Memorandum 2023

The Bremen study group on Alternative Economic Policy has been publishing analyses since 1975. Sustainable infrastructure Investments, de-carbonization, environmental safeguards, work protections and welfare regulations are primary as well as resisting profit maximization and environmental destruction.

MEMORANDUM 2023

Globalization at an end -

Time for alternatives

EXECUTIVE SUMMARY

Table of contents

1. robust economy in Germany

2 State compensates for market failure

3 Active labor policy in times of segmented labor markets

4 Globalization in the crisis

5 Fossil fuels at the end - time for alternatives

6 Blind spots in climate policy: sufficiency and climate-friendly living

7 There is another way - pensions in Austria

8 Concluding remarks



MEMORANDUM 2023

Globalization at an end - Time for alternatives

by The Alternative Economic Policy Study Group in Bremen, Germany

[This memorandum posted in February 2023 is translated abridged by Marc Batko (marc1seed [at] yahoo.com)

from the German on the Internet, http://www.alternative-wirtschaftspolitik.de.]



1

We are living in a time of multiple crises. The corona pandemic, the ongoing environmental disaster, wars and escalating geopolitical conflicts are keeping the world on tenterhooks. Above all, the Russian war against Ukraine is having devastating devastating consequences. However, it has also provided the impetus to far-reaching and in some cases reciprocal economic sanctions, which have shaken up the global energy and raw materials markets.

The return of inflation that began with the corona crisis accelerated enormously. At the same time, the war has triggered a new wave of rearmament, which threatens to divert the necessary concentration of all economic and social forces on the fight against climate change into the background.

No one can seriously assess what escalation of this war with more and more weapons will lead to and what economic turmoil will be provoked. "I fear that the world is not sleepwalking into a major war - I fear it is doing so with its eyes wide open" (UN Secretary-General António Guterres before the UN General Assembly on 2/6/2023).

War causes endless human suffering and economic damage. How can the war against Ukraine be ended as quickly as possible while respecting its sovereignty and the principles of principles of international law? It is important to keep the door open to consistent strategies at all times concerning this war and the associated trade disputes, not only during this war, but also far beyond the war. The world is more dependent on cooperation than ever. Otherwise the ecological catastrophe cannot be stopped. There is no other way to overcome the ever-greater polarization between rich and poor.

A world whose global inter-dependencies threaten to sink into crises, chaotic processes and power struggles between countries and regions. Only through cooperation can rules be imposed on global capitalist exploitation enabling all people to live in dignity.

Thinking beyond war also means preventing long-term economic damage. The most obvious economic consequence of war and sanctions is the damage caused by the scarcity of raw materials, especially energy resources, and the price rise in many countries. According to calculations by the International Monetary Fund (IMF, World Economic Outlook, January 2023), the inflation rate in 2022 in industrialized countries was 7.3 percent and 9.9 percent in the countries of the global South. In Germany it was 7.9 percent. The central banks are fighting inflation with rising interest rates, but cannot change the causes of price increases.

The current situation is creating winners and losers -even if the situation is surprisingly stable and a global economic crisis is not in sight (the IMF puts the real increase in global gross domestic product (GDP) in 2022 at 3.4 percent in 2022). Many multinational corporations are benefiting from the crisis, the shortage of raw materials and rising prices. Oxfam

(Rethinking for social justice, January 2023) has analyzed 95 of the largest food and energy companies and found that they will increase their profits in 2022 by 256 percent compared to previous years. That means a profit of 306 billion US dollars. This sum was largely not invested; 84 percent of it was distributed to shareholders (Handelsblatt from 2/1/2023). The energy company Shell posted a new record profit of 39.9 billion US dollars, doubling its result from

the previous year. Here, too, the money was not reinvested. Shell distributed a total of 26 billion dollars in 2022 and bought its own shares for 19 billion dollars. The excess profits actually due in the UK, the location of Shell's headquarters, were trifling. Through clever tricks, Shell managed to limit the payment of the special tax to 900 million dollars (Handelsblatt from 03.02.2023). This shows once again how difficult it is to obligate internationally active

corporations with national tax legislation.

In the USA, there is once again debate about the role of multinational corporations in view of the completely inflated prices of the tech giants in particular, . The focus is on the power to set prices in order to increase profit margins. There is already talk of "greedflation.". The current inflation in Germany is also partly due to the pricing power of large corporations.

For the world's poorest people, the food situation has worsened due to war and inflation. "Hunger is also growing. Even before the sharp rise in food prices in 2022, almost 3.1 billion people could not afford healthy and adequate food, and the number has risen since then. Global food prices increased by 18 percent in 2022 compared to 2021 and energy prices by 59 percent. Up to 828 million people are going hungry. Almost 60 percent of the people who are currently at risk of hunger are women and girls, as they are particularly disadvantaged by patriarchal structures. They have lower incomes and are increasingly working in insecure working conditions" (Oxfam). The rising food prices are also such a big problem because the cultivation of food for their own supply in many countries of the global South has been pushed back in favor of export products (coffee, cocoa, cotton, etc.).in the context of globalization. In addition, the increasing extreme weather events caused by climate change (drought, floods) are increasingly threatening crop yields.

