Why did Germany make the mistake of investing so much in renewable and Russian energies?

[Julie4]

[nightdrot]

It was not so much a mistake as a simple function of market economics. Germany and Russia have a long history as diplomatic rivals and as economic partners as each country is a natural trading partner of the other.

Germany, as an industrialized economy, served for Russia as a source of finished industrial products and consumer goods. Russia, with its' abundant territory, is a natural source of raw materials and foodstuffs. Each was a natural trading partner for the other and this was a source of interdependence for the other and, paradoxically, such interdependence, as a constraint on the other power, was a source of rivalry between both powers.

Most of history has been like that. The theory of the Enlightenment was that free market trading would be a spur to more peaceful relationships, but as each nation seeks to maximize its' freedom of action on the global stage, the trade relations that developed were see both as an economic benefit and as a constraint on a nation's freedom of action.

Thus, as a famous example, did German troops watch as they crossed the border into the USSR in the early hours of the war between them in 1941 as Soviet trains came into German held territory. Those trains carrying grain, coal and various other raw materials that the Germans would ultimately use against the Soviets who were supplying them. (Suffice to add that once the war began in earnest, such trade stopped.)

Even in contemporary times, there are other examples. See the complicated relationship between China and the USA. China has moved from an agricultural economy to an industrial/manufacturing economy. The USA is moving from a manufacturing to a post-industrial tech/service economy.

It, after all, pays more to manufacture computer chips than to grow cotton. Similarly, it pays more to write computer programs than to manufacture computer chips. Yet China needs the computer programs to improve its' manufacturing and the USA still needs the computer chips to facilitate the further development of new computer programs. So a deep trade relationship has developed between China and the USA.

Yet, at the same time, the USA and China are serious diplomatic and strategic rivals. Each needs the other in one sense, yet at the same time each sees that interdependence as a source of constraint and tension. Thus, the paradox of two strategic rivals with deep trade relations.

This is what Germany and Russia are experiencing now. Indeed, have experienced through their long and bloody history with each other. Russia is a natural market for German technological investments and it paradoxically helps the German economy - as well as environmental and other considerations - to make the Russian economy more efficient.

Germany wants raw materials and foodstuffs that Russia can supply cheaply as a matter of economies of scale. Russia wants that investment to improve its' economy. Thus, the paradox that what may be seen as a strategic mistake is also an imperative of economic logic.

(Just to add, for a slightly different example, see also the relationship between France and Germany. That being more a case of two industrialized economies seeking to improve sectors of their respective economies, while at the same time being long historical rivals. To repeat, this is not a situation peculiar to Germany and Russia.)

Bottom line, it is a paradox of the international arena. What seems like economic common sense translates into strategic rivalry. Each sees that economic interdependence from which each profits as a constraint on their security and freedom of action.

So Germany invests in renewable energies so that its' industrialized economy may get cheaper and cleaner sources to feed that economy. Suffice to add that Russia enjoys also the profits such trade provides and hopes to use it to move up the economic food chain.

[Julie4]

As for Russia, I can understand it now, but I don't understand the poor strategic choice of renewable energies. Having invested so much in renewable energies, only to realize that in the end they don't provide enough energy, we're forced to massively reopen coal-fired power plants, whereas before that the Germans had access to nuclear power, for example, which is a decarbonizing energy source. Is this due to the political clout of Germany's environmentalists?

Oh, I think I've read somewhere that the USA is reindustrializing quite significantly.

For the rest, France doesn't have that much of an industrialized economy. We have one of the lowest rates among developed countries, and in fact 76% of our GDP comes from services.

[nightdrot]

Well, as to Germany, they simply made a judgement that renewables were a viable option. They may, indeed, prove to be in time. However. for the moment, what is happening in many Western economies is that governments are attempting to force history and summon the future, so to speak.

In effect, they are trying to spur the technological innovations that may come as a natural development over time. Sometimes that can work - see also the development of nuclear science - sometimes not.

As to the USA, there is much talk in political circles right now about reducing our dependence on China. That dependence, as I noted above, was born of the fact that China is lower down the supply chain. It supplies the microchips for which Americans are writing the computer programs - as I explained above.

For the USA, this is a difficult thing as it runs against the free market instincts of the American culture. That is a culture that is dynamic and effective but that had forgotten Adam Smith's maxim, "The merchant has no country." So the USA is only now coming to grips with that reality.

As to France, it is - depending on how you count it - the world's 6th largest economy, second largest in the EU. It is, in fact, relative to the rest of the world, quite industrialized. However, as that stat you cited shows, France too is moving up in the next stage of industrialization.

