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the New Economy Ticker
The latest news, debates, proposals and developments on new economic thinking at a glance.
Yes to climate protection, no to costs – Article (German)
Christian Endt, die ZEIT, 25.01.24
The state can no longer afford to protect the climate by handing out generous amounts of money. But the alternatives are quite unpopular, exclusive data shows.
‘Biden’s policy is a renunciation of faith in the market’ – Article (German, Paywall)
Nele Spandick, Capital, 22.01.24
Joe Biden and Olaf Scholz have been inspired by Harvard philosopher Michael Sandel in their centre-left policies. However, Sandel says that the USA and Germany are still approaching the great danger of right-wing populists in the wrong way.
The entrepreneurial self in the crisis – blog post (German)
Eva Gros, Andreas Hövermann, Amelie Nickel, Makronom,15.01.24
In view of the current multiple crises, the long-dominant neoliberal social programme is reaching its limits – and with it its constitutive guiding principles. This is giving rise to democracy-destroying and authoritarian movements.
Why Are Americans Dissatisfied Despite a Strong Economy? – Article
Pinelopi Koujianou Goldberg, Project Syndicate, Jan 19, 2024
Even though inflation appears to have been tamed without triggering a recession, Americans report broad dissatisfaction with the country’s economic leadership. While there are multiple likely explanations for this, one important factor is the role of unfulfilled promises in a world of rising aspirations.
A Progressive Green Growth Narrative – Article
Mariana Mazzucato, Project Syndicate, 19.01.24
Although many countries have the means to direct new investment toward decarbonization and other socially and environmentally beneficial outcomes, many voters still regard such efforts as economically harmful. For the green transition to get off the ground, it will need a more compelling narrative.
Neoliberalism: still to shrug off its mortal coil – Article
Colin Crouch, Social Europe, 05.01.24
In 2011 Colin Crouch’s The Strange Non-death of Neoliberalism appeared to acclaim. Its author reflects on a shifting landscape since.
The debt brake. On a paradoxical government technology of austerity – Article (German)
Thomas Biebricher, Geschichte der Gegenwart, 17.01.24
The ordoliberal regulatory framework, one of the most important instruments of which is the debt brake, aims to protect economic policy from the power of economic interest groups. However, this seemingly depoliticised government rationality has paradoxical political effects.
The recently published Forum New Economy Working Paper ‘Caught in Geopolitical Fragmentation: How to De-risk Germany´s Economic Mode‘ by Sebastian de Quant, Sander Tordoir, and Shahin Vallée calls for Germany to take the EU’s De-Risking from China more seriously. Two short articles summarise the main arguments, one published in German on Zeit Online, and one in English on Internationale Politik Quarterly.
The authors identify four main risks:
- 1. European and German Intellectual Property is vulnerable in China.
- 2. European technologies, companies, or infrastructures falling under foreign control.
- 3. Europe’s dependency on imports of crucial materials and technology, foremost for the green transition.
- 4. For Germany, regional and sectoral export concentration poses a significant risk.
According to the authors, to efficiently deal with these risks it is crucial to pool the decision-making competences at the EU level.
There is a need for action, but the political levers are not in one hand. While trade policy is already an EU competence, the broader tools needed for comprehensive derisking – including foreign investment screening and export controls – remain largely at national level. This leads to slow and inconsistent decision-making, leaving the EU exposed to pressure from China or the US. Every aspect of derisking in Europe requires an EU-wide consensus.
Read the whole articles here (Zeit Online, German) and here (Internationale Politik Quarterly, English).
How to finance the shift away from natural gas in Germany? In light of the recent cuts to the federal budget, the question of finance became ever more crucial in the context of security-oriented energy policy. The recently published report of the ZOE-institute summarises recommendations of eight leading experts from the fields of finance, economic policy and technology. Together these proposals could deliver Germany’s independence from natural gas by up to 78%, and also serve as inspiration and a blueprint for other countries.
The proposals stress the immediate importance of prioritizing natural gas independence for Germany’s security-focused energy policy. The Council’s final report outlines actionable steps for government intervention to stimulate private sector investment, promote electrification technologies, and leverage financial support through adjustments to the EU’s ‘green taxonomy’ and ECB interest-rate benefits.
Ten recommendations for Germany’s independence from natural gas:
1. Natural Gas Commission
2. Support package for the municipal heating transition
3. Scaling up programme for heat contracting
4. Practical checks for the heat transition
5. Heat-for-all programme for vulnerable homeowners
6. Skilled labour campaign for the heating transition
7. Industrial Transition Accelerator Platform (IBP)
8. Aligning sustainable finance with change
9. Targeted public funding
10. Interest rate advantages for investments in energy independence
Read the whole report here.
‘A tribal clique’: Lagarde denounces economists at Davos – Article
Thomas Moller-Nielsen, Euractiv, 18.01.24
European Central Bank President Christine Lagarde launched a stinging attack on the economics profession on Wednesday (17 January), accusing analysts of having “blind faith” in their models, which often bear little connection to reality.
“There is an escalation of losses” – Interview (Paywall, German)
Nils Markwardt, die ZEIT, 16.01.24
Liberal democracies are in crisis. This has to do with a paradox of loss, says sociologist Andreas Reckwitz. He outlines three scenarios for the future.