3

1. Robust economy in Germany

The economic development in Germany is exposed to extraordinary burdens. The Corona pandemic led to a decline in economic output by 3.7 percent into a severe recession. The way out of the crisis began in 2021. The mood for 2022 was initially very optimistic. At first, the pandemic was considered to be largely overcome. The joint forecast of the leading research institutes expected a growth of 4.8 percent for 2022 in its fall report of 10/13/2021.. Individual institutes were even more optimistic.

Whether such a boom would have occurred under other circumstances is arguable. Comprehensive sanctions were very quickly imposed when Russia invaded Ukraine on February 24, 2022. Energy prices exploded; uncertainty about future developments was great. The economy had to cope with another unusual burden.

Under these new conditions, it could be assumed that Germany would fall into a severe recession. An unprecedented slump would have threatened, particularly in the event of an energy shortage, . But things turned out differently: at least for 2022 the German economy has shown astonishing resiliency.. Economic output was even able to grow by 1.8 percent.. The catch-up process has been successful; the pre-crisis level of 2019 was exceeded. The decisive factor here was that a gas shortage was prevented. Due to the price explosions on the energy markets, there were significant gas savings nationwide. They resulted mainly from a price-related reduction in the demand for gas and heating in households and industry and, in the latter case, from a temporary fuel switch to other fossil alternatives (oil or coal). Above all, the increased coal firing in particular led to the same level of energy consumption instead of decreasing greenhouse gas emissions.

As a result, the gas storage facilities are sufficiently filled. Some energy-intensive companies have cut back production due to high energy prices. There were still major problems in the supply chains over the course of the year; industrial production effectively stagnated. Gross value added in the manufacturing industry only increased by 0.2 percent. The services sector benefited greatly from the lifting of corona sanctions (in spring 2021 there were still considerable restrictions). Above all. the trade, transport and hospitality sector grew by 4 percent on a price-adjusted basis.

Growth was driven almost exclusively by private consumption which accounted for 2.3 percentage points of the total growth. While the surplus (exports minus imports) in the past was the driver of growth in the German economy, since 2016 it only made a positive contribution to GDP growth in 2022. 2022 with the war, the sanctions and the disrupted supply chains was particularly difficult for Germany internationally. In addition, the sharp rise in import prices led to a massive deterioration in the terms of trade and further losses in prosperity from external relations. In this situation, the German account surplus also shrank sharply. The trade surplus depressed economic output by 1.3 percentage points. Domestic consumption, on the other hand, had a growth of 3.2 percentage points.

The high rate of inflation led to a considerable loss of purchasing power. Wages were no longer able to keep pace with prices in the second half of the year. Real wages shrank by 5.7 percent. Over the year as a whole, they fell according to initial calculations by 4.1 percent. This is the third decline in a row, after real wages fell by 1.1 percent in 2020 and by 0.1 percent in 2021. The increase in private consumption was therefore financed by saving. Consumption options were severely restricted in the corona crisis; were severely restricted; there was a "savings surplus" of around 200 billion euros. In 2022, the situation normalized and the savings overhang was reduced.

Government programs have also supported consumption. The first three relief packages to cushion the effects of inflation provided 95 billion euros, of which, according to ifo calculations, only EUR 33.4 billion will be effective. The Alternative Economic Policy Working Group

Economic Policy Working Group criticizes the lack of social targeting of these programs and their negative ecological impact. However, they have a a noticeable, demand-strengthening effect.

Looking ahead to 2023, the mood has brightened, but there can be no talk of euphoria. Stagnation can be assumed according to the forecasts available to date, . The biggest economic risk factor remains the energy supply. It is by no means certain whether the gas supply will be sufficient in winter 2023/24.... Energy prices have recently fallen and all forecasts for 2023 assume a slightly lower inflation rate compared to the previous year. At the same time, the wage settlements point to a stronger rise in wages, which will reduce the loss of purchasing power. However, an enormous loss of purchasing power will occur in the short and medium term. The expansionary effect of fiscal policy will be somewhat greater than in 2022 since the gas cap on electricity prices will be somewhat greater than in 2022.



2 The state compensates for market failure

The state is back as a global player on the economic policy stage. Nobody seriously doubts that active economic policy is necessary . Even during the major economic and financial crisis of 2008/09, economic policy had already acted together with the central banks with large spending programs against the collapse of the financial markets. This could still be seen by the

representatives of market orthodoxy as a one-off fall from grace in an extraordinary situation. But when the world plunged into the corona pandemic, the state was once again on hand with appropriate spending programs to cushion the consequences of the crisis, stimulate demand

and stabilize the economy. In 2022, the federal government had various packages to contain the consequences of inflation. This was done in different party constellations in the federal government and in many countries around the world. It has become the new normal in the current capitalist world.

The Alternative Economic Policy Working Group has been a vehement advocate of an active state investment economic policy. The change in policy that has now taken place policy change demonstrates the importance of the persistent work of the Alternative Economic Policy Working Group policy over decades. The successes of this policy are quite impressive: although all three major economic crises of the past few years had very different causes (collapse of the financial markets, lack of energy and raw materials). All three have the potential for a dramatic economic collapse. The situation could be stabilized again relatively quickly.

The effectiveness of the current active financial policy also depends on monetary policy. In the past, the expansive monetary policy of the European Central Bank (ECB) in its efforts to stimulate and strengthen sustainable macroeconomic development and thus counteract the break-up of the eurozone. Today the ECB is concentrating one-sidedly on combating the high interest rate last year in Germany which peaked at 10.4 percent and which, according to most forecasts, will be between 6 and 7 percent this year.

