The rapid expansion of onshore wind energy in Germany has slowed significantly in the first half of 2015, with the industry representatives saying it is now up to the German government but also the EU. EurActiv Germany reports.
Germany's finance minister wants to correct the balance between the European Commission's political role and its regulatory powers, reflecting concern in Berlin over the EU executive's neutrality as its political clout grows.
Hillary Clinton’s latest campaign salvo attacked “quarterly capitalism,” the supposedly irresponsible corporate focus on short-term results at the expense of long-term growth. She promised government fixes.Short-Termism, Share Prices, and IncentivesIs there too much short-termism in business firms? To answer this, let’s look at participants’ incentives.Shareholders own the present value of their pro-rata share of net earnings, not just present earnings. They do not want to hurt themselves by sacrificing good investments today which raise that expected present value. Owners often tarred as too selfish do not ignore those consequences. Critics also confuse short-term corporate results as the goal, when they are actually valuable indicators of the likely future course of net earnings. Just because good short-term results raise stock prices does not imply excessive short-termism.Since share prices are both a primary metric for managerial success and basis for their rewards, and they reflect the present value of expected future net earnings, managers’ time horizons reflect shareholders’ time horizons, stretching far beyond immediate measures.Bondholders, who want to be paid back, incorporate the future, where repayment risks lie, in their choices. Workers and suppliers are also sensitive to firms’ future prospects, and the prospect of those relationships being terminated if things start turning south forces consideration of the future in present choices.Beyond misinterpreting share price responses to good short-term results as short-term bias, Clinton’s main proof of short-termism was that firms have increased stock buybacks, supposedly sacrificing worthwhile investments by returning funds to shareholders. She ignores that those funds will largely be invested elsewhere with better prospects. But she also ignores that the buyback binge reflects the Fed’s long-term artificial cheapening of borrowed money. When debt financing gets cheaper relative to equity financing, firms substitute toward debt. But a firm substituting debt financing for an equal amount of equity controls no fewer funds for future-oriented investments.The Role of the Fed and Government InterventionConfusing business responses to artificial Fed interventions as business-caused only begins the list of government created biases toward short-termism. Constant proposals to raise corporate tax rates and worsen capital gains treatment in the future reduce the after-tax profitability of good investments. Regulatory mandates and impositions pile up, with far more put in the pipeline for the future, doing the same. Energy policy threatens huge increases in costs, reducing likely investment returns. And the list goes on.That government regulators will put more emphasis on the future than the private sector is also contradicted by political incentives. Owners bear predictable future consequences in current share prices, but politicians’ incentives are far more short-sighted.Government Is More Short-Term Oriented Than the Private SectorAn election loser will be out of office, and capture no appreciable benefit from efforts invested. So when an upcoming election is in doubt, everything goes on the auction block to buy short-term political advantage. And politicians’ incentives drive those facing the DC patronage machine. That is why so much “reform” meets Ambrose Bierce’s definition of “A thing that mostly satisfies reformers opposed to reformation.” The mere passage of bills in the political nick of time, even largely unread ones, can be declared victorious legacies, with harmful consequences never effectively brought to bear on decision-makers.Not only is politics inherently more short-sighted than private ownership and voluntary contractual arrangements, there is a cornucopia of examples of government short-termism at the expense of the future, whose magnitude dwarfs anything they promise to reform.Unwinding Social Security and Medicare’s 14-digit unfunded liabilities will punish future generations, caused by massive government overpromising to buy earlier elections. Other underfunded trust and pension funds threaten similar future atonement for earlier short-term “sins.” Expanding government debt similarly represents future punishment for short-term political payoffs. Foreign and military policy have similarly turned away from dealing with long-term issues. But serious long-run issues like immigration escape serious attention because “public servants” are afraid of short-run interest group punishment.Political attacks on short-termism, and reforms to fix it, are beyond confused. They ignore financial market participants’ clear incentives to take future effects into account. They are clueless about what provides evidence of short-termism. They treat private sector responses to government impositions as private sector failures. They ignore far worse political incentives facing “reformers.” And they act as if the most egregious examples of short-termism in America, all government progeny, don’t exist.There is little to Clinton’s criticism and alleged solutions beyond misunderstanding and misrepresentation. We should recognize, with Henry Hazlitt, that “today is already the tomorrow which the bad economist yesterday urged us to ignore,” and that expanding government’s power to do more of the same is not in Americans’ interests.
