in Washington and Paris anyway. They are also terms of struggle that are intended to obscure a little what it is actually about: a partial reversal of what we call the market economy.
The latest chapter in the mission of sovereignty is the Chips Act, which EU Industry Commissioner Breton proudly presented these days.
The same applies here: The reality is more complex than the pure teaching of market economists would suggest. Yes, chips are a strategic “raw material” for modern industry. Yes, Europe has to react when the USA and above all China support entire industries with gigantic sums of money. And yes, Europe must also know that an intelligent technology policy that sets the right incentives makes the economy fit for the future.
However, there is reason to suspect that protectionism is also being practiced to some extent under the cloak of “sovereignty”.
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Brussels doesn’t limit itself to promoting the settlement of chip factories with more than 30 billion euros in subsidies. The Commission also wants to bundle the purchase of semiconductors, possibly even ban exports. The state aid law, which has made the European internal market what it is today, is being hollowed out beyond recognition.
“Technological sovereignty” is the name of modern protectionism
The zeitgeist is industrial policy and anti-competitive – this is a worrying development, especially for an economy like Germany, which depends like no other on the openness of the world markets. The new vulnerability that the corona-damaged economies have experienced has also led to a revaluation of values.
- The Market Economist is now the naïve, not the one who believes that the state is in possession of the truth. Forget that the market economy ultimately results from the realization that nobody owns one.
- The globalist is now the ideologue, not the one who propagates isolation and protection. But that the international division of labor was and is the basis of our prosperity – no one wants to know.
- The frugal is now the risk factor, not the one who assumes that the funds of the state and, in tow, those of its central banks can be drawn from nothing.
That shortages transport important information and that moderation and healthy public finances are prerequisites for the long-term success of economies – these insights are no longer valid. They are at best gray knowledge from outdated textbooks.
Reshoring initially makes the economy poorer
Globalization – that means easier travel for microbes or unwanted competitors on your own doorstep. The trend is not new. The Federal Ministry of Economics is gradually tightening the foreign trade law, which can make it difficult for foreign investors to enter the market.
The EU Commission is adapting its industrial strategy and introducing an “anti-subsidy instrument” that is intended to prevent state-sponsored companies from China from going on a shopping spree in Europe.
In many respects there are quite legitimate approaches. Defensiveness is not only indispensable for democracy, but also for the market economy.
In the pandemic, the state has shown incredible powers of action and restriction. The economy now needs a humble person who is aware of his limitations.
(Photo: Burkhard Mohr)
Overall, however, the trend towards trusting the state is questionable. Many of the globalization skeptics refer to the economist Mariana Mazzucato, who promotes an entrepreneurial state.
The state determines which technology the future belongs to. He says which business models are allowed to work or which are even morally reprehensible (keyword taxonomy). He determines which products are to be produced at home and which are not.
“Reshoring” doesn’t necessarily make the economy safer, but it certainly makes it poorer. Building resilient and diverse supply chains, on the other hand, is a more promising strategy.
In any case, talk of the end of globalization is a legend. German companies sold goods worth 1.4 trillion euros abroad last year – more than ever before. World trade is growing faster than it has in a long time. The international division of labor remains the driver of prosperity.
Nonetheless, the idea of a powerful, intervening state is booming. Last but not least, the pandemic has unleashed Leviathan’s incredible powers of action and restriction.
Recent economic history is characterized by the attempt to build national champions. France even nationalized entire industries for this purpose in the 1980s, think of the computer manufacturer Bull. German government officials later tried to set up a German solar industry – in vain.
The neoliberalism that prevailed 20 years ago, which believed in the superiority of the market down to the last ramifications of the economy and society, ended in state liability for the financial sector. Private losses were collectivized.
But now the pendulum is swinging back. And the risk is great that it swings too far. However, we do not need the powerful state, but the modern and modest one that is aware of its limits.
More on this: Europe’s battle for gas: Russia has the upper hand – for now.