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.
The State
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
- 1. 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
- 3. Use of state as an entrepreneurial actor, investing in and deploying new technologies.
- 4. Central banks could distribute money directly to citizens in an attempt to boost consumer confidence and consumption.
- 5. Demonstrate the indispensability of the state by tackling monopolistic capitalism.
More News on The State
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Eine gute öffentliche Infrastruktur ist das Fundament einer gerechten Gesellschaft
In einem Essay für Makronom argumentiert Tom Krebs, dass eine gut ausgebaute öffentliche Infrastruktur die Grundvoraussetzung für Egalität in der Gesellschaft darstellt.
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An Investment Agenda for Germany
The association of German employers (BDI) and the German trade unions (DGB) have called for an increase of investment spending of almost €500bn over the next ten years.
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A new paradigm for fiscal policy?
By Xavier Ragot, OFCE, Paris.