The reason behind the ECB's current policy is that there has been a change in the explanation of inflation. Flashback: After the inflation shock last year, the ECB justified its monetary policy by saying that the causes were the rise in prices for imported energy and food. This imported

supply shock was "temporary" and could not be successfully combated with a restrictive monetary policy. Under the massive barrage of criticism, the ECB changed its position last summer. The causes of inflation were narrowed down to the monetarist primitive causality: if inflation continues to dominate, this could only be due to a surplus of cheap money. Other causes of inflation - such as the rise in energy prices due to the war.

Energy prices, the crisis of globalization (supply chain problems) and the monopolistically enforced price hikes, but also the ecological costs were not taken into consideration. The increased core inflation rate, which excludes the prices for energy and food price, was evidence of the home-made inflation. However the rise in the core inflation rate reflects the broad passing on of energy costs across the board to the end consumer.

The so-called homemade inflation now being fought by the ECB is attributed to excess demand due to government spending on crisis aid and to expected wage increases that drive inflation. The neoliberal-monetarily motivated demand that monetary policy should discipline

wage negotiations is already doing the rounds again, despite its lack of success to date. Finally, under public pressure, the ECB finally acted. Key interest rates were raised in five steps from July 2022 to February 2023.

In the end, the key interest rate at which banks can borrow money from the ECB was 3 percent. Added to this is the planned reduction in the bonds purchased by the ECB which are to be reduced by 15 billion euros per month from March this year.

The results of this restrictive monetary policy are not surprising and can hardly be successful due to imported energy. The burdens on corporate investment and private households (for example when purchasing residential property) due to higher interest rates on loans are certain. Banks, which hardly pass on the higher interest rates via fixed-term and overnight deposit accounts, but increase the interest rates on loans, are among those with high interest surpluses and are ultimately among the winners of this monetary policy.

Active fiscal policy is about much more than economic policy. The socio-ecological restructuring of society requires stabilization of demand and also spending and investment. The crises have mercilessly exposed the deficits in many social systems. There can be no talk of resilience in healthcare, nursing care, education and the provision of affordable housing; the systems are operating at their limits. In the past MEMORANDUM, the Alternative Economic Policy working group dealt with these issues. Far-reaching improvements have so far failed to materialize. The ecological restructuring is also progressing far too slowly.

This is also reflected in the still far too little public investment in Germany. In 2020, public investment rose by 8.2 percent in price-adjusted terms. That was a step in the right direction, but still completely insufficient to reverse many years of disinvestment in the public sector.

In 2021 and 2022, public investment was reduced again by 2.8 and 2.0 percent respectively. Public investment in plant and equipment shrank by 3.2 percent in 2022, although military weapons systems are now included in this category. The share of public investment in GDP

was just under 2.7 percent in 2022. That is more than in the years before the coronavirus period, when it amounted to 2.1 to 2.3 percent. But that is not enough for the ecological conversion nor for repairing the largely dilapidated public infrastructure.

The most important source of public investment are the municipalities, where the investment crisis is still acute. "New needs are emerging, but the necessary investment ramp-up, however, is still a long time coming" (KfW Municipal Panel 2022). The KfW Municipal Panel put the investment gap in 2020 at 150 billion euros, rising to 159 billion euros in 2021 and will also be of a similar magnitude in 2022.

The Alternative Economic Policy working group has long called for a comprehensive investment and spending program of at least 150 billion euros per year. This remains topical and is more urgent than ever. Large debt-financed spending programs have been adopted (most recently

the "double whammy" of over 200 billion euros to finance the electricity and gas price brakes) in the past few years to overcome the crises, which has led to an increase in public debt. Permanent financing via taxes makes sense (even if the debt level in 2022 at 67.4 percent of GDP is by no means dramatic and significantly lower than after the 2010 financial crisis with 82.4 percent of GDP). The working group on Alternative Economic Policy calls for a tax policy that not only increases tax revenue, but above all taxes high incomes and large fortunes in particular to finance public tasks.

The Alternative Economic Policy working group demands the following in economic and financial policy:

- A comprehensive investment and spending program for the areas of education, municipal spending, energy-efficient building, building refurbishment, social housing, local care infrastructure and for the labor market and qualification is more necessary than ever.

Although the state has provided considerable aid to cushion the impact of the crisis, public investment has fallen again in the past two years and is still far too low.

-  A fairer tax system with higher revenues to finance public spending. This includes a wealth tax, a higher top tax rate for income tax and the prevention of tax evasion, tax structuring and corporate tax avoidance.

-  The old demand for better regulation of the financial markets remains on the agenda. The call for a financial transaction tax is still correct and important. Many ecological and development projects could be financed with it.

-  The abolition of the debt brake in the Basic Law. The redefinition of debt as "special assets" and thus their separation from the normal budget is not a solution. Should the abolition of the debt brake fail due to the the high constitutional hurdles, reforms are needed at the very least to ensure adequate financing and an anti-cyclical spending policy for public budgets.

-  At European level, the fiscal rules must be abolished or at least comprehensively reformed. The resilience and Recovery Fund must be developed into a permanent instrument. This will also help to overcome the industrial political challenges.

-  In addition, a one-off asset levy as a burden equalization to cope with the burden of the crisis, inflation and the ecological restructuring.

