Do the Russians play Monopoly?
Posted by Heading Out on May 4, 2006 - 5:13am
Topic: Supply/Production
Tags: gazprom, germany, gulf of mexico, khurais, lng, russia, saudi arabia [list all tags]
In a direct reference to the Russian president, Mr Barroso (head of the European Commission) last week complained that the Kremlin was increasingly resorting to a very blunt, but potent weapon in its dealings with Europe - "the use of energy resources as an instrument of political coercion". . . . . In short, to mix the energy metaphor, Gazprom appears to have Europe over a barrel.However, given that companies have to be assured of their investments before they commit to large energy construction, it is worth noting that the pipelines and infrastructure are going to cost around $11 billion. Since it will take four years to get the pipes in, is it fair to ask those who demand windfall profits taxes from the energy companies, what they would consider a fair return on that investment?
While Gazprom sells just a third of its supplies to Europe, those sales - which last year totaled more than $25.7 billion - account for two-thirds of the company's revenue because domestic energy prices are still subsidized in Russia.
And speaking of Russian gas, and the need for long-term contracts, obviously someone has been paying attention, since it is now reported that all of the Sakhalin II LNG is sold. Oh, and if you were expecting any, well:
The plant, Russia's first, will have two trains, each with a capacity of 4.8 million tonnes/year. First shipments will begin in summer 2008.Well there went that!Talks with Chubu Electric Power Co. and Osaka Gas Co. are said to be entering final stages. The firms expect to have contracts in place for the nearly all the 9.6 million tonnes/year of capacity.
Earlier, on Apr. 20, Hiroshima Gas signed a full sales and purchase agreement (SPA) to buy 210,000 tonnes/year for 20 years.
Hiroshima Gas will use a new ice-class LNG vessel to transport the LNG to its receiving terminal in Hatsukaichi.
And on a historic note, even though about 20% of the GOMEX oil production is still shut-in, the Minerals Management Service is stopping the weekly reports on change, since there no longer appears to be much, and the new season is fast approaching. This should be a bit of a disappointment to OPEC, since, as I noted earlier they had anticipated
The revision reflects a slightly worse expectation for the recovery of the US GoM in 2Q06 and 3Q06. Assumed GoM losses in 2Q06 have been adjusted to 280,000 from a previous estimate of 200,000 b/d while for 3Q06 losses are now assumed at 100,000 b/d compared to a previous 50,000 b/d. Additionally, 50,000 b/d of permanent losses are not expected to recover in 2006, an assumption that remains unchanged.However OPEC expects that the Mars platform, Typhoon and K2 (a total of around 200 kbd) will soon come back. Mars is now expected to be back on stream by the end of May. It should be back in full production by the end of June (at 140 kbd). Typhoon, you may remember, was left upside down and the production return there is not as favorable. Meanwhile the Houston Weather Research Center has been looking at the data and found a cycle.
This cycle implies that the Gulf of Mexico oil leases have a higher risk of experiencing Category 3, 4 and 5 hurricanes over the next 5 years.Sigh! Though I suspect that this is not unsurprising news.
Speaking of OPEC, back before we all became concerned about just how much oil and gas remained in Saudi Arabia, they were quite happy to admit that they had extensively carried out aerial surveys of the country to find potential new fields. But the proof of the pudding, requires that holes be sunk, and production rates established through wells rather than computer programs.
Thus they are now committing to a greater number of exploratory drilling rigs particularly focused on the offshore.
The kingdom, whose desert oil reserves are the largest in the world, will deploy 20 percent of its rigs in offshore waters to explore for new oil and gas fields, Al-Saif said.Wonder where they are finding them all?By year-end, Saudi Arabia will have 120 rigs operating in the country, up from 85 last year and 54 in 2004.
"The offshore is growing," he said. "We see it as at least 20 to 30 rigs from here on instead of six or eight."
And in regard to the Khurais development where we have previously discussed the number of wells required, and their anticipated individual production rate, the Aramco VP said
Onshore, Al-Saif talked up the Khurais development west of Saudi Arabia's massive Ghawar field as the primary way Aramco will boost crude production from just under 11 million barrels of oil per day to 12.5 million barrels by the end of 2009.This gives an individual well production of around 4,000 bd rather than the 3,000 bd figure that we quoted earlier which was based on a reported 400 wells being required. And these rigs are not cheap.Khurais is thought to contain 23 billion barrels of oil reserves, most of it light, sweet crude that's easy to refine. The adjacent Abu Jifan and Mazalif fields hold an estimated 4 billion barrels.
Al-Saif said that the project required 310 horizontal wells to access all of the reservoirs, but together the fields should produce an extra 1.2 million barrels of oil per day by 2009.
