Redefining the role of the state
For decades, there was a consensus that reducing the role of the state and cutting public debt would generate wealth. This contributed to a chronic underinvestment in education and public infrastructure. New research focuses on establishing when and how governments need to intervene to better contribute to long-term prosperity and to stabilize rather than aggravate economic fluctuations.
New Paradigm
New Paradigm Knowledge Base
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The Challenge
Decaying infrastructure and a lack of investment in education and innovation expose the weaknesses of an overly market-driven paradigm
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What went wrong?
Reducing the role of the state in the economy was seen as the best way to ensure high levels of growth.
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New Economy in Progress
The challenges of our time require us to rethink the role of the state and the need for a more active fiscal policy.
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CHART: The steep decline in net public investment
Total capital expenditure minus the cost of replacing worn-out depreciation of assets.
5 possible ways that are discussed to redefine the role of the state
- Boost investment in education, healthcare, infrastructure. This could more than pay for itself.
- Use fiscal policy as a tool for macroeconomic stabilization and to boost economic activity
- Use of state as an entrepreneurial actor, investing in and deploying new technologies.
- Central banks could distribute money directly to citizens in an attempt to boost consumer confidence and consumption.
- Demonstrate the indispensability of the state by tackling monopolistic capitalism.
More News on New Paradigm
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Rethinking the state
In its election manifesto, the CDU calls for a modernisation offensive for the state. But what would sensible reforms for a sustainable state look like? We discussed this with Thomas Heilmann and Henning Vöpel in our Short Cut series on the Bundestag elections.
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Handling Socio-economic Risks – An Economy That Works for the People
Can we safeguard ourselves from socioeconomic crises? From job guarantees to UBI & UBS, many proposals circulate promising to make the economy work for the people. But do they have potential?
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Do we have to reform the debt brake?
The Greens are calling for borrowing for certain investments to be permitted even beyond the limits of the debt brake. Does this make sense in terms of economic policy? We discussed this with Anja Hajduk and Philippa Sigl-Glöckner in our Short Cut series on the Bundestag elections.
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Would a wealth tax really reduce inequality?
In the fight against growing inequality, the SPD wants to reintroduce the wealth tax - with a uniform tax rate of one per cent for the richest. NoWaBo and Markus Grabka discussed how effective this instrument is in our Short Cut series on the Bundestag elections.
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Using Nation Wide Rent Caps to Combat the Housing Crisis?
The party die Linke wants to cap rents nationwide and promote social housing - with 15 billion euros per year. In our Short Cut series on the Bundestag elections, we discussed the economic sufficiency of this plan with Caren Lay and Claus Michelsen.
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Do tax cuts really end up financing themselves?
In their election program, the FDP advocates far-reaching tax cuts - even if that initially raises debt rates. In our Short Cut series on the Bundestag elections, we discussed the points of debate surrounding this proposal with Christian Dürr and Rüdiger Bachmann.
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New Economy Short Cuts Bundestag Election – Wealth Tax, Debt Brake, Tax Cuts
To date, the election campaign still offers little depth of content. What's not lacking are relevant megatopics for the future. This is why we invited leading candidates for the Bundestag to discuss their parties' key economic policy concepts with us.
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The disenchanted state
A new book revolves around the question of what the state can learn from the pandemic in order to act more efficiently and crisis-proof in the future.
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How much debt is too much?
In light of record levels of public debt, the question of how much debt is too much debt is on the table. Four economists have now discussed this question in a panel discussion.
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“Trickle-down economics has never worked.”
US president Joe Biden calls to build the US economy from the middle and bottom up – a clear opposition to tax cuts for corporations and the rich.
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How German companies feel about key election issues – A mood survey
How do German companies view key campaign issues such as industrial and climate policy shortly before the election? Deutsche Bank surveyed 200 companies on this issue - with surprisingly heterogeneous results.
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Beyond the debt brake – Towards a more flexible German fiscal policy?
At the moment, there is much debate about the German debt brake. At the VIII. New Paradigm Workshop, Philippa Sigl-Glöckner and others discussed a proposal for a reform commissioned by the Forum New Economy.
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The Prudence Principle: A New Framework for Fiscal Policy
Mark Blyth and Eric Lonergan have presented their Forum paper on how, in principle, rules could be established that would be better than debt targets that have dominated in recent decades, especially in Europe.
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New Fiscal Rules for Europe?
Prominent French economists around President Macron are calling for a reform of the European Stability and Growth Pact, causing much excitement in Brussels and Berlin.
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World Summit for A Systemic Recovery from the Pandemic
What a selection of the world's most renowned economists recommends - short report from an impressive NAEC conference.
