“We need better tools to respond to inflation shocks” – Jens Südekum on the lessons from Bidenomics

The economy is weakening, trade is shrinking, and stock markets are falling – the more the effects of Donald Trump’s policies become visible, the more impressive the economic record under Joe Biden appears. This continues to raise the pressing question of why Americans chose Donald Trump by majority vote despite a seemingly strong economic situation – and what that means for better economic policymaking going forward.

We discussed this ahead of the second Berlin Summit in mid-June with Jens Südekum, one of the prominent German signatories of the Berlin Declaration. According to the economist, what Biden pursued through his targeted industrial policy for regions in transition was quite reasonable – and closely aligned with what the leading experts behind the Berlin Declaration had developed as a new guiding principle.

The reason it didn’t resonate more strongly with Americans, Südekum argues, was that it was overshadowed by major shocks and inflation. It is now important to learn from this experience – and to develop concepts that allow governments to respond more swiftly and effectively to such shocks. In the long run, it will be about building on previous experiences with proactive regional policy. These kinds of constructive, forward-looking efforts to deliberately build new industries in struggling regionsare, in any case, the better path – compared to Donald Trump’s current approach of trying to re-industrialize the country through a trade war, says the economist.

You can watch the full video interview here.

The lessons from Bidenomics and other real-world applications of proactive regional policy will be explored during smaller expert sessions at the Summit on June 11 and 12. Paul Pierson and Steve Vogel from Berkeley will join the discussion, along with Jakob von Weizsäcker, Elga Bartsch, and Rohan Sandhu. The public part of the Summit on June 13 will then focus on how Germany is handling the second China shock – and where the deeper, structural problems lie beneath surface-level diagnoses. The panel beginning at around 10:30 a.m. will feature Servaas Storm, Brad Setser, Dalia Marin, and Margherita Russo. The opening remarks will be delivered at 10:00 a.m. by Adam Tooze of Columbia University.

Click here to register for June 13.