"European farmers have been staging peasants' revolts for centuries, so you'd think politicians would have learned by now to avoid annoying them. Apparently not, with tractors blocking highways and town squares across Germany this week.
The proximate cause of the unrest in Europe's largest economy is net-zero climate policy. Berlin is in the grip of a budget crisis after the federal constitutional court in November ruled that politicians' favorite gimmick for funding the country's ruinously expensive energy transition violates Germany's constitutional amendment requiring a balanced budget. Which means Berlin will have to pay out in the open all the net-zero bills it had hoped to hide off the government's balance sheet. Ouch.
The ruling blew a 30 billion euro hole in the 2024 budget, stretching to 60 billion euros over the longer term, and Berlin's first attempt at a solution was to cut agricultural subsidies, among other measures. A budget deal unveiled less than a week before Christmas axed the subsidy for agricultural diesel fuel, saving up to 440 million euros, and removed a tax break on agricultural vehicles worth around 480 million euros. The intent was to inch toward net zero in a more budget- and free-market-friendly way by eliminating giveaways that encourage the use of fossil fuels.
Observant readers will have noticed that those sums are nowhere near the total amount Berlin needed to eke out. For all their complaining, farmers were far from the biggest losers in the budget deal. That title could go to the aviation industry, facing 580 million euros in additional climate-linked taxation. Or to the industries and consumers losing a subsidy worth 1.4 billion euros annually that protected them from a European Union plastics levy.
No matter. Facing vocal opposition from the farm lobby, Berlin already has backtracked on its budget deal, agreeing to preserve the vehicle subsidy and to phase out the diesel subsidy over several years rather than eliminating it in one go.
Farmers still turned out in large numbers to protest this week. The public appears to be with them. A poll carried out for the right-leaning Bild tabloid this week found that 69% of respondents agreed with the farmers' complaints.
What have we learned?
One lesson for the climate-obsessed left is that two can play at this game. Europe in recent years has been swept by waves of aggressive eco-protests, which in the U.K. involved throwing soup at paintings (and paint at buildings, including this newspaper's London office) and in Germany featured protesters gluing themselves to highways.
Environmentalists wanted to settle in the streets the policy debates that hadn't gone their way in parliaments and legislatures. Well, if that's how we're going to do politics now, it helps to own a tractor. Before there was unrest in Germany, there was unrest in the Netherlands, where an agricultural rebellion against environmental policies produced a new political party and laid the groundwork for Geert Wilders's startling victory in November's election.
One irony, which Britain's Just Stop Oil or Germany's Fridays for Future lefties will be too dim to note, is that if everyone who is negatively affected by the costs of net zero starts taking to the streets, the net-zero fantasy will end in a flash. The eco-left gets closer to its goals when it conducts climate policy debates in the relative obscurity of the parliamentary committee room.
Less encouraging for Team Common Sense is what the German episode teaches about the prospects for any sort of rational climate policy assuming that we must or will have a climate policy. If governments truly were serious about slashing carbon emissions, they'd do what Berlin just attempted, albeit unwittingly and unwillingly: a carbon tax.
The defining characteristic of such a measure, in contrast to today's patchwork of environmental levies, tradable carbon credits and industrial regulations, is its universality. Equalizing the tax on fuel regardless of use was a conspicuous economic virtue of the repeal of the agricultural diesel subsidy.
This was part of the reason farm-subsidy slashing could win support from Germany's Green Party -- which, more than any other left-wing party in the West, actually believes in the climate cause -- and the free-market Free Democratic Party at the same time. Berlin had stumbled into a budget deal that might have been a template for more effective, less distorting climate policies.
But the step toward universality ticked off farmers who hadn't expected to have to pay for net zero and would rather not start now. So they won't start paying. The dispiriting conclusion is that a carbon tax might eventually win support from a critical mass of politicians, but probably won't survive contact with the broader public.
Which means instead governments will only do more of what they already are doing. With no real climate benefit, they'll tax some and subsidize others and boost cronies and punish rivals in the name of net zero, while the rest of us pay ever higher bills for, well, everything. Our politics apparently can't tolerate an honest climate policy, which means we'll get a dishonest climate policy until the moment arrives when we decide we don't want any climate policy at all." [1]
1. Political Economics: Angry German Farmers Win a Street Fight Over Climate. Sternberg, Joseph C.
Wall Street Journal, Eastern edition; New York, N.Y.. 12 Jan 2024: A.15.
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