Aramco will be paying Houston-based Rowan Cos. $100,000 to $105,000 per day for each of four large offshore rigs slated to begin exploring for oil and reworking wells in the Arabian Gulf for a three-year period beginning in early 2006.And to add a little more to Stuart's great posts on OPEC production I would just add this figure from OPEC which differentiates planned crude and LNG production.
Thxs for the new info! I find the Euro-Russian natgas situation fascinating. If the Euros are smart, they should do every effort to increase efficiency, insulation, conservation, etc, so that they can ssttrreettcchh this natgas benefit as much as possible to keep their economies robust enough to pay their bills. If not, I am sure the Russians can resell this fuel to another eager buyer with more cash. The best Euro benefit of all would be if this Russo energy could mostly be used to build the next paradigm, instead of just burning it for senseless reasons.
Still find it hard to believe that so many exporting countries let their citizens have fossil fuels at below market costs. This will not help prepare their people for the next paradigm; it will only lead them further into Overshoot.
Bob Shaw in Phx,Az Are Humans Smarter than Yeast?
Thank goodness for google, or I would have never had any idea what that meant. Sounds like some of that there crazy pommespeak! snicker
Why do you find that hard to believe? The West, and the US in particular, while not selling below market, has long been selling well below what the price ought to be in view of future depletion. And continues to even with recent increases.
The citizens in those countries, in many cases, are far less able to afford market. (Our citizens are able to pay with borrowed money -- second and third mortgages, in essence held by other countries.) So that's one form of spreading the wealth, maybe not the best, I agree.
Overshoot? Yes, again, I agree. For them, and for us.
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What is somewhat noticeable is a feeling that the profits that are being earned by domestic German energy (electric/natural gas) companies are too much related to monopoly practices and weak to almost non-existent oversight, and that the answer is to examine the books of the companies, determine a fair rate of profit, and then adjust people's energy bills accordingly.
Sort of the way it used to work in America a generation ago, actually.
Further, since natural gas prices are tied to oil prices, there is a feeling that this artificial market coupling is a relic of the past, and that the market price of each should no longer be tied together. As you can imagine, all the German energy companies are opposed to this - this has been their little profit machine. Sort of like UPS's cream skimming against the USPS - UPS is a better managed company with a bottom line focus, has less fixed costs in terms of obligations of delivery, and every time the USPS raises rates, UPS does too (at least back when we used both for shipping) - thus increasing UPS's profits without UPS having to do anything. You will never see UPS ever oppose any increase in USPS rates - but expect truly fierce opposition if the USPS ever tried to seriously decrease rates - UPS would call it anti-competitive, or some such. German natural gas companies are much the same - they have watched rates rise 'naturally,' and of course, they can't be blamed for that. This is why they fight so tenaciously against opening their books and having a fixed rate of return based on the actual natural gas prices in their contracts, and not on the price of oil.
Gazprom has little to do with the price of gasoline - and considering that most Germans realize that taxes already are the major component of the price of gaoline, no one is demanding that oil companies be taxed more.
But there does seem to be a fairly wide agreement that the oil/energy companies are making out like bandits currently, which just shows that Germans also know how to read a balance sheet. For some reason, the citizens of the world's largest exporter seem to have a better grasp of basic capitalist principles than the world's largest debtor nation. Germans consider this normal company behavior, and a reason to have government balance various competing interests - and they recognize that government listens to people who make their voices heard (bet you haven't heard too much about various strikes currently underway in Germany - the doctors have the longest running at this point I think - or how various unions seem to have been somewhat successful in forcing companies to take the worker's power seriously when distributing profits?). Germans don't mind paying for reliable utility service, for example, as they know that reliability costs more than simply gutting a system for short term profits.
I will also add, somewhat strangely, gasoline prices seem to be acting differently here than in the U.S. - this does make me think that some of the rise in prices in the U.S. are truly limited to North America. Whether this is a symptom of something worse for the U.S. is hard to know. It could be a first tiny signal that the U.S. is truly losing its place at the head of the oil table, as other people are able to pay more and/or do with less.
European refiners have played arbitrage with gasoline in the past, but they don't seem to be at this point. Of course, they might still, but I have the feeling that the refiners are acting pretty much the way Germans (and I think most Europeans) do with anyone who is bankrupt - they won't sell anything without being paid in cash upfront. Germany most definitely does not have a credit card culture. (And yes, I have known a person whose company that went bankrupt to the tune of a few hundred million dollars or so - on paper at least, though I would guess the family members had comfortable reserves in various undisclosed locations. Nobody in the neighborhood would give them credit for anything at all, even for something costing 20 marks or so. From the first rumors of problems, everything had to be paid in cash. Yes, business failure in Germany does lead to public shame, as compared to coming back with a hit TV series or book.)
