Paraphrased, Merkel didn't say 'Southerners are lazy', she said 'Southerners, stop being lazy if you want our tax money'. So no carrot there, this is the pretence of a stick (a rhetorical stick in the imaginary right-wing framing of the situation, unrelated to the actual stick). Whether this will work on the rebels, in particular on the more numerous FDP rebels (who still believe only tax cuts will boost their poll numbers and feel existential angst even more after their party dropped from yet another regional parliament), is questionable. Merkel is likely to achieve more with standard fall-in-line-or-else appeals to conservative submission to authority. Which again underlines the fact that Merkel will risk sowing the seeds of hatred in millions and make big strategic and policy sacrifices for the most insignificant of political position power gains.

_{*Lunatic*, n.
One whose delusions are out of fashion.}