-  The ECB should refrain from further rounds of key interest rate hikes. The most important task is to slow down the divergence development of the eurozone. The "Transmission Protection Instrument"(TIP) with the interest rate turnaround was therefore right, It allows bond purchases of crisis countries with risk-related high interest rates, such as Italy, as an exception. Overall, the ECB's monetary policy must return to monetary support for active fiscal policy.

3. active labor policy in times of segmented labor markets

The number of people in employment has been rising since 2010 and unemployment is falling. The figures were worse only in the first year of the corona crisis 2020, . In 2022, they have recovered again despite the consequences of war and sanctions.. In this respect, the labor market is surprisingly resilient in this respect. This was only possible because the state counteracted this by short-time working. But despite this long-term recovery, 4 million people were still looking for work in 2022 - actively or in the hidden reserve. In the second half of the year, unemployment rose above the previous year's level.

With the improving labor market situation, the number of job vacancies also rose from 1.4 million in the 2nd quarter of 2019 following a brief corona-induced decline by the second quarter of 2022 to the historically high figure of 1.93 million (IAB Job Vacancy Survey 2022). According to the WSI works and staff council survey from 2021/2022, 56 percent of companies had difficulties in filling vacancies, especially in the healthcare sector, the public sector, the construction trades, in parts of the skilled trades and in technical, IT and some skilled metalworker occupations. The positive consequence:more employees with good "market value" obviously have to accept jobs with poor working conditions than in the past. Despite the good labor market situation, more than a third of employees still have to work in potentially unstable employment relationships, i.e. with a low number of hours, fixed-term contracts, temporary work or with low wages.

The structure of unemployment shows that companies are still not letting go of their high demands on the resilience and availability of jobseekers, while at the same time investing too little in the qualifications of employees. According to an IAB survey from 2021, only 39

percent of companies were prepared in principle to take on the long-term unemployed; for 54 percent, it was out of the question. The high proportion of women in the hidden reserve also shows how little companies respond to their needs for family-friendly adjustments.

The Alternative Economic Policy Working Group sees the shifting balance of power in the labor market as an opportunity to expand the existing labor market policy into a labor policy in which companies are obliged to train dependent employees and maintain their working capacity

throughout their working lives.

The Alternative Economic Policy Working Group policy demands for the labor market:

-  The abolition of the special regulations for mini- and midi-jobs.

-  Raising the statutory minimum wage to 13 euros per hour before the end of year 2023.

-  The introduction of a legal entitlement to switch between full-time and part-time work with the right to return and compensation.

-  To avoid false incentives, the splitting of the gradual abolition of splitting between spouses.

-  Public childcare and ll-day schools must be further expanded.

-  Care work in the family must be shared between partners by shorter working hours with wage compensation (publicly or collectively financed). An equal division between women and men must be particularly encouraged.

-  All young people under the age of 27 must be guaranteed a training offer anchored in SGB III.

-  Company-based training must be financed by a pay-as-you-go fund which all companies pay into (already already realized for the construction industry and the care sector).

-  Similar to initial vocational training, investments in training, investment in in-company further training must be broadened and detached from micro-economic individual cost calculations. As with the required pay-as-you-go financing for initial training, there must also be a fund financed by all companies. Inter-company facilities supplement the further training opportunities for small and medium-sized enterprises.

-  Works and staff councils must have a say in personnel, a right of co-determination in personnel planning instead of consultation rights. When companies are planning staff reductions, the reconciliation of interests regarding these measures must be subject to co-determination and not just the social compensation plan, which only regulates the conditions

for staff redundancies.

-  Unemployed people must have a legal entitlement to further training/retraining. The qualification phase must not be counted towards the ALG-I. The unemployment benefit must be increased by a further training which must be well above the additional earnings limit.

-  The standard rate in the new citizen's allowance must be increased from 502 euros by at least 200 euros (the other maintenance rates analogously). The training allowance must be increased to g300 euros. During a qualification or training phase, the unemployed must not be

be forced to move or draw on their savings. In addition, the job centers must be better equipped so that they can provide the promised individual advice to all..

4 Globalization in crisis



In Memorandum 2022, the Alternative Economic Policy study group discussed globalization in great detail. This process that has been smouldering for a long time began as the consequences of the Corona crisis became increasingly clear. The war and the sanctions have not only endangered the world's supply of energy and raw materials. The geopolitical division of the world has increased. A new bloc formation is crystallizing.

Historically, globalization can be seen by the increase in the share of exports (goods and services) as a proportion of economic output. Exports increased more strongly than economic output, and international interdependence grew. From 1986 to 2008, there was a strong increase, the share of exports almost doubled. Since the economic and financial crisis, it has decreased slightly again.

Globalization was a central project of the neoliberal (neoclassical) turnaround: Free trade, free movement of capital, deregulation of the financial markets, floating currencies, privatization worlds in the nation states and privatization in the nation states and the dismantling of state structures - all of this was driven forward from the beginning of the 1980s.

The deregulation of the financial markets led to more and more new financial products and a speculative expansion of the entire financial sector. The formation of financial assets has decoupled from the development of the real goods markets. The financing of investments and

economic development is easier in this system. There is plenty of liquidity. Globalization is more than just trade: growing worldwide capital linkages and direct investments are also part of it. Global direct investments amounted to USD 1.5 trillion at the end of 1990. At the end of 2019, this figure had grown to 31 trillion US dollars. The German export industry is a major winner of globalization. In total, Germany exported goods worth just under just under 1.4 trillion euros.

