Current economic troubles in Germany have pro-business politicians and industry titans pointing fingers at public policy. Although German government and business have typically lived symbiotically in recent history, stagnant growth and new public policy measures have started to sour their relationship. More specifically, economic growth is projected to fall to 1.3% in 2015, exports are predicted to fall below typical world trade numbers, and the manufacturing, retail, and wholesale sectors are feeling the effects of low investor confidence.
To make matters worse, these issues are all being thrust upon an increasingly unhealthy political climate. Last year's election results, where the centre-right joined forces with the less business-friendly Social-Democrats, yielded a government with an affinity for government spending, promising expanded pensions and an increased minimum wage. Additionally, arguably extreme energy policies, hoping to replace fossil fuels and nuclear power with renewables, have sky-rocketed German energy prices.
Germany's current political-economic climate clearly demonstrates Stigler's thoughts on the costs associated with political action. For example, the measures to eliminate nuclear and fossil fuel energy forced prices far above the social optimum as the nation sensed coercion into substitution; additionally, given the magnitude of those industries, Stigler would suggest that the energy legislation would inherently carry massive information and opportunity costs. Ultimately, the heightened paternalism in Germany's economy is altering the behavior of its private agents.
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