Sorry, never been to Europe, so I am much in the dark as to the degree of cross-border cooperation. One of the links HO provided talked about Gazprom's pricewise ability to divide and conquer the various Eurostates with their pipeline routing infrastructure and pricing contracts. For example, Poland being upset with the new Baltic pipelines that bypasses them; author compared this with the Hitler-Stalin Pact of 1939, and gives cost justifications that the decision was politically driven, not economically driven. Can you comment if the Eurobloc can maintain it's single market cohesiveness against Gazprom, or is this energy contention likely to get so heated that the entire EU is likely to fracture? Thxs for any info.
Bob Shaw in Phx,AZ Are Humans Smarter than Yeast?
An attempt to change the direction is obvious then: create a cartel of buyers which would negotiate with an implicit cartel of sellers (Gazprom+Norway). If successful, this strategy still might result in a completely liberalized European energy market. However, another problem appears: a market with, essentailly, one buyer and one or two sellers is not competitive in any sense of the word. This is a "matching problem": there is "match surplus" which has to be split between the two negotiating sides in proportion to their bargaining power. It is very understandable, then, that the EU Commission is mad at Germans who reduce EU's bargaining power by striking unilateral contracts.
Poland's position is less obvious (of course, they love to hit at Russia at the slightest opportunity, but I'm talking economics here): instead of being one of the few transit countries capable of extracting a lot of rents, they will become one of 25 cartel participants and probably will get less goodies in the internal EU distribution of its share of the surplus. They are losing in any case, but they are losing with NEGP more. I guess they have their own Russophobic rethorics and politics of the last decade to blame for this self-inflicting wound, though.
Coming down to the double cartel situation: EU looks to be the losing side, as more cartel members (25) on the buyer's side means more incentive to cheat. There are technical ways to avoid cheating, of course, especially with gas which has few entry points, but expect a huge political battle before anything becomes an official policy. It will definitely be more loud and nasty than the last year's EU bickering over the budget.
And the last parting thought: Ukraine was paing $50 per thousand cubic meters of gas. Population, actually, was paying just $39. It also initially proposed re-negotiating the 50 dollar contract itself (I remember reading professionals' articles in Ukrainian press last August which warned about the sheer stupidity of this step), and resorted to complains to all the high powers on Earth only after looking at the real prices. The last time I checked, end users in Germany and UK are paying real prices for their gas. Therefore, trying to interpolate the Russia-Ukraine gas spat into Russia-UK relations, as FT and others tried to do recently, is completely unwarranted. Of course, it helps to whip up population's histerics, which might be used in any future cartel-to-cartel negotiations in order to increase EU's relative bargaining power.
Everybody in Europe (yes, another generalization, but one most Europeans consider absolutely obvious) puts their own interests first. But since we live in a world of other people, shared interests are the cost of doing business.
In terms of the Baltic pipeline, my opinion is that it is mainly being done to ensure that no one else gets a cut in terms of transit fees/bleeding off gas, and to ensure that all the contracts for construction are German/Russian. (I might add, ignoring Poland has always been something Germany and Russia share completely.) Further, since there are plans to hook this pipeline up into the Norwegian/Dutch/French gas network, Germany may also being planning on putting itself into a middleman position, in terms of raking in the fees itself - for example, selling North Sea/North African gas to Poland.
But cutting the Poles out, especially after the Poles pretty much said that as EU members, they would do what America thought best, is a multi-level game. The Poles were pretty stupid in how they handled the Iraq invasion, and the pay off never materialized - like all of America's current allies, they were simply used without any consideration of anything interests but America's. (Of course, if you are Polish, America still looks a hell of a lot better than Germany or Russia in historical terms.)
The question is not to what extent the Russians/Gazprom can split Europe into squabbling nation states, the question is to what extent are the Russians returning to old Soviet Cold War ambitions. At that time, the goal was essentially to split NATO - so in a sense, that is not real likely today.
I do think this is all a touch overblown in the American/English press - the world has been held hostage to Saudi Arabia and its fairly destructive form of Islam for a generation, and now the Russians are simply stepping back into their old role of tempting Western Europe into becoming an appendage of Russia's ambitions.
Except Russia seems to be a giant kleptocracy, not an ideological monster.
And though the Soviet plans of the mid-80s might have been successful enough if carried through, there is an EU today, and quite honestly, they will probably settle it out as well as possible. Most Europeans realize that scale matters, and most Europeans have lost their faith in the U.S. as a sort of kindly big brother.
How it will play out is murky - I expect a good number of Russian officials to end up driving Mercedes, and that the EU will continue to plan for the future, balancing a number of things while trying to ensure as much comfort for themselves as possible. Europe tends to be pretty post-ideology, something most Americans don't quite grasp.
