Sat 23 Jul 2005
A few days ago as I was eating breakfast I switched on a news channel and there was a short report from Germany about the state of… petrol stations along their border with Poland. It turns out that due to huge difference in the prices of fuel (both petrol and diesel) and lack of border (and duties) between the two EU members Germans go to Poland to fill up. En masse. The report pointed out that policies of big oil corporations regarding pricing make the situation even worse, since the petrol is cheaper in Berlin than in Frankfurt am Oder which is on the Polish border.
As the result of all this many stations went bankrupt and many more are on the brink of doing so. They operate under some franchising schemes, so it means their owners went out of business. As it is Germany these owners have of course a kind of trade union. What did the union propose? Well, it called for the German finance ministry to create a special fund from a few euro-cents collected on each liter of fuel sold in the eastern lands. Then, they said, the ministry would subsidize the filling stations in those lands that are in trouble.
I let out a scream of astonishment as I heard this. So this is how badly the European society is damaged by the years of de-facto socialism. What do the filling stations owners do when business gets bad? Think of selling something else on their stations? Think of another business to switch to? Pressure the corporations to lower prices? Pressure the ministry of finance to lower the tax, which is the main source of the problem after all? No! Nothing of this kind. They want the government to pay them to keep them afloat.
To call in the government to handle a problem caused by a market situation is bad already. To call in for more government to handle problems caused by this very government’s messing up with the market is even worse. This just shows how badly the society has been damaged, because people don’t try to manage their lives, take chances and, sadly, suffer the consequences of playing the game called “life”. No. They call for the Big Nanny to hold them, stuff a candy into their mouth and rock them asleep.
But, you can say, it’s just some people from the east of Germany, probably many of them raised in the former communist East Germany – and so on. But, you see, this kind of attitude seems to be dominant through Europe. Aren’t West German trade unions a powerful force preventing any significant reform of the German welfare state, under weight of which their whole economy crumbles? And what about EU’s Common Agricultural Policy? A prime example of senseless protectionism, which the French would defend viciously as Tony Blair is about to see.
In the long run, with this kind of attitude EU doesn’t stand much chance in the global competition. The dream of catching up with the US expressed in the Lisbon strategy has already ended. Now the EU tries again with the i2010 strategy, but without a major shift in the policies of all member states it will remain just another pretty document for future historians. The painful truth is that Europeans at large have forgotten that the world is not a nice, cozy kindergarten, that it takes hard work to achieve and strong action to be safe. Maybe, quite against their wishes, the terrorists would help Europeans wake up from this socialist stupor with their bombs. It’s just sad it had to get to this point.
Some background on the German petrol story: why did the German government create the problem in the first place?
Well, let’s think logically for a while – neither Germany nor Poland have their own significant oil sources so companies in both countries buy the crude oil and its products on the same world market for the same wholesale prices. Transport to both countries costs roughly the same. So the only explainable source of price difference is the taxes.
Both governments (as almost all governments in Europe) tax liquid fuels heavily because it is one of the things people and businesses have to use to function and can’t produce themselves (as opposed to, say, alcohol and cigarettes). Polish government can’t go as far as the German does, because Poland is a poorer country and higher taxation of liquid fuels would disrupt its economy. Still, even in Poland more than half of the price of a liter of petrol is taxes. In Germany it’s, I guess, close to two thirds.
Why both countries have so much taxes? Because they have a huge burden of welfare they have to pay for. Check the stats. Most of the taxes are lost in the welfare system, not spent on building infrastructure, paying for scientific research or the army.