[Julie4]

By the way, let me change the subject, I'd like your opinion on the rivalry between the USA and China.

To be honest, I have the impression now that China will never overtake the USA, for several reasons: in recent years, instead of the gap between the American and Chinese economies narrowing, it has widened slightly in favor of the USA, which leaves the USA with a really comfortable economic lead; add to this the fact that China is experiencing a significant increase in unemployment; and most importantly, China's population is going to be older than that of the USA, which is no small advantage for the USA.

And if we add to this the new US project acted on at the G20, the "economic corridor" project - railroads, hydrogen corridor, submarine cables to link India and Europe via Emirates, Saudi Arabia, Jordan & Israel - we only have to see the Chinese government's reactions to this project to understand that if it goes ahead, it will hurt China.

So for me, when I take all this into account, I don't see how China could surpass the USA.

Forgive me if I don't answer right away, my sister had COVID and I caught it too, I'm just getting over it but I still feel weak.

But I hope you enjoyed all the events you took part in and that you and your family had a good time. I hope you're well, take care and give my love to your family.

[nightdrot]

Wow. I hope you and your sister are feeling better. From my family to yours, we wish you the best.

Oh, and yes, we had a fun end of summer. We actually have one more social event next weekend and then life should start to return to normal. Which is especially important given that the Munchkins are back in school and therefore have an early bedtiime.

Finally, as to your comments on China, I am going to make this one easy for you. I basically agree with you, though I would add that nothing is assured. A war, another pandemic. There are enough unknowns that the USA supremacy cannot be assured.

However, you basically analyzed things correctly.

China's economy was growing at a rapid pace for a time, but to some degree that was a statistical aberration born of the fact that China was industrializing. It being the case that productivity soars as an economy moves, as China's was, from an agricultural/mercantile base to a manufacturing/extractions base. This makes economic growth soar, but it tends to draw down to more normal levels over time.

MORE

[nightdrot]

Your point about China's demographics, however, is really the key point. China's "One Child Policy" has been discontinued, but its' impact has been to age China's population well beyond where it should be for a nation in its' current stage of economic development.

China is, in fact, aging far faster than the USA and China's birthrate is not recovering. The net effect has been an aging and shrinking of the workforce - as well as a decline in the segment of the population eligible for military service - and a drop in productivity. Moreover, the birthrate has not recovered from the "One Child Policy.."

The net result is to give a huge - and seemingly permanent - advantage to the USA's economy. Again, this stipulating that all other factors remain more or less as they have been. Again, a war, a pandemic, or some other unanticipated event could change those projections.

However, for the time being - at least in economic terms - the USA seems to have secured itself an advantage. Though finally to add that as the USA bears the brunt of securing the Western world against China, Russia, Iran, North Korea and other hostile powers, the USA's money needs to go further than just the USA.

[Soteris]

No. Russian gas was supposed to be a transitory phase, going from Coal which is worse towards renewable. At the time Russian gas was cheap and easily available which made it the perfect candidate for a stopgap measure while the rest of the infrastructure made the transition towards renewables. It is not the renewables that are the problem, its the reliance on fossil fuels that has become the issue.

However, its also worth noting that Germany did not have to cut Russian gas. Russia invaded Ukraine, a country that Germany does not really care about from a national standpoint. Ukraine used to just be another of Russias puppet states after all and as such Germany could just continue with its plan of using cheap Russian gas to transition its economy. They specifically chose not to. They made a moral and principled stand at their own economic expense, fully knowing what this would cost them. Saying its a "mistake" when it was literally a decision they made knowing the cost is misleading. For them this was worth it.

[strateguy632]

wrong, russia was considered an enemy of n. ato' and was warned by u. s. not to strengthen an enemy, so germany was wrong twice to strengthen and rely on an enemy and an aggressor attacker. i guess they can buy from sauudi now?

[Soteris]

@strateguy632 No one has considered Russia as a credible enemy to NATO in decades. I mean, they are currently busy losing a war with URKAINE. Furthermore, no one gives a shit what USA says these days ever since USA burnt all their brownie points by electing maniacs and idiots as presidents such as George W Bush and Donald Trump as well as lied to NATO to drag them into a war in the middle east for literally false pretenses.

As such, Europe has been diplomatically distancing themselves from USA to stop having to deal with all their shit.

And lets talk about trade. If you do not want to fight an enemy, you trade with them. Trade relations defuse hostilities since opening a conflict with a major trading partner is extremely damaging to yourself. Trading with Russia was never a bad choice as such since they never posed a threat to NATO or "the west" which is obvious by the fact that we have not actually gone to war with them yet.