What isn't often noted here is how energetically Spain, Denmark, etc. are developing renewable energy and renewable energy industries, or France's dealing with North Africa for gas - the Europeans are hesitant to become too dependent on Russia, since no one trusts the Russians anyways. And Europeans are not lazy in the sense of expecting some miracle - they live very much in the real world.
What is so typical is that now that the Russians are starting to act like good capitalists to earn as much as the traffic will bear, those who used to fear 'Soviet domination' seem deeply worried about the Russians playing by the West's rules - and winning.
The only correct strategy for Poland would have been to say, Der Russians and Germans, you can build your pipelines wherever you want as long as you follow international regulations in place that regulate development in the Baltic Sea. However please consider how much cheaper it would be and how much easier to maintain if you build it through our country, hey we will even help with a little subsidy. Here is our offer that is too good to turn down.
With the policy that Poland has followed, Germany especially has no other realistic choice than to go through with the undersea route. Not to mention that Poland has consistently tried to punch over its weight in a manner that has been destructive to both European integration and Polish interests themselves (one may remember the ridiculous, anachronsitic attempt to forge a "Catholic axis" and the pivotal Polish part in destroying the momentum for a European constitution)
If I was a Russian, I would be anxious about developments in the Ukraine as well. I would look at the Ukraine and think that the Western powers were attempting to carve-off the Ukraine and bring it into and under the "Western" sphere of influence. Seen from Russia the Ukraine would then function like a potential spearhead pointed at Russia's heart. An agressive and atagonistic Ukraine on Russia's border would be unacceptable to me, as a Russian. Also comtemporarty Ukrainian politics are Very complicated. People in the West and East of Ukraine are different. Poland appears to have revived its old dream of bringing the Ukraine into its orbit and establishing a Greater Poland. The people in the East of Ukraine are basically Russians, who would never support it breaking totally with Russia. So we could see a situation develop where the West supports one half on Ukraine, and the Russians intervene in the East, leading to the Ukraine spilliting down the middle or even something close to civil-war. All this is further down the track, yet, we should perhaps keep these possibilities in mind.
I suppose what I'm trying to say is, that, these countries have very complicated histories, and we should be very wary and circumspect, before/if we decide get mixed-up in their internal affairs, and how they can be used as pawns in the Great Game.
Sometimes I have the impression your posts paint a somewhat too pleasant picture of the situation here in Germany.
The consideration of business failure as public shame, for instance, is also part of the cultural complex that is crippling Germany´s potential for economic development (and that doesn´t just mean growth). In the US, at least (and I invite any American to correct me on this) I have the impression that someone can start out with a grand business plan, crash and burn spectacularly, flip burgers for a few years and then come back with the next big thing - and get another chance, if he can simply convince someone to finance him, be it by the strength of the business plan, or just by trickery. In Germany it would be very rare to have such a chance, and in truth it often happens that businesses fail because they tried something too soon. This leads to people in Germany only wanting to start a business when they can feel almost 100% sure there is no risk of failure, which most often means they never start it, or only do so with financial support form the state (which certainly does nothing to weed out bullshit business plans and often preconfigures them for failure).
Many similar cultural attitudes have also combined to make Germany a socially highly immobile society. Try to find another similarly developed country where the social status and income of a couple predefines the lifetime social status and income of their children as strongly as in Germany, and this despite the value that is ostensibly placed on equality (this is the really important result of the whole PISA discussion)
Out of the current strike movements in the "Öffentlicher Dienst" the hospital-employed doctors are the one and only who have a true issue, as they actually comprise a class of people who are objectively being exploited and the conduct of the state-run clinics also runs directly against EU law. However the vast majority of other strike participants are only trying to defend historically inherited rights of expropriation against the general populace - getting more security and payment for less work than everyone else. The inevitable and ongoing reaction of cash-stripped communities is purging the workforce in double proportion to Verdi´s demands.
Honestly it seems like black humor, after following the debacle of last fall´s elections, to say that Germans have a better grasp of basic capitalist principles. In terms of paying for reliable services, the German system has devolved ever more into paying increasing amounts of money for constantly degenerating or nonexistent services. In the 1970´s the concept was still working, as you were paying high contributions for basically "full-service"; today some of the most elementary healthcare issues have been privatized and the public health system has been effectively converted into a scam system profitíng a very small circle of insiders. If you have low income and bad eyesight, you´re out of luck - better hope your state-provided glasses from 1986 will last a little longer and never fall down, cause you just can´t afford the 1100 euros.