The European Union must use its resources intelligently to control terrorism without destroying its core principles, writes Marc Pierini.
The EU will extend financial support for farmers hit by a Russian ban on European imports into next year, the European Commission confirmed Thursday. The compensation scheme, which covers farmers making dairy products, fruit and vegetables, was introduced last August after Russia imposed an import ban on European produce.
Eurosceptics who want Britain to quit the European Union are letting pro-EU campaigners get a head start in mobilising opinion ahead of an In/Out referendum that could take place within a year, Britain's most prominent Eurosceptic said on Thursday (30 July).
Prime Minister David Cameron, buoyed by an unexpectedly decisive election win in May, has already begun trying to renegotiate Britain's relationship with the EU, saying he will campaign for a "Yes" to continued membership if the talks are successful.
The European Commission has announced it will extend support measures for the dairy and fruit and vegetable sectors hit by Russia’s ban on food imports from Europe, which has been in place for a year.
Aid for the dairy sector will be prolonged until 29 February 2016 while support for fruit and vegetable producers will be continued until 30 June 2016, the Commission said on Thursday (30 July).
Greek PM Alexis Tsipras suggested at a Syriza party meeting on Thursday holding an "emergency [party] congress to discuss being in power as leftists, our strategy in the face of bailout conditions". However, he added that a party referendum Sunday is also a possibility to solve the internal rift.
Ukip leader Farage Thursday said a Yes vote in the in/out referendum “brings Britain closer to joining the euro”. The eurosceptic MEP said "the rise of Ukip" is why PM Cameron has called a referendum and criticised Cameron's EU-negotiation wishlist. “To say its modest would be an understatement.”
Poland lost its richest businessman, philanthropist and person strongly associated with the country’s transformation from Communism to the market economy on Wednesday.
It is the duty of parliamentarians to contribute to re-opening the dialogue between the EU and Russia, argues Knut Fleckenstein, saying it was “a serious mistake” to block the Russian State Duma speaker from entering Finland.
Russia Wednesday used its veto power in the UN Security Council to stop the setting up of an international tribunal into last year's downing of flight MH17. Dutch foreign minister Koenders said his country "will not rest until ... justice has been served".
Belgian farmers on Wednesday started protesting over the price of milk and meat. "The prices are even lower here" than in France, a Belgian farmers' union said. On Thursday they plan to block motorway exits throughout the country. Their actions come after a week of protests by French farmers.
The European Commission wants Ireland to put out an international tender for its railway service, the Irish Times
reported Thursday. It said the Irish government wants to renew the contract with state-owned Iarnród Éireann, but the commission is urging further liberalisation of the train sector.
Trafficking in persons not only flourishes during a disaster, it is a direct result of disasters, every bit as much as the infrastructural damages, the loss of life or the food shortages which garner far more attention.
Greek prime minister Alexis Tsipras has threatened dissenting members of his ruling left-wing Syriza party with elections.
German finance minister Wolfgang Schaeuble would like the competition and single market departments removed from the European Commission, according to a report in Germany's leading centre-right daily.
The new Greek bailout programme should focus on economic growth rather than further austerity, according to a new study by the influential Bruegel think-tank.
It is barely two weeks since Greece was on the brink of crashing out of the euro, yet some investment banks are now encouraging investors to return to its bond market.
Many of the most radical Catalan separatists believe the autonomous elections on 27 September 27 this year will open the door to the question of secession from Spain. Researcher Ignacio Molina believes this is a dangerous idea.