World trade...

The global financial and economic crisis 2008/09 revealed the enormous risks of globalization.

Due to the close and non-transparent interdependence of the financial sector, the collapse of bad real estate loans in the USA could trigger a de facto collapse of the global financial markets. The shock waves could spread very quickly to the real goods markets. Only energetic government intervention could prevent this.

After the financial crisis, criticism of globalization from the right massively increased. Instead of the neoliberal discourse, in which the high song of free trade was sung, nationalist tones were heard more and more often. The employed and unemployed people in the old industrialized regions thus became the mobilization potential of right-wing populist movements. The opponent of the socially weak was no longer capitalism or their own government, but the foreign country. The high point of this development for the time being was Donald Trump's "America first" policy in the USA.

Globalization came under serious pressure for the first time with the coronavirus pandemic and the countermeasures. International supply chains were significantly disrupted for a long time. This development intensified in 2022. Lack of oil and gas and also many metals and minerals, artificial fertilizers and grain have driven up inflation and put further strain on supply chains.

The war has also driven the geopolitical division of the world. Even before that, a power struggle for a dominant position in the world has waged between the USA and China. Now there are increasing threats to form a bloc with China and Russia on one side and Europe, the USA and Japan on the other. As a consequence, close economic relations with China are now viewed much more critically.

In addition to the disruptions to globalization caused by the financial crisis, the corona pandemic, war and sanctions as well as geopolitical rivalries, the climate catastrophe and the necessary decarbonization policy and increasing digitalization are also causing serious upheavals in the global economy.

Source: Federal Statistical Office, foreign trade statistics

The ecological transition requires more government and more public funding. The state also has a role to play in digitalization. An industrial policy is necessary. The EU has responded with strategic industrial policy goals and new funding opportunities.

The globalization project has always been criticized from a left-wing perspective. Attac as a movement was explicitly critical of globalization, above all against the actions of the financial markets, but also against free trade agreements. There have always been large protest movements. Globalization was the cudgel to help "market right-wing democracy" to triumph. It has played a significant role in the increasing inequality worldwide. The richest ten percent now own 76 percent of the world's wealth. The bottom half of the entire population have only two percent of the world's wealth (World Inequality Lab, report on Global Inequality 2022).

It looks as if the age of market-driven driven hyper-globalization is coming to an end. What is at stake is nothing less than a reorganization of the global economy. A thread of discussion has recently emerged that is shared by many economists, but above all by the German Council of Economic Experts (Annual Report 2022/23, para. 505ff.). The strategy starts with what companies are already doing to secure their supply chains: a return to more warehousing and a diversification of the supply chains. Politicians are called upon to form strategic alliances to help with the supply of critical raw materials. Increased recycling should also support the supply of raw materials. A fundamental reduction of economic activities is crucial... In addition, the global implementation of European standards and norms is to be driven forward. Such a program would contribute to economic stabilization. But it would not make globalization more socially or ecologically democratic. The Alternative Economic Policy therefore calls for a fundamental rethink. We need more multilateral, rule-based structures.

The Alternative Economic Policy Working Group explains with a view to the future of globalization:

-  Free trade agreements are not transparent but are often subject to a great asymmetry of power in the negotiation process and trivialize social concerns even more than the current rules of the WTO. In addition, the formation of political blocs is promoted. The Alternative Economic Policy study group consistently rejects free trade agreements.

-  The WTO must consistently abandon its focus on market radical dogmas. Within the framework of the WTO, a set of rules for a fairer exchange of trade that also promotes the introduction of ecological production methods is imperative.

-  Supply chain laws are an effective means of achieving fairer trade relations. These companies are obliged to punish violations of the law by their suppliers. Germany has a supply chain law, but it is still completely inadequate. In the EU, a supply chain law is currently in the legislative process. In principle, the EU level is more effective than national laws and the EU draft is more far-reaching. Germany has many deteriorations in this process, for example, liability restrictions for certifications and restrictions on the human rights to be respected by companies and their climate plans. The Alternative Economic Policy working group calls for the more far-reaching original draft.

-  The implementation of the currently negotiated UN agreement on business and human rights (UN Treaty) is also an important step towards better globalization.

-  In the negotiations on an effective climate protection agreement to achieve the Paris climate targets, industrialized countries must finally acknowledge their CO 2 debt and commit to corresponding compensation payments to the countries of the global South.

The climate crisis leaves us no more time for delaying tactics.

5. the end of fossil fuels - time for alternatives

Time for alternatives

The energy supply in Germany had to be placed on a new basis with the sanctions policy against Russia on the one hand and Russia's failure to deliver natural gas on the other. In addition to saving natural gas and expanding supplies from Norway and the Netherlands (which was only possible to a limited extent due to limited production capacity), the use of nuclear power was extended and coal-fired power plants from the reserve were reconnected. In addition, liquefied natural gas (LNG) is now being sourced. With LNG in particular, however, the risk of new dependencies arises.