Certainly, Germany has many advantages in its social and economical structure in comparison to the US when it comes to coping with a coming energy crunch. Only very few of these have anything to do with policy decisions or expressions of the will of the people over the last generations. The one exception is that through a combination of an export-oriented economy and just enough state intervention, Germany has reached a critical mass of activity in renewable energy, so that people are realizing you can make money with this, it is strong enough to fuel its own expansion, and this sector is now a positive factor for future development even in the books of the most boneheaded conservatives.
Otherwise, Germany´s advantages (both in comparison to the US as well as some other European countries) either have to do with the basic geography of the place, or some unexpected side-effects of history (such as the relative decentralization which is largely the long-term result of French and Swedish power projection into Germany in the 17th century)
Practically all of the social and economic trends that critically-minded Americans are upset about in their country have been adopted in Germany; some of them have failed to make a similar impact but again this is usually due to the different surroundings. For instance Germany simply doesn´t have the issue of million.sized metropolises sitting in the middle of deserts. And, suburbia/exurbia cannot grow so maliciously in Germany because at 60 miles from a city center you have usually already passed through the next major center, if you aren´t in the next country.
The reliable services was meant in regards to such utilities as electricity - it has been quite a while since the electricity in this region had any problems at all. Various German systems are nowhere near the state of decay that major parts of American infrastructure are - basically, Americans stopped investing in such unprofitable areas decades ago. This is not a major debate however - I am sure that parts of Germany are in worse shape than this region, and parts of America are in comparable condition to the best in Germany. But Germans are much more aware of the costs and benefits of having reliable systems, which is one reason German infrastructure companies do so well in the world market. And Germans certainly pay a very high price for this reliability, which is one reason the energy companies play it up so much in public debate - without discussing their profits.
You are absolutely correct about the fear of failure being a problem. And yes, it does hinder the development of new ideas or new companies - except for the new ideas or new companies it doesn't. (I also know one of the original founders of the world's largest ERP software company.) But yes, the barriers are much higher than in America, and it is a real problem. It is certainly a German economic weakness. As I am American, I can assure you that failing in one business is considered a learning experience, and not something which ruins your future in business.
At least in Baden-Württemberg, part of the strikes of government workers related to their simply having to work longer hours without any extra compensation - much like the Beamten (life-long civil servants) were also simply told they now work longer (the Konrektorin / vice principal I know, if I remember correctly, had her work time simply increased 3 hours, and various things like Christmas money simply cut). This is not at all a debate about how effective the government workers are, or whether Verdi is right or wrong, or even if these workers have a realistic view of the world (a lot of them don't). But you can't simply tell your employer you will work 3 hours less because you are time strapped, a principle which works both ways. As for the whole IG Metall strikes - one way of looking at it is that Mercedes workers didn't feel that it was their fault that Schrempp and friends lost billions of euros, while his pay increased. People here do seem to have a much clearer view about how capitalism works, which is why so many workers are union members. And why the various companies/Industrieverbände are so interested in neutralizing the unions. (As a side note - I think unions are just another form of big business - I do not fit well into a right/left definition - but workers collectively demonstrating that the owners are not the only part of the social equation is absolutely necessary in a democracy.) (Another side note - Lidl is a true American style company - shutting down any store where workers organize, or having a newspaper fire a correspondent who reported critically about Lidl and its workers by threatening to withhold advertising - the fact that the BNN admitted this just shows how truly incompetent the BNN is as a news organization - a smarter newspaper would have waited 6 months, then fired her. It was also proof about how the German system works to brake 'capitalism' - in America, such firing is perfectly legal, here it is clearly illegal.)
'Practically all of the social and economic trends that critically-minded Americans are upset about in their country have been adopted in Germany' - to an extent, this is also true, except for the fact that it got started much later, it is still opposed by significant forces (though some are also growing weaker or less relevant), and that as you noted correctly, Germany simply has a different geography and history. But the advantages aren't merely luck. What happened to where I grew up is inconceivable here, as no one would approve of ripping up the forests and the watershed to simply build more houses. But I certainly agree such things as frozen food in Aldi/Lidl, the increasing size of the cars, or the growing number of air conditioners is going in the wrong direction. (Or the stores built with huge parking lots on the fringes of cities.) On the other hand, I can't imagine many people in Germany having a critical problem if the freezers were unplugged and the cars stayed parked and the air conditioners were turned off. And do notice the mandatory recycling of all packaging, the push for renewable energy, the backing of organic farming - you will not find the equivalent in real debate in America, much less in practice.
