Prosperity in danger: How war forces us to make sacrifices and change course

prosperity at risk
How the war forces us to renounce and change course

The Ukraine war “will cost us prosperity,” says Federal Minister of Economics Robert Habeck. And Finance Minister Christian Lindner warns that Germany must “develop new sources of social prosperity”.

Greens and FDP in rare unanimity. In view of the confrontation, it is more than questionable whether Russia, as a reliable partner, will continue to supply the German economy with affordable oil and gas in the future. Germany’s consumers see the consequences day after day: Gasoline prices have climbed to record levels. Many goods have become more expensive in retail. In some supermarkets, the shelves for cooking oil are empty. The Corona crisis has not yet been digested when the war in Eastern Europe is catapulting the affluent societies in the West into a new era.

“Freeze for Freedom”

“We can also freeze for freedom for once. And we can also endure for a few years that we have less happiness and zest for life, »said former Federal President Joachim Gauck in mid-March on the ARD talk show «Maischberger». The news magazine “Der Spiegel” stated: “Words that have not played a role in German reality for a long time are returning: renunciation, deprivation, willingness to make sacrifices, lack.”

According to surveys, many people in Germany are already restricting themselves. According to a YouGov survey commissioned by Postbank, around one in seven adults can hardly meet the cost of living in view of the rise in inflation – 7.3 percent in March. Of those surveyed from households with a monthly net income of less than 2,500 euros, almost 24 percent stated that they were hardly able to cope with regular expenses due to higher prices. In January, 17 percent of this group said so. Inflation eats away at people’s purchasing power.

«Ukraine war makes us all poorer»

The federal government has put together two billion-dollar packages to relieve people in the face of energy and fuel prices. In the long run, however, the state will not be able to fix it with money alone. “The Ukraine war is making us all poorer, for example because we have to pay more for imported energy,” FDP leader Lindner told the “Bild am Sonntag” newspaper in early April. “The state cannot compensate for this loss of prosperity either.”

Secure income, being able to fulfill one’s material wishes – in the prosperity barometer of the market research institute Ipsos, which has been surveyed quarterly since 2012, such factors receive high approval ratings when people are asked about their understanding of prosperity.

In contrast to the crises of recent years, the war in Ukraine has shaken some things that were taken for granted in Germany as well. “Another consequence of the Ukraine war is the end of the peace dividend in the form of falling defense spending,” analyzed Ifo President Clemens Fuest. The defense budget is significantly increased. “That means cuts in public services in other areas and higher taxes, so ultimately less prosperity,” says Fuest.

«Inventory of the fossil age»

Speed ​​limit, car-free Sundays, turn down the heating – the list of proposals for savings against the energy crisis contains little that is new. A short-term reaction alone should not be enough anyway. As early as March 2020, the cultural theorist Benjamin Steiniger had his say in an article by the Max Planck Society entitled “An inventory of the fossil age”: “We live in cities that can only be reached by motorized vehicles, wear Goretex and nylon, feed us with the help of artificial fertilizers, are dependent on medicines – all things based on oil, gas and coal. Both concretely and abstractly, our lifestyle is shaped by fossil raw materials in a way that we have barely penetrated.»

Political scientist Philipp Lepenies believes that moral considerations – for example when procuring gas and oil from autocratic states – have been subordinated to consumption in recent decades. “The neoliberal market narrative assumes that the highest degree of freedom is that of free consumer choice,” said the head of the research center for sustainability at the Otto Suhr Institute of the Free University of Berlin on the SWR2 broadcaster. All of a sudden, the state and citizens would have to “make the consequences of their own consumption much clearer than ever before”.

“The third major setback for globalization”

The “euphoria for globalization” of the 1990s, as Lepenies calls it, is fading. For decades, Germany benefited from free world trade, which provided access to cheap products and raw materials. This, along with other factors, kept inflation rates at a comparatively low level. “Most things that we buy are now manufactured abroad – to put it mildly – for cheap wages and – to put it less harmlessly – sometimes under conditions similar to slavery,” said author Carl Tillessen, who comes from the fashion industry.

The framework conditions for world trade have changed a lot – according to economists not only since Russia’s attack on Ukraine. “The Putin shock is likely to prove to be the third major setback for globalization and global supply chains in recent years, following the US-China trade war and Covid-related supply chain disruptions,” argues the Deutsche Bank Fund subsidiary DWS.

Bringing production back to Germany from low-wage countries tends to mean higher prices. A general trend towards “deglobalization” could change the flow of goods and thus drive up consumer prices, wrote economists at DZ Bank as early as May 2021. People in Germany are therefore also paying a price for Ukraine’s struggle for freedom.

dpa