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The latest news, debates, proposals and developments on new economic thinking at a glance.
According to the recently published Minimum Wage Report 2024 by the Institute of Economic and Social Research (WSI), there was a significant increase in the minimum wage in most EU countries at the beginning of 2024. The European Minimum Wage Directive adopted in autumn 2022 is cited as a favourable factor. However, Germany is an outlier in this development: the small increase in the minimum wage is lagging behind the price trend.
Most EU countries saw significant increases in minimum wages on 1 January 2024. Despite persistently high inflation rates in the majority of member states, these were sufficient to maintain or even increase the purchasing power of the minimum wage. The minimum wage momentum was also boosted by the European Minimum Wage Directive adopted in autumn 2022. In the course of implementing the EU directive, many member states are endeavouring to achieve the reference values of 60% of the median wage or 50% of the average wage set out in the directive. The development in Germany was different: here, the Minimum Wage Commission argued against the votes of the trade unions in favour of only a small increase in the minimum wage, which falls behind the price trend.
Read the full report (in German) here.
Europe must ask: what if Biden wins in November? – Article (Paywall)
Rana Foroohar, Financial Times, 19.02.24
Traditional allies of the US are pondering a response to Trump 2.0 but they need a plan for a Democratic election victory as well.
America’s economy is thriving like never before – Article (German, Paywall)
Winand von Petersdorff, FAZ, 16.02.24
President Joe Biden’s economic policy has been loudly criticised. Many economists are now surprised by the particularly strong growth of the American economy. They had predicted a deep recession.
Data check debunks “myth of the bloated German state” – Inconspicuous development in international and historical comparison – Press release (German)
IMK Pressemitteilung, 15.02.2024
Contrary to what is sometimes claimed, government and social spending in Germany is not particularly high either in an international or historical comparison – and has by no means grown strongly recently. This is shown by a new data analysis by the Institute for Macroeconomics and Business Cycle Research (IMK) of the Hans Böckler Foundation.
AI Could Actually Help Rebuild The Middle Class – Blogpost
David Autor, NOEMA, 12.02.24
AI doesn’t have to be a job destroyer. It offers us the opportunity to extend expertise to a larger set of workers.
“The firewall still holds in the West”: political scientist Colin Crouch on right-wing extremism – Interview (German)
Michel Hesse, Frankfurter Rundschau, 12.02.2024
Conservatism is in crisis. Political scientist Colin Crouch analyses right-wing extremism and populism in Europe – and the right remedies.
What Was Capitalism? – Article
James Livingston, Project Syndicate, 16.02.24
The economic crisis of 2008-09 and the pandemic of 2020-21 delivered devastating blows to a market society that was already staggering – hollowed out by the “financialization” or “dematerialization” of assets. And those perched at the commanding heights of today’s economy seem no less hollow.
Does saving make people right-wing? And why? – Blogpost (German)
Stephan Kaufmann, Politische Ökonomie, 10.02.24
Studies show that austerity goes hand in hand with the rise of right-wing parties. Stephan Kaufmann provides an overview of the studies and analyses the way in which the causes of the right-wing trend are researched. The political path to the right is not that far, he writes.
Donald Trump has 11-point polling lead over Joe Biden on handling of economy – Article (Paywall)
Lauren Fedor & Eva Xiao, Financial Times, 11.02.24
FT-Michigan Ross survey shows US voters are not crediting president even as their finances improve.
What if it’s not the economy, stupid? – Article (Paywall)
Rana Foroohar, Financial Times, 05.02.24
With Biden’s supply-side economic policies working, November’s presidential election may well be waged on social issues.
Dani Rodrik: doing industrial policy right – Interview (Paywall)
Robert Armstrong & Ethan Wu, Financial Times, 09.02.24
The Harvard economist on ‘the new economics of industrial policy’, China’s subsidies and Joe Biden’s record.
Populism’s Great Replacement of Economics – Article
Antara Haldar, Project Syndicate, 01.02.24
Dozens of countries will hold national elections in 2024, in what many view as a kind of plebiscite on the postwar global order. The likely rejection of that order in favor of populist leaders should serve as a wake-up call for policymakers to heed the message that no economy exists outside the society that created and sustains it.
Trade liberalisation can weaken unions and reduce votes for the left – Article
Pedro Ogeda, Emanuel Ornelas, Rodrigo R. Soares, CEPR Blog, 04.02.24
Intuitively, trade liberalisation should increase the appeal of left-wing parties that offer to protect workers with protectionist policies. This column uses evidence from Brazil to show how liberalisation actually reduced votes for the left by undermining labour unions, the traditional support base of many left-wing parties. These changes in voting behaviour have proven persistent and highlight the institutional channels through which economic policy may have repercussions for the political landscape.
If shadow banking looks like a duck . . . – Opinion Piece (Paywall)
Leah Downey, Financial Times, 05.02.24
Maybe it should be regulated like one? As private credit proliferates, we must think more seriously about its risks.
The debt brake will fall – Commentary (German)
Max Haerder, Wirtschaftswoche, 02.02.24
As soon as the federal government decides on its budget within the framework of the debt brake, Robert Habeck proposes a new special fund. What is happening? Old certainties are dissolving. Slowly, but surely. A commentary.
The Politics of Despair – Article
Harold James, Project Syndicate, 30.01.24
For the past 30 years, the American political consultant James Carville’s famous mantra, “It’s the economy, stupid,” has shaped our understanding of politics, especially in an election year. But politics has long since stopped responding to what is happening in the real world, including the economy.
If you want to fight the AfD, you have to pursue social policies – Article (German, Paywall)
Georg Diez, Die ZEIT, 28.01.24
The success of right-wing extremists is also due to the failed economic policies of the established parties. This makes it all the more fatal that this hardly plays a role in the debate.
German debt brake “too rigid”, say government advisors – Article (Paywall)
Guy Chazan, Financial Times, 30.01.24
Panel of experts recommends changes to constitutionally enshrined borrowing curbs
A new global gender divide is emerging – Article (Paywall)
John Burn-Murdoch, Financial Times, 26.01.24
Young men and young women’s world views are pulling apart. The consequences could be far-reaching.
“The concept of labour is currently being occupied by the right” – Interview (German)
Robert Pausch, Die ZEIT, 01.02.24
The distribution conflict between top and bottom hardly plays a role in current debates, says sociologist Linus Westheuser. This is not least the fault of the SPD.
Where do billionaires come from? Mom and Dad – Article
Whizy Kim, Vox, 22.01.24
The great billionaire wealth transfer means people born very, very rich are going to stay very, very rich.
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.
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.