I am guessing, maybe incorrectly, that your experience of America is more from a distance. 'Only very few of these have anything to do with policy decisions or expressions of the will of the people over the last generations' - this could be debated, but the local farming and regional aspect of much agriculture, the Mittelstand tradition of business, and the fairly high value placed on Natur are all factors which do not support that statement. One of the more interesting 'quotes' I remember (sorry, no reference now) was from the founder of the company which reduces organic material to liquid fuel through tornado like vortexes - he said that his company really couldn't function in Germany, since the agriculture was so organic, there wasn't any real waste from industrial farming to use.
To the best of my knowledge, nobody in America (certainly no one in my experience) has ever had their health insurance pay for glasses. But 1100 euros is way, way too much to pay - mine were about 500 euros, and they were way too expensive too, but they were the best compromise for riding a motorcycle and how my German wife wanted me to look.
There are many measures of social mobility - Germany does really poorly for immigrants, and there is no question that social mobility is fairly well connected to your parents' status. On the other hand, by sopme other measures, Germany has more social mobility than America over the last couple of decades - a scary thought, in its way. (The German school system is appalling, in my eyes - but this has nothing much to do with PISA results, and a lot to do with how it pretty much determines a child's future around 4th grade.)
As for capitalist principles - that was a play on two different ideas. The first is that the world's largest debtor nation seems to feel it has some sort of unique insight into capitalism, where by the objective measures demanded by the market, it is an utter failure - and the world's largest exporting economy is somehow a 'failure' in the eyes of so many. (Most nations would love to have Germany's problems.) The second was the idea that people in Germany realize that perhaps the most basic goal of capitalism is the rich getting richer, which is why so many Germans, who unlike Americans, are quite certain they will never be rich, understand capitalism to be something which is not really to their personal benefit. Of course, this attitude can be carried too far in its turn.
People here do seem to have a much clearer view about how capitalism works, which is why so many workers are union members.
People in France generally do not have a clue how capitalism works... this is not uncorrelated with extremely low union membership. People are shocked when a company lays off workers even though it's making profits... the implicit model is not even socialist, but old-style paternalist.
the world's largest debtor nation seems to feel it has some sort of unique insight into capitalism
... well of course! They've got it all figured out, and are working the system for all it's worth! Having pretty much invented modern capitalism, surely the US is entitled to live off welfare during its dotage?
My point is actually American - workers in America are essentially powerless at this point, and, what a surprise, the rich are growing obscenely richer at a rate not easily imagined in other industrialized societies. Personally, the pension plundering is probably the corporate thing which is most disgusting these days, but give them a year or two, and I am sure they will come up with something else (the life insurance policy on your own workers - betting on them dying for corporate gain - is in its own category).
German workers may or may not be realistic, but they have no illusions at all that if they don't struggle for their piece of the pie, they won't get anything but crumbs. (Of course, that they want a bigger piece than the owners want to give them is a simple truth. That sometimes the workers get greedy is also a given - people are the same the world over.)
If you don't believe this, just look at America, and its income demographics. It is strange to watch a middle class society disappear in your own life time, to be replaced by an older, traditional American model.
Welfare is a dirty word in America. Just letting you know. Only corporate welfare is OK - then it is called the free market in action.
Thanks for your comments. An exchange of ideas doesn´t always have to be a combative debate. i think it is very interesting to discuss with someone who has a good firsthand view on both America and Germany.
Looking at the prevalent economic systems in Germany and the US - both of them were in the past able to provide prolonged expansions of standards of living. For the benefit of the US, its political system was also able to provide prolonged incremental betterments, while Germany of course is well known for its past of exporting rather serious convulsions.
The present challenges of energy and environmental crises question the maintainability of both systems, though Germany may be somewhat better positioned to transition gradually. However, even ignoring these challenges, both systems seem to be failing in terms of propagating the base of their prosperity into the future. That is, looking at the standard of infrastructure and education that they are providing for their average citizen a few decades or generations further down the road, this seems totally insufficient for these citizens to maintain a comparable standard of living.
That means their systems are in for trouble regardless, even if issues like energy resource depletion or global climate change actually turned out to be hoaxes in their entirety.