LNG is natural gas that has been processed and liquefied through strong compression and cooling. For this about 10 to 25 percent of the energy content of the gas is utilized.. It can be transported using special tankers and then has to be returned back into the gaseous state ("re-gasified"). The largest supplier countries are the USA, Australia, Qatar, Malaysia, Algeria, Russia and Nigeria. The United States has been trying for years, to replace Russian pipeline gas with US LNG. Development in Europe is a huge gain for US companies.

LNG from the USA and Canada in particular largely consists of environmentally harmful fracked natural gas. The pollution of the soil and groundwater and wastewater are not the only problems with fracking. Gas leaks from the countless wells also harm the climate. All LNG varieties have in common the energy losses during liquefaction and transportation by ship. With natural gas pushed through pipelines over thousands of kilometers, this in turn leads to leaks of climate-damaging methane escapes. According to Greenpeace, LNG with a high fracking from the USA is over six times more expensive and from Austria around 7.5 times more harmful to the climate than the pipeline gas from Norway.

LNG has higher production costs than pipeline gas. Irrespective of this, the gas shortage drove up prices on the European markets for LNG and pipeline gas to astronomical heights. European wholesale prices ranged from 200 to 340 euros per megawatt hour (euro/MWh) in August and September 2022, 10 to 17 times the prices called for in spring 2021 (around 20 euro/MWh). LNG tankers were even diverted between Asia and Europe to reach the more lucrative buyers.

Before the war in Ukraine, there were more than than two dozen LNG terminals in the EU, but none in Germany. With the LNG Acceleration Act in May 2022, the German government designated a large number of terminal locations. It provided almost three billion euros for their construction or rent. The Working Group on Alternative Economic Policy criticizes the build-up of huge over-capacities in the LNG sector. This jeopardizes the necessary energy transition. According to a study by the New Climate Institute, the capacity amounts to 73 billion m3

per year. That would be around 50 percent more than Germany ever imported from Russia (46 billion m3 per year). In order to follow the path to the agreed German goal of climate neutrality in 2045, German gas consumption would have to be steadily reduced consumption would have to be steadily reduced - by around a fifth by 2030 compared to today's level, half by 2035 and to almost zero by 2045.

The German government and the terminal operators argue that if gas consumption falls in the course of climate protection, the LNG terminals could be converted to "green hydrogen". But such "H2 readiness" is technically unrealistic. The price rally on the energy markets has brought considerable non-performance-related extra profits to a number of large corporations, energy producers and suppliers via the connection of the gas market to the electricity market where electricity prices also climbed to unprecedented heights.

With the aim of siphoning off crisis-related extra profits, the EU Council of Ministers set a revenue cap at the end of September 2022, the EU Council of Ministers set a revenue cap for producers of nuclear, lignite and green electricity. They are allowed to earn a maximum of

180 euros/MWh on the wholesale markets. The member states are to absorb and redistribute anything above this at least 90 percent...

Mineral oil and gas companies and refineries have also profited exorbitantly - and continue to earn excess profits. In Brussels, the Council in September allowed companies that trade in fossil fuels higher profits this year and next year, 20 percent higher than the average profits for the years 2018 to 2021. All profits in excess of this are to be skimmed at "at least 33 percent". The Alternative Economic Policy working group demands the absorption of 80 percent of excess profits.

According to calculations by Agora Energiewende, German greenhouse gas emissions last year amounted to 761 million tons of CO 2 which represents a reduction of 38.7 percent compared to 1990.

Despite a 4.7 percentage point reduction in energy consumption, the target for 2022 of 756 million tons of CO 2equivalent was missed. The balance in the transport and building sectors is disastrous. Nevertheless, the FDP is preventing even cost-effective climate protection measures such as a speed limit. In the building sector, the federal government has been delaying the Energy Efficiency law.

Within the coalition itself, there is disagreement as to whether there will finally be comprehensive efficiency standards for refurbishment standards for renovations, especially for buildings in the worst energy condition, as required by the EU Buildings Directive under the EU climate protection package "Fit For 55" package. At the same time, a solid heating transition in the building sector is still in the stars, although many energy refurbishments are not rent-neutral and thus increase the pressure to displace tenants. Well-done and needs-based subsidized refurbishments, in which the landlords are also made financially responsible increase independence from fossil energy sources and their price trends.

Despite supportive legislative changes, green electricity and grid expansion are only making slow progress. The implementation backlog is now dramatic, especially for offshore wind. Since 2020, the 7.8 gigawatts (GW) of installed capacity have not been added. The situation is somewhat better for photovoltaics with an increase to 63 GW and onshore wind with an increase to 57 GW.

However, the tenders for upcoming projects have been heavily undersubscribed for some time. Overall, the stock of wind and solar power must increase by 2030 from 128 GW to 386 GW, tripled so that the German government can achieve its own targets. At the same time, grid expansion is lagging well behind plans. According to a study by Prognos, the third quarter of 2022 of the grid expansion Federal Requirements Plan Act (BBPIG) by the year 2030 planned 10,413 kilometers of lines in the extra-high grid, 886 kilometers have been implemented and a further 656 kilometers approved. In the hydrogen sector, the lack of EU guidelines on the definition of "green hydrogen" are still preventing investments for the market ramp-up.

The Alternative Economic Policy Working Group policy calls for the following in energy policy:

-  The reduction of the planned terminal capacities for LNG. These are completely oversized and prevent an ambitious energy transition policy.

