Forum Newsletter #45 – Wrap-up from the New Economy

Dear friends and colleagues,

major paradigm shifts are not when a party or interest group changes its own mind. For that to happen, views, guiding principles and patterns of interpretation must shift across political boundaries. So it could be a signal of a major paradigm shift if, in the face of an increasingly dangerous divide, even people with high fortunes call for themselves to be taxed more heavily, as a large group of German and Austrian millionaires did last week – #taxmenow. Something similar has already happened in the US.

Another strong signal could be what our colleagues at Deutsche Bank Research have found out in a representative survey of 200 companies: according to this survey, “the” business community at the grassroots level does not seem to be as firmly convinced of the market-liberal model (any longer) as the rather orthodox pronouncements of the relevant lobbying associations suggest – be it the Association of Family Businesses, the Economic Council of the CDU or the INSM, whose somewhat clumsy campaign against the Greens is a hot topic of discussion at the moment.

According to the survey, a relative majority of 42 percent still say that a black-green government would mean “the start of a long overdue restructuring of the German industrial landscape“; and that there would thus be the prospect of a state investment program “that would also benefit companies,” according to 39 percent. No sign of ‘State-bad-market-good’. Just under 30 percent do not believe that a state led industrial policy would slow down their ability to invest. Even more remarkable: 36 percent of the managers surveyed think it would be good if the EU were to take on joint debts on a permanent basis – a no-go if the positions of the economic lobbies are taken as a reference. Such a joint liability would guarantee sales markets, according to the proponents in the survey. Sounds like a modern doctrine. Paradigm shift.

Philipp Heimberger and Daniel Stelter basically agreed on this in this week’s New Economy Short Cut on Italy – except that they advocate quite different recipes: see the re-live here. What else could form part of a paradigm shift in terms of content can be found in the two studies by Philippa Sigl-Glöckner from the Dezernat Zukunft on a new financial policy (and reforms of the debt brake in line with the Basic Law) and by Tom Krebs on the – so far greatly underestimated – need for public investment in a large hydrogen infrastructure: a target value of 100 billion – almost ten times as much as the German government has estimated so far. Both studies are now available in full – here and here.

At the end of August, our symposium will look at the current status of even bigger questions, such as the highly emotional question of whether the economy needs to grow or shrink – and the relevance of alternatives to GDP. Dennis Snower, Nicola Brandt, Marcel Fratzscher, Julia Steinberger, Jakob von Weizsäcker and Achim Truger will be among the speakers. The program for August 31 is available – here.

Have a nice weekend,

Thomas Fricke