Anyone who takes a sufficiently broad view at the existing systems will tend to drop out of the classic left-right scenario; of course workers rights are a valid cause. There are certain areas where socialism works, and privatization doesn´t, however some of the traditional right-wing recipes also have their merits. Comparing Merkel to Margaret Thatcher was a huge mistake made by many foreign observers of German politics, I wish they had been at least partly right :)
When it comes to the Labor Unions, they were an essential part of the development of the well-functioning German social system from beginning in the 1880s, that was essemntially completed in the West in the 1950s. Effectively the power struggle between workers´power and Bismarck, and the latter´s victory, was what produced the basic outline of the system as it still works today. However today the unions are no longer the representants of an oppressed and exploited majority. Actual exploitation of workers in West Germany ceased to exist after WWII as workers were far too precious. The only place where German workers faced oppression, and worse, was of course under Communism. Today however the labor unions are the representants of what is quickly becoming a privileged minority, namely employees with regular and reasonably protected jobs. They are ruthlessly trying to increase the benefits for their members and are totally aware that they are helping to constantly increase the number of the permanently jobless. This does not touch them however since there is no such thing as an Arbeitslosengewerkschaft. (It is also interesting to see how the unions operate when they are employers themselves - Verdi for example has a huge bureacracy. They know all the evil tricks and use them to the fullest. My opinion on Verdi is also shaped that at one point due to existing conflicts I considered engineering the unionization and Betriebsratsgründung in the so far non-unionized company I work in. Which would have been totally within the rights and means available and in the end the employer could not have done anything against it. In the end I declined and honestly today I am happy, knowing what Verdi is).
In my opinion union power as it exists today in Germany needs to be broken. Unions have devolved into producers of mass poverty for others, when once they fought for the prosperity of the little people.
When it comes to rotting infrastructure, certainly the general standard in the US is lower. However Germany is again also simply easier to maintain (in terms of expanse and climate). Also, much of the infrastructure is substantially newer. Most everything was redone after WWII and many modern infrastructures were simply introduced significantly later. But do not forget how overland powerline masts crumbled under snowfall this winter - and then it turned out that some of these had not seen maintenance since being patched up after WWII. Not to mention all the building collapses under snow.
As for working longer hours without compensation - it´s a fact that most people in the "freie Wirtschaft" work more than stipulated in their Tarifvertrag - if they have one -, and honestly, who gets all the oldtime benefits like Christmas money anymore. Hardly anyone who has to individually negotiate his terms of employment has ever seen things like this since the early 90s. It´s simply a fact of increased competition that people have to work more in Germany than they used to in the 1980s, for effectively the same or less money. However coming from the relatively lazy german workforce this is perfectly doable. Just witness the fact that sick days across all of the economy have enormously plummeted in the last 15 years - not because Germans are getting healthier but because the days when everyone effectively took an additional week of annual vacation by playing sick are over. So no pity. For most of the German population the crisis of 1993 was the wake up call, and they heard it.
When it comes to health insurance etc the comparison was of course not to America but to Germany´s recent past. The example of the expensive glasses is a real one from a single mother with four children who until she finally landed a job recently had to live off Hartz IV. Who happens to have a very serious eyesight problem that however can be corrected to perfectly normal with specialized glasses. In essence her ability to contribute as a taxpayer hinges on getting those glasses, and in previous times the benefit for having an expensive health system was that she would have gotten those, no questions asked. Upon losing those glasses, today, well she might have to consider prostitution.
As for my view on America, it is certainly more of an outsider´s. I did live in the US in the late seventies (and this was quite a different America than today´s I would say) and the last time I visited was in ´99.
My outlook on Germany is strongly coloured by the fact that by choice I live in a low-income "Sozialbrennpunkt" community (btw, also in Baden-Württemberg). This is because like probably many others on this site I believe it is best to collect your own economic strength for upcoming serious challenges, instead of wasting it on status symbols like living in a "neighbourhood that is more appropriate to your income status". (I dont´ need a car anyway...) Such an environment exposes you to some views that are quite different from the official political focus but probably reflect actual currents in the country more precisely. And here I see that the seething, visceral detestment for the Beamten and everyone else clinging to special treatments, undeserved extra payments just for occupying a position, and state coddling is universal and most everyone says, Well let them finally grow up like the rest of us have done. Even those who vote for 'die Linke' have no patience for this.
Despite America´s failings, one has to admit that critically minded Americans are questioning not only individual sets of policies but also the predominant American mindset and culture. Also America has contributed greatly over the past few decades in the promotion of awareness of many relevant issues. America doesn´t just export flawed policies, it also exports dissident voices. Many public movements in areas like environmentalism, civil rights, etc got a kickstart from America, originated there, or had their defining public voices coming from there. And try to find any German-language website that provides even a quarter of the depth of "The Oil Drum" in regards to the energy issue (if one existed, I would be reading that one, and not this). In fact when discussing the "peak oil" topic those Germans who follow it usually also know and use the term "peak oil" because once again, the recognition and definition of the problem is led by American voices. Of course one can reduce this to say that America due to its reckless modernization and the sheer size of the contiguous market has simply had an opportunity to discover the deleterious consequences of some modernizations earlier.
However when I look at the discussion in Germany I see an overarching tendency to criticize those negative cultural aspects which are labelled and identified as "Globalization" and "Americanization" and are usually just Germany falling prey to the same temptations as America, and not consciously importing something American, or even having it imposed. However those negative cultural aspects which are genuine and local to Germany tend to get completely overlooked even by the vast majority of system critics, while I do see a willingness of American system critics to investigate their own culture more rigorously (perhaps because for Americans, the excuse of having their culture imposed by foreigners is really not plausibly available).
