Forum newsletter: With citizen’s benefit against Elon Musk / Short Cut with labor market economist Enzo Weber – save the date

Dear friends, colleagues,

when twenty years ago the Agenda 2010 came into force, the leading economists in the country warned that this was at best the first step in the right direction – and that much more would need to be reformed before Germany could withstand global competition and the economy would grow again. Shortly thereafter began the longest growth phase Germany had seen in ages – and a phase of ever more extreme export surpluses. So much for competition. And all without the supposedly so necessary further reforms.

What followed is one of the most remarkable reinterpretations of history: suddenly, according to common reading, it was indeed the Agenda after all. It was never truly examined. The story has circulated ever since. Although much suggests that it was entirely different factors that brought the long stagnation to an end back then – above all the enormous boom in China, which for years explained a good share of German growth. The Agenda fixation on Germany’s competitiveness even had fatal side effects: those worldwide-criticized and ultimately economically unsustainable surpluses in German foreign trade, which now threaten to be corrected by Donald Trump – in a rough manner.

That the Agenda was never properly reviewed may explain why now, as the economy has stagnated again for a few years, the same reflexes are taking hold – work more, fewer social benefits (respectively citizen’s benefit), why not also cut public holidays. Which of the real problems of the year 2025 will that solve? That Germany’s auto industry has missed the transition to electromobility? Or that China’s state-driven low-cost competition will cease? Cutting citizen’s benefit will neither offset the looming costs of climate change, nor stop Elon Musk and Peter Thiel from undermining democracy – nor reduce Europe’s fatal digital dependence. Everything is far more complicated than channeling resentment toward a manageable number of benefit shirkers in matters of citizen’s benefit.

This does not mean there are no reasons to reform citizen’s benefit and create more incentives to work. That there are people who refuse all work – not good. Far more important would be to find out how big the problem really is – and whether it is proportionate to the amount of energy currently being spent in political debates and talk shows on it. Or what the real reasons are that some positions in Germany remain unfilled. Most often it is about highly qualified people and IT specialists. And it hardly helps to cut benefits for long-term unemployed people without computer skills.

In all this, research in the years since Agenda 2010 has produced a wealth of new insights that, amid the uproar about citizen’s benefit, now risk being buried. Enough reason for us to discuss exactly this in our next New Economy Short Cut – with Enzo Weber from the Institute for Employment Research.

For your calendar: September 25 at 1 p.m. An attempt at clarification beyond gut-feeling empiricism.

Have a nice weekend,
Thomas Fricke

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