What we really know about the global economy – Article (Paywall)
Martin Wolf, Financial Times, 16.01.24
From demography to technology, we must pay attention to the forces that will certainly shape our future.
On average, women earn 18 per cent less than men – Article (German)
Die ZEIT, dpa, reuters, 18.01.24
The pay gap between men and women has not narrowed compared to the previous year. According to experts, career choice continues to play a major role.
The end of green hegemony – Guest article (German, Paywall)
Andreas Rödder, FAZ, 12.01.24
In a short space of time, Germany is experiencing the fourth political and cultural paradigm shift. The only question is: what comes after the demystification of great transformation, post-colonialism and diversity? A guest article.
Amendment to the debt brake to bring 57 billion for investments – Article (German)
Julian Olk, Handelsblatt, 15.01.24
The conflict in the traffic lights over the debt brake is intensifying. A government advisor is now campaigning for a way to invest an additional 57 billion euros.
What It Takes to Build Democratic Institutions – Article
Daron Acemoglu, Project Syndicate, 16.01.24
Chile’s failure to draft a new constitution that enjoys widespread support from voters is the predictable result of allowing partisans and ideologues to lead the process. Democratic institutions are built by delivering what ordinary voters expect and demand from government, as the history of Nordic social democracy shows.
Confronting Our Four Biggest Economic Challenges – Article
Dani Rodrik, Project Syndicate, 09.01.24
At the start of a new year, it is increasingly obvious that new, creative thinking is needed to address climate change, socioeconomic malaise, faltering development strategies, and the breakdown of globalization as we know it. To remain relevant, economists must adapt to new realities and new demands.
Consequences of the constitutional judgement: Protecting investments – Guest article (German)
Clemens Fuest, Michael Hüther, Jens Südekum, FAZ, 12.01.24
In a guest article for the Frankfurter Allgemeine Zeitung, IW Director Michael Hüther, Ifo President Clemens Fuest and Jens Südekum, Professor of International Economics at the University of Düsseldorf, write about the far-reaching consequences for German fiscal policy of the Federal Constitutional Court’s ruling on compliance with the debt brake.
Liberalism is battered but not yet broken – Article (Paywall)
Martin Wolf, Financial Times, 09.01.24
Freedom is under threat in the west and elsewhere, but it must be defended.
Time for a Victory Lap? – Article
Joseph Stiglitz, Prospect, 04.01.24
Those who believed inflation would be transitory were proven right, and those who demanded the sacrifice of mass unemployment proven wrong.
Stefan Gosepath: There is a justification for inequality in the market economy – Article (German, Paywall)
Susanne Lenz, Berliner Zeitung, 07.01.24
But by wanting to pass everything on to your children, you are betraying the principle of equal opportunities. Berlin philosopher Stefan Gosepath explains how this could be changed.
Environmental expert Axel Friedrich: “We need a climate debt brake” – Article (German)
Joachim Wille, Frankfurter Rundschau, 11.01.24
Environmental expert Axel Friedrich is calling for a turnaround in financial policy so that future generations are not crushed by the coming climate debt.
OUR MAIN TOPICS
New Paradigm
NEW PARADIGM
After decades of overly naive market belief, we urgently need new answers to the great challenges of our time. More so, we need a whole new paradigm to guide us. We collect everything about the people and the community who are dealing with the question of a new paradigm and who analyze the historical and present impact of paradigms and narratives – whether in new contributions, performances, books and events.
Redefining
the role of
the state
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.
Remaking
finance
REMAKING
FINANCE
More than a decade after the financial crisis there still seems to be something seriously wrong with the financial system. Financial markets still tend to periodically misprice risk and contribute to boom and bust cycles. A better financial system needs to discourage short-termism and speculative activity, curtail systemic risk and distribute wealth more broadly.
Greening
prosperity
GREENING
PROSPERITY
During the high point of market orthodoxy, economists argued that the most 'efficient' way to combat climate change was to simply let markets determine the price of carbon emissions. Today, there is a growing consensus that prices need to be regulated and that a carbon price on its own might not be enough.
Reducing
inequality
REDUCING
INEQUALITY
The rising gap between rich and poor has become a threat to social cohesion in most rich countries. To reverse this trend it will be crucial to better understand the importance of different drivers of income and wealth inequality.
Innovation Lab
INNOVATION LAB
Do we need a whole new understanding of economic growth? What would be a real alternative? How viable are alternatives to GDP when it comes to measuring prosperity? These and other more fundamental challenges are what this section is about.
Globalization
for all
GLOBALIZATION
FOR ALL
After three decades of poorly managed integration, globalization is threatened by social discontent and the rise of populist forces. A new paradigm will need better ways not only to compensate the groups that have lost, but to distribute the gains more broadly from the start.
Europe
beyond markets
EUROPE
BEYOND MARKETS
The euro was planned during a period in which economic policy making was driven by a deep belief in market liberalism and the near impossibility of systemic financial crises. This belief has been brought into question since the euro crisis, which showed that panics do happen. New thinking needs to focus on developing mechanisms to protect eurozone countries from such panics and to foster economic convergence between members.
Corona Crisis
CORONA CRISIS
The current Corona crisis is probably the worst economic crisis of the post-World War 2 era. Economists are working hard on mitigating the economic effects caused by COVID-19 to prevent a second Great Depression, the break-up of the Eurozone and the end of globalisation. We collect the most important contributions.