The chickens are coming home to roost for Europe’s so-called powerhouse Germany

Excellent post about that low-wage/crumbling infrastructure/paltry pension/black zero/balanced budget swabian housewife FinMin/dieselgate country Germany from Bill Mitchell. A country, that Schäuble thinks should be emulated by other EU countries because, hey, the EU crises would be over then.

When I was in Portugal a few years ago (Porto mainly), I noticed taxi drivers at the rank queue who would get out of their cars when the front of the queue changed and push them to the next spot in the queue. It was like something one would see in a very poor nation without fuel. But then austerity had created poverty in Portugal and the taxi drivers were just trying to eke out a living as best they could and make as many savings as they could along the way to spread the meagre receipts they earned as far as possible. But then that was just Portugal, right! They have been living beyond their means for years and needed the reality check that austerity brought, right! They should follow Germany’s lead and tighten their belts and enjoy low unemployment and the strongest economy in the Eurozone, right! But, of course, the reality is different. Germany has become so obsessed with recording fiscal surpluses that its trucks can no longer transit important bridges and so the export model is being undermined. It is so obsessed with screwing its own people and overseeing an increasing bias to precarious work with low pay that the future retirements of their workforce is in jeopardy. The chickens are coming home to roost in a big way for Europe’s so-called powerhouse. No other nation should follow its lead.

Remember the Juncker plan aka the ‘EU Infrastructure Investment Plan”, which the current European Commission President devised between drinks as his grand scheme to revitalise Europe after years of failed policies interventions.

The plan outlaid a measly €315 billion over the period 2015-2017. Yes, it ends this year.

The estimates of the sort of capital injection that was actually needed at the time to address the failing infrastructure in Europe and to kickstart growth was multiples of the sum that the European Commission provided for.

Massive capital injections are needed in the Eurozone after two decades of starved public investment.

The Deutsche Welle report (March 7, 2015) told us that “all truckers heading eastward towards Duisburg” should “bring a pillow” because the main bridge on the A40 autobahn that “crosses the Rhine River between Oberhausen and Duisburg” was deemed unfit for heavy vehicles given its deteriorating state of repair and increasing traffic usage.

It is “one of western Germany’s most heavily used bridges in what is one of the most important inland waterway transportation hubs in all of Europe”.

At the time the report was published, engineers working for the state of North Rhine-Westphalia estimated that of the 880 bridges in operation, “229 bridges have been assessed: 150 will have to be rebuilt, and 64 will have to be repaired.”

Just before this bridge was closed, another bridge between Wiesbaden and Mainz – the A643 Schiersteiner Bridge – was closed because the roadway had sunk several centimeteres overnight (in fact, 30 cms) after one of its main structural pillars collapsed (Source).

It reopened after extensive repairs.

As an exporting nation, the bridge infrastructure is crucial for its on-going prosperity.

When government embark on austerity they typically find it hard to attack what is referred to as recurrent spending because the impacts are immediate and tied to people – pensions, educational overheads, health expenses etc.

It is much easier to hack into capital expenditure because the negative effects are more remote from our daily experience and take time to reveal themselves anyway – usually beyond the current political cycle.

But when they do start to impact, chaos enters the scene.

As in Germany, where the public infrastructure has been so starved of funds that it is now starting

Last year (September 14, 2016), I read a report on CNBC that the A1 bridge between Cologne and Leverkusen in Germany was no longer capable of supporting the traffic, particularly heavy vehicles.

Trucks have been banned from using the bridge since 2012, which is one of the most important arterial road links in Europe. Truck drivers now have to take a 30 kms detour to access other (similarly endangered) bridges across the Rhine river.

One “study estimated that closing of the Leverkusen Bridge would cost €108 million per quarter in additional fuel and time.” (Source)

The report said that:

Crumbling bridges and traffic jams are staining Germany’s global reputation for efficiency. The infrastructure in Europe’s largest economy — as in the United States — has been slowly deteriorating from a lack of investment over the past few decades …

In 2006, Germany ranked third in the World Economic Forum’s Global Competitiveness Report for the overall quality of its transport infrastructure. This year, it has slipped to 11th place, while the United States ranked 13th.

Further:

The German Institute of Urban Affairs estimated that 15 percent of Germany’s municipal road bridges need to be completely rebuilt. German railway company Deutsche Bahn said new measures to increase train punctuality will take several years. Last year, 1 in 4 long-distance trains on the network did not run on time, in part because of construction efforts.

A recent report in the Handelsbltatt Global (May 25, 2017) – A Rusty Bridge Too Far – reported that:

Leverkusen Bridge in Cologne, for example, is host to an almost perpetual traffic jam, its steel so rusty that trucks are no longer allowed to use it. The chaos on this bridge across the River Rhine is so bad that it was a factor in the defeat of the North Rhine-Westphalia government of Social Democrats and Greens in recent state elections …

Leverkusen Bridge is beyond repair and experts refuse to predict how long before it collapses. The cost of replacing it is pegged at around €600 million – only a fraction of the tens of billions needed across the country.

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A leading German economist told the FT that:

For too long, Germany was focused on balancing its budget and reducing the deficit rather than on investment, and over time that really adds up.

Further, the funds provided to local authorities (States) by the Federal Government have been diverted “to reduce budgetary deficits and build up surpluses”.

In 2009, the ‘debt brake’ amendment to the German constitution banned “Germany’s state and local governments … from running structural deficits.”

Are you starting to form the words ‘moronic’, ‘mindless’, ‘ideology gone mad’ in your lips yet!

Well, we are not finished yet.

In 2012, the Spiegel Online Report (March 23, 2012) – Berlin’s Poor Collect Bottles to Make Ends Meet – told us that “Many pensioners and unemployed people in Berlin are turning to an unusual means of supplementing their meager incomes: collecting discarded deposit bottles.”

In this land of plenty, the so-called powerhouse of Europe, where trucks can no longer traverse key bridges and the costs of transport are rising significantly, its poorer people were resorting to rubbish bins to supplement their incomes.

This was no green environmental exercise. Rather, it was barebones survival for those who are trawling through the rubbish.

One of the images that never leave you if you work in poorer countries is the sight of people (of all ages) trawling through rubbish piles to make ends meet.

But in modern-day Germany, Spiegel told us that:

Significant numbers of financially destitute people are now resorting to collecting discarded glass and plastic bottles … But whereas the majority of those collecting used to be the homeless, alcoholics and drug addicts, more recently it is Berlin’s pensioners and long-term unemployed who are increasingly turning to the practice in order to make ends meet.

The powerhouse of Europe!

But the desperation of poverty is not just confined to pensioners and the unemployed in Germany these days.

A recent Euronews report (July 26, 2017) – Germany’s “working poor”: employed but still in poverty – gave a graphic account of the problem.

Despite low official unemployment, many who “have a job … are known as the working poor”.

They are so badly paid, despite having qualifications, and are forced to work in temporary or part-time jobs because of a lack of overall quality employment growth that their incomes render them among the impoverished.

The Report says that “Berlin … [is] the ‘capital of the working poor” as a result of the concentration of precarious employment in that city.

We learn that:

… one in five workers are paid less than ten euros an hour, they are the “working poor” … they are people who work 40 to 50 hours a week but who cannot make a living.

One of the consequences of this dive into low-paid, precarious jobs is that the old pension systems are starting to break down. Workers can no longer “put money aside for retirement”.

The pension formulae that used to work when people had full-time, secure jobs with real wages growing in proportion with productivity are now producing ridiculous outcomes for workers forced by austerity and neoliberal deregulation to eke out a living on precarious income streams in an increasingly low-paid work environment.

full post here