-  The linchpin for the energy transition is the accelerated expansion of green electricity plants. To achieve this, the EU requirements for an accelerated expansion of the use of renewable energies must be swiftly incorporated into the regulations and practices in the federal states. The financial participation of the local authorities in the earnings of green electricity operators must be made binding nationwide and raised above the 0.2 cents/kWh stipulated in the EEG. In addition, the procedures in the expansion of the grid must gain speed.

-  The EU must set guidelines for the definition of "green hydrogen" in order to ramp-up investments for hydrogen technologies on the market. These criteria must not be too soft.

-  The energy price brake must be made more social. The working group Alternative Economic Policy demands socially differentiated direct payments to households instead of the current mechanisms based on historical consumption.

-  The transport sector has major structural problems. Rapid and cost-effective measures for climate protection such as an immediate speed limit on highways are crucial in addition to strengthening rail, public transport, cycling and walking at the expense of motorized private transport,

-  Significant funds have been made available for structural change. However, the corresponding plans are to end between 2035 and 2038. The acceleration of this process, which is necessary for climate policy must be carried out wisely and with the actual participation of civil society. It should be set out and anchored in an amended Structural Strengthening Act.

6 Blind spots in climate policy: Sufficiency and climate-friendly housing

Many socio-political ideas about changes in behavior, lifestyles, production and consumption can be described with the term "sufficiency". The IPCC describes sufficiency measures as "a set of measures and everyday practices that reduce the demand for energy, materials, land and water..."

"Sufficiency" is often used alongside "efficiency" and "consistency" as the third core strategy for sustainable development. Sufficiency policy, leading to an increase in the quality of life has been successfully practiced for a long time (e.g. car sharing) or, for example, in the reduction in livestock farming set out in the coalition agreement which is associated with a reduction in meat consumption, or the ban on the destruction of returns in the mail order business.

The long-term energy and climate protection scenarios are currently dominated by two main technical strategies: the accelerated expansion of renewable energies ("consistency") and a massive increase in energy productivity ("efficiency"). The seemingly reassuring message is that if these two strategies are implemented consistently worldwide, then the 2-degree target of the Paris Agreement of 2015 can still be achieved with technology already known today. Even the actually necessary 1.5-degree target can be kept within reach.

There is no doubt that technological breakthroughs and the accelerated implementation of the two main strategies are the prerequisites for sufficient climate protection. A socio-ecological transformation towards climate neutrality for the world by 2050 and in Germany by 2045 can be achieved with the predominantly technical strategies of "efficiency" and "consistency" alone.

Sufficiency policy enables more climate-friendly behavior and therefore goes far beyond individual behavioral patterns and takes into account existing social inequality. The relevant question is not a blanket and seemingly indiscriminate "How much is enough?" but rather "How much is enough for whom?" - so that the ecological transformation in our unequal society does not leave even more people left behind in even more desperate situations than before.

Climate change has specific main causes and main affected groups. There are considerable differences between rich and poor countries, but also within these countries between rich and poor people. A target-oriented strategy for climate and environmental protection must no longer treat distribution issues as a moral appendix, but must regard climate justice and the fight against inequality as prerequisites for a systemic approach to socio-ecological transformation.

In 2022, 50 years after "The Limits to Growth" was published, the Club of Rome called for climate protection for the first time: "The rich must pay the bill". This is a concept for a significant redistribution of income and wealth in favor of poorer households. This objective is congruent with that of the working group Alternative Economic Policy. The question of distribution is inextricably linked to the ecological question. The current report to the Club of Rome, "Earth for All", presents a purely technical view of the future of energy transformation and climate protection. Only a comprehensive system change can be successful. And yet the industrialized countries have historically and currently emitted by far the most greenhouse gases per capita and abuse the atmosphere excessively as a CO 2 dumping ground.

Source: World Inequality Lab, World Inequality Report 2022



Insofar as the control and incentive effects of CO 2-pricing are used, they must be accompanied by a redistribution of the revenue, the Alternative Economic Policy working group emphasizes. However, redistribution is by no means sufficient as a measure. The investment needs of poor households for efficiency and consistency measures in buildings, such as thermal insulation measures or heating replacement programs, must also be supported by public funding so that the incentive effect favored by economists for "vulnerable households" due to a lack of financial viability does not completely come to nothing.

Climate and distribution issues clash in the building sector more than in any other sector. The sector fails to meet the sector targets: In Germany alone, it consumes 517 million tons of domestic mineral raw materials per year and at the same time causes 40 percent of greenhouse gas emissions, with 66 percent of emissions caused in the residential building sector and a comparatively small proportion in non-residential buildings. However, it is not only the climate issue, but also the social issue that has also come to a head in recent years in the building sector. For example, existing rents in the five largest cities increased by an average of 15 percent between 2008 and 2018 and new lettings by as much as 50 percent. The lowest fifth of all tenant households in terms of income spent an average of 42.6% of their disposable income on housing costs in 2021.

The social and ecological issues can be cannot be separated from each other when it comes to living space. Households with higher incomes live in larger living spaces and pay higher rents and heating costs than households with lower incomes, but spend a smaller proportion of their income on this.

Examples of sufficiency measures can be found in neighboring countries. In Zurich, for example, there is a residential area limit, embedded in a comprehensive climate strategy, which aims to promote the reduction of emissions. The Alternative Economic Policy working group calls for sufficiency measures in the building sector...

