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the New Economy Ticker
The latest news, debates, proposals and developments on new economic thinking at a glance.
Germany is in a bizarre fiscal mess of its own making – Article (Paywall)
The Economist, 30.11.23
Three steps to resolve the fiscal panic.
Luxury Boom Boosts Wealth of Billionaires – Article (German)
Der Spiegel, 30.11.23
The rich make the rich even richer: according to a study, the post-coronavirus spending spree has ensured that owners of luxury goods companies have amassed more money. Who becomes a new billionaire is largely determined by their background.
The New Industrial Policy and Its Critics – Blogpost
Laura Tyson & John Zysman, 17.11.23
For many years, industrial policy was considered taboo in the United States and many other advanced economies, owing to assumptions that it is inherently protectionist and market-distorting. But context matters, and in today’s world, state interventions to address market failures are exactly what is needed.
Majority Thinks Debt for Investments Is Ok – Article (German)
ZDF, Dominik Rzepka, 29.11.2023
Getting into debt is not actually a majority option – but there are exceptions: If the money flows into schools or roads, a majority is in favour of relaxing the debt brake.
Anarcho-capitalism, What Is That? – Article (Paywall, German)
Nikolaus Piper, Süddeutsche Zeitung, 26.11.23
The new Argentinian President Javier Milei is an avowed anarcho-capitalist. To understand this, you have to get to know the economist after whom Milei named his dog.
In a representative survey on the topic of public debt conducted by Fiscal Future and d/part in June 2023, over 3,000 people in Germany were asked about public debt and government investment.
At first, superficial glance, population surveys seem to support the assumption that people in Germany expect a reduction in debt in terms of fiscal policy. When asked about this, many people state that they are rather sceptical about extensive government debt. But can we really conclude from this that they consider government investment to be less important and prioritise fiscal discipline? Existing research casts doubt on this.
Find the whole briefing here.
Monster of the mainstream – Article
Quinn Slobodian, The New Statesman, 20.11.23
Argentina’s new president Javier Milei embodies the zombie neoliberalism of the 1990s.
Why Mainstream Economics Got Inflation Wrong – Blogpost
James K. Galbraith, 15.11.23
Leading economists’ misdiagnosis of inflation in 2021-22 was the latest episode in a long-running series of failures, from not foreseeing the 2008 financial crisis to endorsing self-destructive austerity in the 2010s. Either mainstream economists need to re-examine their core beliefs, or the profession needs a new mainstream.
« The United States and the European Union must support a United Nations tax treaty » – Article (Paywall, French)
Collectif, Le Monde, 21.11.23
Fourteen economists, lawyers and former politicians – including Jayati Ghosh, Joseph Stiglitz and Thomas Piketty – are warning of the crucial vote on Wednesday 22 November at the United Nations on a resolution on international tax cooperation.
Best books of 2023 — Economics – Article
Martin Wolf, Financial Times, 15.11.23
Martin Wolf selects his best reads of the second half of 2023.
Three and a half ideas for a new debt brake – Article (German)
Fabian Franke, Die Zeit, 24.11.23
Christian Lindner’s solution to the budget crisis is short-term, the demands for a reform of the debt brake remain. This is what it could look like.
The Hidden Gender Wealth Gap – Article
Celine Bessiere & Sibylle Golac
As important as equal pay and other labor-market advances for women have been, progress toward economic parity with men remains tenuous and incomplete. As inequality becomes less about wages and more about wealth, women once again find themselves facing profound structural disadvantages.
“Democracy has not delivered what it promised” – Interview (Paywall, German)
Markus Zydra, Süddeutsche Zeitung, 21.11.23
Economist Raghuram Rajan foresaw the global financial crisis – and now recognises fractures in the system. He explains where they are, why so many people are turning to authoritarian regimes and what can be done about it.
The think tank Dezernat Zukunft has published a new information page on the German debt brake. The website explains and visualises the fiscal rule on three levels. Firstly, how it came about. Secondly, how it actually works. And thirdly, how it could be reformed.
The impact of the debt brake on the budget, education, infrastructure and society is enormous. Nevertheless, few people understand it. And experts doubt whether it is really future-proof. An attempt to explain it, including a proposal for reform.
Find the website here.
A recent article published in Die Zeit discusses the results of the Forum’s new wealth simulator ‘ReBalance’, which was launched today. A key finding of the simulator is that wealth inequality in Germany would increase over the next ten years without reforms.
In capitalism, capital means freedom. And in Germany, it is distributed extremely unequally. This applies not only to inheritance, but to wealth as a whole. According to calculations by the Forum New Economy, an association of economists, the top ten percent of wealthy people in Germany hold 61 percent of all assets, the upper middle class 38 percent. The poorer half of the population owns only 1.4 percent of all wealth.
The article focuses on the effectiveness and financial viability of various proposals for a basic heritage.
But how much could such a basic inheritance actually change the unequal distribution of wealth in Germany? The Forum New Economy is publishing new calculations on Friday this week. The results are available to ZEIT in advance. They show that In order to have a noticeable effect, the basic inheritance would have to be quite high – and would be correspondingly expensive. If every German were to receive 10,000 euros when they come of age, this would be just enough to maintain the current distribution of wealth, i.e. to prevent further upward redistribution. With 20,000 euros, the poorer half of the population would receive 2.7 percent of all assets. The state would have to raise 17 billion euros every year for this, which is more money than the federal government spends on healthcare. If the government were even to transfer 60,000 euros for every 18th birthday, as the Jusos are demanding, the share of assets of the lower half would rise to five percent. However, this would also cost 65 billion euros a year, far more than the entire defense budget.
Find the wealth simulator ReBalance here.