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the New Economy Ticker
The latest news, debates, proposals and developments on new economic thinking at a glance.
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.
Economist Isabella Weber in conversation: “The debt brake has been a brake on the future for 14 years” – Interview (German, Paywall)
Julius Betschka & Felix Kiefer, Tagesspiegel, 03.01.2024
Saving is not always a virtue, says Isabella Weber. The economist warns that austerity is not only detrimental to competitiveness, but also to democracy.
Clarifying America’s Great Inequality Debate – Article
Daron Acemoglu, Project Syndicate, 03.01.2024
Technical debates about the nature and scale of income inequality are important, but they should not obscure what matters most in the story of the US economy. The mitigating effects of taxes and transfers do not change the fact that the market economy has been malfunctioning for the past 40 years.
Mainstream Economics’ Medieval Inflation Medicine – Article
James K. Galbraith, Project Syndicate, 29.12.2023
Considering that the US inflation rate peaked in June 2022, there is no evidence that monetary policy had any significant effect on the direction taken by prices. Yet, like premodern physicians committed to the ancient humoral theory of disease, mainstream economists today have shown that they lack the tools to cure the patient.
To Fight Populism, Invest in Left-Behind Communities – Article
Diane Coyle, Project Syndicate, 28.12.2023
People living in “places that don’t matter” have seen quality jobs disappear, public services eroded, and their economic prospects rapidly diminish. Seen in this light, today’s populist backlash is hardly surprising, especially when many politicians are part of the thriving urban elite.
Debt, guilt and Swabian housewives: debate on German borrowing rule heats up – Article (Paywall)
Guy Chazan, Financial Times, 31.12.2023
Scholz government at an impasse over reforming popular debt brake after November court decision.
On the Brink of System Failure – Article (German, Paywall)
Georg Diez, Die Zeit, 02.02.2024
Whether pensions, federalism or education: The country has a number of eternal construction sites. Everyone knows about it, but no one changes anything. In the end, this jeopardises democracy.
The Exploring Economics platform has compiled a review of key publications from the German-speaking ‘New Economy Space’ over the past year.
The Forum appears twice. In January with the study Mapping the State of a Shifting Paradigm on the current state of the paradigm shift in economic policy. And in November with our new inequality website including the ReBalance wealth simulator.
Click here for the end-of-year review.
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.