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the New Economy Ticker
The latest news, debates, proposals and developments on new economic thinking at a glance.
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.
The Myth of the 1% – Article
Michael R. Stain, Project Syndicate, 14.12.2023
The skewing of income toward the top 1% of earners has become a central issue in American politics, with both Republicans and Democrats proposing higher taxes on the rich. But new research finds that it may not be true, suggesting that policymakers would do better to focus more on helping the working class.
A Bidenomics score chart – Column
Martin Sandbu, Financial Times, 14.12.2023
A boastful administration that has much to be boastful about.
Tax justice is yet to hit the richest ‘citizens of the world’ – Column
Rana Foroohar, Financial Times, 11.12.2023
A Supreme Court case highlights the difficulties of raising revenue from wealthy people who can park money offshore.
Why the economic miracle is not reaching Americans – Article (Paywall, German)
Ann-Kathrin Nezik, Süddeutsche Zeitung, 12.12.2023
The US economy is performing better than in most other industrialised countries. Nevertheless, the majority of people are dissatisfied. Economists suspect other reasons behind this.
High time for a constitutional amendment – Article (Paywall, German)
Alexander Thiele, Max Krahé, Philippa Sigl-Glöckner, FAZ, 12.12.2023
The debt brake must be reformed so that Germany does not fall behind economically.
Debt brake? Yes, but relax it! – Interview (Paywall, German)
Die Zeit, 07.12.2023
Gita Gopinath, deputy head of the International Monetary Fund, speaks out on the German budget dispute and worries about global trade.
Ecological sustainability and high employment are often perceived as being in tension. Historically and also today, economic development has almost always come at the expense of the environment. Does this mean, conversely, that the green transformation threatens jobs?
In a recently published study, Enzo Weber and Gerd Zika estimate the employment effects of climate transformation and come to the conclusion that they are likely going to be positive.
The approaches take into account that existing jobs can be replaced and eliminated by new technologies and regulations. Similarly, investments, infrastructure development, and new business models associated with the transformation are also considered. All these impulses associated with the transformation or the measures are then simulated simultaneously in a structural economic and labor market model. This model illustrates how the changes are processed and what adaptation reactions occur.
The central result: Overall, there are positive employment effects in the socio-ecological transformation. And this applies to all skill levels, meaning not only ‘good’ jobs are replaced by ‘cheap’ jobs. The climate policy turnaround is possible without losing jobs overall.
Read the whole study (in German) here.
The independent scientific advisory board at the Federal Ministry for Economic Affairs and Climate Protection has proposed a comprehensive reform of the debt brake. According to this, investments should no longer fall under the debt rule, as quoted in a recently published article.
The independent committee states that the debt brake in its current form contains “false incentives”. Although the advisory board does not propose abolishing it, it does propose several changes. These are the two most important:
“Golden Rule Plus”: The state can take on debt for investments that do not fall under the brake. “Investment promotion companies”: The state undertakes to provide these companies with a fixed amount of money each year. They then use the money exclusively for investments.
The report also criticises the previous fiscal policy practice of special funds to circumvent the debt rule:
In the view of the advisory board at the Ministry of Economic Affairs, it was urgently necessary to put an end to the practice of special funds, not only from a legal but also from an economic point of view. This policy was “not sustainable”, it was merely an attempt to “disguise” the actual financial requirements. These are the words of the report, which was compiled over the course of more than a year under the leadership of Mannheim financial scientist and advisory board chairman Eckhard Janeba.
Read the whole article (in German) here.
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.