What ruined this relationship was not the trade deal or anything else but something completely different, namely Ukraine. Lastly, it is USA who has close cooperation with the Saudis, not Germany.

[RavVid]

The simple fact is that there are not that many good places in the world to produce solar and wind energy and Germany is not one of them.

So it was a mistake. It has been a mistake in most of the world. In Australia there are good solar and wind locations to the degree there is a project to export such generated power to Singapore. But of course politicians are more focused on subsidizing solar panels in Melbourne and Sydney where it is lousy for solar but plentiful in votes.

I think Germany invested too much in renewables because it was all rainbows and unicorns to people who couldn't do maths but could vote and wanted to believe in said rainbows and unicorns. If it is cold in winter then it means there is not enough solar energy hitting your local and it is lousy for solar. Impractical if you work the land area you need to heat a free standing house.

It was always a mistake for Germany to become highly dependent on Russia energy. I think that was driven by a political need to go over to a slightly greener fuel. Shutting down their nuclear power stations was another environment driven endeavor but nuclear power was their only real option..

[NaultD]

They equally bet on red and black on a roulette table and got a green zero. The entire western world should bet on green energy because Saudi arabia has enough oil to burn the crust of the earth 10x over. The only way to neuter them is with green renewable energy.

[BigDog1989]

Investing in renewable energy, isn't a mistake and needs to be done by the u. s. and ALL OTHER COUNTRIES

Relying on other countries for your own energy, is not ok. It takes from them, and it's like you're a parasite. Even if you're paying for it, it's just wrong

[goaded]

I think it's OK if you pay for it (and it doesn't price their citizens out of the market). Austria has a double reservoir system that generates hydro-electricity or uses excess electricity to pump water back up. Bavaria pays them for both services, they often have more solar power than they can use, even while the trains run on it.

[DryGermanGuy]

We did not. We invested so much in renewable energy to get rid of the dependency on Russia. Successfully so, as our energy prices are back to the levels of 2021. Russia‘s extortion attempt failed.

[Julie4]

Invest in nuclear power, coal-fired plants are no good lol

[Soteris]

Germany had a vote if they should continue with nuclear power or not and the people voted "No". That is why they are not investing in it and why they decommissioned the ones they had.

[DryGermanGuy]

Nuclear power is on its way out, I have a neutral stance on this. Coal will be out in the next ten years (rightfully so). We invest massively in geothermic power, offshore windparks and LPG infrastructure for foreign gas. During winter times me might buy nuclear electricity from France now and then.

[goaded]

WTF? Russian gas, maybe; we thought they were grown up and ready to join the civilised world. Renewables? Certainly not! They're one of the reasons we don't need so much gas (and they reduce greenhouse gas emissions).

[Drewtate]

Investing in renewable energy is not a mistake. What was a mistake was not building more nuclear power plants. Buying Russian oil/gas has fueled German economic progress since during the cold war

[Avicenna]

Russian energy was the least expensive source for an economy specialized in high-end manufacturing.

The renewables boondoggle came about because of the Greens and German industry looking to get fat off of subsidies.

[Subwayco]

Why? They were probably tired of paying for tanker delivery of gas and simply looked at the pipeline as the most economical way to go. It usually comes down to the money.

[genericname85]

i'm german and i think it's because germany is still trying to overcompensate for their history. wanting to be the most progressive and morally cleanest country at the expense of their own economy and their own peoples wellfare.

[AngryCarl2]

There may be something in this. Say what you like about Hitler, but he never trusted the Russians.

[genericname85]

@AngryCarl2 the Russians never disrespected us Germans. They never attacked us. I don't know why were supposed to hate them.

[AngryCarl2]

Did I tell you to hate Russians? We'll disregard for now the German soldiers tortured and murdered by Russians during or after the war.

[genericname85]

@AngryCarl2 no you aren't. our media does tho.

[AngryCarl2]

Your media hates the Russians?

[genericname85]

@AngryCarl2 yeah. so bad that they even prohibited russian tv stations now.

[AngryCarl2]

Well Russian TV stations are state propaganda so no great loss.

[genericname85]

@AngryCarl2 well our very own countries media is completely lost as well. like biden bombs our nodstream2 and our media just keeps acting as if nobody knows who did it.

[AngryCarl2]

haha yeah.

[msc545]

I don't see a problem with investment in renewable energy. I think therGermans stopped with Russia long ago. They also stopped with US companies as well. Smart people.

[Julie4]

Having closed these nuclear power plants and having been forced to massively reopen coal-fired power plants because renewable energies don't compensate enough, do you think this is a good move?

[QuietRunner]

Because of the anti nuclear power crusade

Also not wanting to listen to President Trump