You are correct about your observations regarding the principal resistance in areas like farming, clearing for construction, some rapacious capitalist practices, etc in Germany. However this is no contradiction to my claim that all this is not result of 'policy decisions or expressions of the will of the people over the last generations'. Simply put, Germany is a significantly less modernist society than America. The large grass-roots resistance against these thuings is not a conscious environmentalist or political reasoning but just, without any conscious decision, the presence of the strong tradition - "This is not how we should be living", "You don´t do this, it´s meant to be done this way".
Wherever environmentalist and leftist activists have managed to tap into the traditionalist sentiment of the socially very conservative German majority they have been hugely successful and have repeatedly defeated governments and corporations. (Best example also from Baden-Württemberg the Wyhl reactor, where "pinko commies" where carried to victory on the back of ultraconservative Christian farmers whose dialect was practically unintelligible to the activists). Wherever they have relied on their political reasoning, they fail. Basically what this all goes back to is that the industrialization and the foundation of the present social system of Gemany was carried out in a society that still continued many archaic feudalist principles (the Prussian-dominated Kaiserreich), while Britain and France had already expurgated feudalism from their system long before industrialization and America never had it (well some aspects of the pre-civil war Southern plantation economy may have emulated it). These archaic roots are still very present in Germany today and have produced some benefits as above but also some of the most serious social and economic problems. Such as the inherent acceptance of an education system that sorts people into three tiers of 'worthiness' very early on, or all the bullshit that is strangling private initiative like Meisterzwang, Handwerks/Handels/ Ärztekammern, the way apprenticeship is set up, etc., the universal paternalistic ideology of all political parties in Germany, the conceptual inability to cope with the reality of immigration, and the remarkable divide between the level of political emancipation for women and the factual socio-economic emancipation (and finally a few German intellectuals have woken up to the fact that this is quite likely where the more severe demographic collapse in comparison to other mature industrial states is coming from, and not enough money or enough church. Countries with very strong conservative social traditions like Italy and Japan may have similar issues, while countries with more modernist social traditions like France and Sweden are doing far better in this regard).
Also, in connection peak energy and environment problems, the archaic tradition serves to frame discussions in terms of "going back" and "returning to the Proper Life". Which is not going to be a solution; the only solution is going forward, but on a different path.
Thanks for the explanation about the glasses - I had really wondered about it.
I also agree that America is a source of truly wide ranging opinions. The problem, at least in my eyes, is the huge difference between the ideas and the reality which most people live. Even some of the best critics, like Kunstler, tend to live the life they feel needs to be changed. This is my major problem with America, in the end. Germans tend to see a problem, discuss it endlessly, agree finally on what to do, then do it until completed (and as a further German problem - if what was agreed to was wrong, it is very hard to correct). But at least something is done, and generally, the results are pragmatically discussed, implemented, and then measured.
Your explanation about farming, for example, isn't wrong, but it also can be seen from another persepctive - why change something that works for reasons which people don't share? And Baden-Württemberg is a truly strange place - most think 'Green (Party)' and vote 'Black (CDU).'
But your analysis of Germany at the end of the last long paragraph is pretty close to mine in most ways - I don't quite agree with the idea of demographic catastrophe, though, for reasons below. German sexism is especially bad in my eyes.
Your point about making things look too good here is not without merit - except when dealing with peak oil, Germany is far beyond America in ways which will matter, even if people don't really discuss this topic - but it has actually been a part of public discussion since the 1970s, simply that much of the debate here is framed in environmental terms in general - which is actually a good thing in most ways.
To make a quick comment about this -
'However, even ignoring these challenges, both systems seem to be failing in terms of propagating the base of their prosperity into the future. That is, looking at the standard of infrastructure and education that they are providing for their average citizen a few decades or generations further down the road, this seems totally insufficient for these citizens to maintain a comparable standard of living.'
To a major extent, that is the point of peak oil - there is no current imaginable way to maintain a comparable standard of living - especially in the sense of working in a Mercedes factory, buying a Jahreswagen every year or two, and retiring at 62 with a full pension.
The question is then what sort of society will be able to survive the coming challenges, and to maintain/adapt essential elements like providing enough food to prevent mass starvation, ensuring that such things as medical knowledge is not completely lost, etc.
I tend to be dismissive of the doomers (those who believe in a massive collapse of civilization leading to 90%+ of humanity dying off), but their arguments need to be taken seriously enough to at least refute clearly. Germany will face a number of