Newsletter: An investment rule against collapsing bridges - Symposium on the outcome of the US election - Progress and wealth

Dear friends and colleagues,

There is sometimes a kind of learning resilience in politics. Take the railway. Over many years, far too many cuts have been made in a hopeless endeavour to make this public service profitable, and everyone is clearly suffering as a result today. To make matter worse, the Minister for Transport now proposes to solve the problem by making the railway profitable as quickly as possible. A former treasurer and advocate of the “black zero” in the Ministry of Finance who now sits on the Supervisory Board of Deutsche Bahn seems somewhat more willing to learn and recently called for a special fund to be created to solve the problem, that is to finance the urgently needed investments through debt. Does this mean a paradigm shift in German fiscal policy? After all, a number of heads of state governments of different kinds are now also discussing how the debt brake should be reformed. They are ready to learn.

How more money could be mobilised for public infrastructure – let’s say the physical resilience of bridges – was written up by Tom Krebs in a new Forum paper. It requires a comparatively simple investment rule that would make it possible to finance investments in the future through debt without having to write large new texts. An abridged version of the proposal appeared recently in Makronom.

The question remains, among others, what investments should actually be made in order to advance the country and its people – and what progress means. Petra Pinzler from DIE ZEIT and Stefan Kolev from the Ludwig Erhard Forum argued about this in our latest New Economy Short Cut. They realised that it might have been better for the traffic light government to talk about precisely this (what progress actually means) before praising themselves as a coalition for progress. The fact that the parties involved do not understand this to mean the same thing could be one of the coalition’s fundamental problems. Watch it as a re-live – here. 

In the meantime, Carmen Giovanazzi’s study on the assets of family businesses in Germany has also been published for the Forum – with analyses in SPIEGEL among others. The topic itself always causes a lot of controversy. For now, it’s just a matter of establishing that the country’s wealth is simply enormously concentrated in the companies in question – and that it doesn’t necessarily make economic sense for so much money to be accumulated rather than reinvested.

Another thing with a future: on 19 November, the Forum New Economy will be holding a symposium on the consequences of the (likely) outcome of the US presidential election and the question of what it means for the new paradigm that is currently maturing if Kamala Harris or Donald Trump determine what happens not only in the US, but also indirectly elsewhere. Joe Kaeser has already confirmed his participation as a panelist. Afterwards, we will toast to five years of the Forum.

And, since many German-speaking economists are meeting in Berlin at the beginning of next week for the annual conference of the Verein für Socialpolitik, we will take the opportunity to have a little chat about the Berlin Declaration, which could become a new guiding principle for economics and replace the long-standing Washington Consensus, at a small reception on Tuesday 17 September in the late afternoon. If you are interested, please contact us by email. A few spots are still available.

Have a good weekend,

Thomas Fricke

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