7 There is another way - Pensions in Austria

Alternative policies are possible within the framework of a capitalist international comparison and provide important food for thought. Examples can be found not only in Scandinavia. Austria also has many achievements in the design of its social model. The country shares many similarities with Germany. It starts with the language, culture and history. The social security systems are also in the tradition of the Bismarckian social security system. In Europe, Germany belongs to the group of countries in which inequality has increased relative to the 1980s in almost all indicators (Gini coefficients for income and wealth, risk of poverty, deprivation, etc.has risen sharply over the past 30 years.). In Austria, on the other hand, the increase has been small. In terms of the Gini coefficient as a common measure of inequality, the two countries were roughly on a par in the mid-1990s. Austria was able to maintain this level while Germany as a result of a policy of targeted expansion of a large low-wage sector while at the same time neglecting public infrastructure.

Germany has changed from a country with below-average inequality to a country with persistently above-average inequality. In Germany, collective bargaining coverage is only just over 50 percent. Low-wage earners for an extended period of time are quickly at risk of poverty in old age if they only receive benefits from the pension insurance and does not have a poverty-proof basic pension. Logically, therefore, the expansion of low-paid and precarious employment was followed by a delayed increase in the poverty risk of older people. This has also occurred.

In the past, the German and Austrian Austrian pension systems were very similar. But this is no longer the case today. The pension policies of the two countries are set differently. Looking back, we see a similar pattern to that of the labor market. Germany pursued a policy of successive deregulation, while Austria, on the other hand, expanded the constitutional protection of the social partnership.

The Alternative Economic Policy Working Group in its MEMORANDUM 2004 criticized the Schroeder's government promotion of private pension products. The group of insured persons within a citizens' insurance scheme could be expanded. In the years that followed, further cuts were made, above all raising the retirement age. Even today after 45 years of work, according to the federal government figures, 36 percent of future pensioners will receive a maximum of 1,200 euros per month net from the statutory pension scheme. The situation is particularly dramatic due to lower earnings, more frequent part-time work and shorter phases of employment for women. In the MEMORANDUM 2021, the Alternative Economic Policy working group underlined the weaknesses and challenges of the German pension system as a whole.

One problem here is the state-subsidized "Riester pension", which has only been a success only for the private insurance industry. For those employees who, due to the expansion of low-wage employment have no opportunity to either save up financial assets or buy their own home, it was a flop. From the failure of the three-pillar strategy, the traffic light government is now merely building up a capital stock that requires state management.. For the first time, ten billion euros in the 2023 budget are financed by borrowing...

In Austria, the pension system has also been the subject of reforms... Increasing the standard retirement age to 67 or even higher has not been the subject of serious discussions. Yet the demographic development in Austria is very similar to that in Germany. The Austrian reforms aimed at stabilizing the standard of living in the statutory system according to the 45/65/80 formula. After 45 years of insurance, the gross retirement occurs at the age of 65. The gross replacement rate should be 80 percent. Initially, pensions of self-employed persons, farmers and freelancers were equalized through the inclusion of civil servants. At the same time, sustainable financing requires an adequate contribution rate. At 22.8 percent, it is around 4 percentage points above the German level whereby an over-parity exists. The contribution rate for employers is 12.55 percent, while the rate for employees is 10.25 percent. Due to its broadening, the Austrian system has effectively been transformed into an employment insurance scheme. Contrary to many forecasts, the system is by no means on the verge of financial collapse.

The current government program of the ÖVP and the Greens (government program 2020-2024) therefore does not provide for any new course. Neither the level of benefits nor the retirement age is to be raised. The coalition agreement focuses on the goal of overcoming poverty in old age as far as possible.

There are also problem areas in the Austrian security system: The provision for women is inadequate, which is largely due to the high prevalence of part-time work and the early standard retirement age of 62 years in 2023; in 2024, there be a gradual increase to the standard retirement age of 65 for men. 30 years of contributions is required for a de facto minimum pension... Another problem is the popularity of early retirement. Attempts are being made to counter this by but these only work to a limited extent...

The policy proposals put forward by the Alternative Economic Policy group in the MEMORANDUM 2004 (in particular citizens' insurance, inclusion of the self-employed, no capital cover) were not only fulfilled in Austria, but have even been exceeded in view of the high net pension level of over 80 percent. The Austrian development model proves that even in an ageing society, it is possible to maintain a high level of public pension provision and be economically successful at the same time.

8 Conclusion

Internationally, there is growing confrontation through more cooperation. The EU is also called upon to play a stronger role. International agreements must focus more on balancing interests and must not be characterized by power asymmetries. A globalization that leads to poverty and even hunger for many is not acceptable.



The economic and social risks have increased enormously. The Alternative Economic Policy stands for a path of public pressure to dare a democratic awakening.

Ecological restructuring and the expansion of the welfare state must be considered, conceived and coordinated. An active financial policy must compensate for inflation for low-income and poor private households along with bridging programs for energy-intensive companies, including craft businesses. This stabilizing fiscal policy must be complemented by an active monetary policy that combats inflation without accelerating the economic downturn.

Regulation could tame the greed for profit. The energy supply crisis has given new urgency to the transition to sustainable energies.

The Alternative Economic Policy Working Group sees itself confirmed on its path. Today, profit-driven globalization is at an end. The call for economic policy alternatives is louder and louder around the world.

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