The Saarland is a case of desperation. Despite waves of migration in Germany in the meantime, the population in the federal state has shrunk in the past ten years. Only in Saxony-Anhalt and Thuringia did the number of inhabitants fall even further.
Those who stay have to make do with less and less. Price-adjusted per capita economic output has shrunk by more than five percent within a decade. And that’s because there’s underinvestment. The investment rate was less than 18 percent of the gross domestic product recently, and of all the non-city states in Germany, only North Rhine-Westphalia has even worse values.
Saarland stands out among the federal states, but among the several hundred districts in the republic there are quite a few that are struggling in a similar way and are not that much smaller. For this reason alone, the decision by the car manufacturer Ford to build the planned electric car platform in Valencia rather than in Saarlouis points beyond the Saarland.
Once again it shows how difficult it is for politicians in Germany to maintain industrial cores and the well-paid jobs associated with them. It’s not that there was a lack of will, the local politicians tried too honestly rather than too little.
The old state government under Tobias Hans (CDU, meanwhile voted out) and Economics Minister Anke Rehlinger (SPD, meanwhile Prime Minister) put together a subsidy package, in the end “on a scale closer to one billion than 500 million euros,” said Rehlinger .
With that, the country would have pumped more than 150,000 euros into every immediately saved job – and financially overstated itself in the process. No wonder that the subsidy gift was “formulated, explained, specified”, but only to the favored global corporation – the taxpayer preferred to remain in ignorance.
The desperate but abstruse attempt to compensate for the disadvantages of a high-tax location through a high-subsidy policy has seldom been documented as expressively as in the Ford case in Saarland.
It is no coincidence that the most recent large-scale industrial settlements in the east of the republic were announced, such as the Intel factory in Magdeburg: State governments there are sitting on the fantastic billions with which they bought the lignite phase-out. The actually more prosperous westerners simply cannot keep up.
However, preventing competition between locations is as little possible as it is desirable. But, and the current case shows this very clearly, no one can have any interest in this competition being fought out mainly through the most lavish subsidies.
A well-trained workforce and a resilient infrastructure should be decisive criteria – as well as an attractive tax and levy burden for everyone (instead of exclusively for individual investors) compared to public services. Tax competition in particular can be a great opportunity for regions that are falling behind, as various Swiss cantons have demonstrated and, at national level, EU member Ireland has shown with its low corporate tax.
This would also be possible in Germany if – yes, if – the federal states were granted partial autonomy in taxing income. But as much as the subsidy race is accepted, tax competition is hated by statists from all political camps.
Olaf Scholz, for example, took an unfulfilled concern from the Ministry of Finance with him to the Chancellery: the global minimum tax, which is intended to further reduce tax competition and which will probably come sooner or later.
Therefore, the Ford case will probably not remain an isolated case. And, as in the case of Ford, you won’t know whether to be angry about the lost jobs. Or not even happy, because the alternative would have been incredibly expensive for the taxpayer.
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