Quick & New -
the New Economy Ticker
The latest news, debates, proposals and developments on new economic thinking at a glance.
Inheritance should become fairer – Radio feature (German)
Kirstin Langen, Deutschlandfunk, 18.10.2023
In Germany, 300 to 400 billion euros are inherited or given away every year. Taxes are due on larger savings deposits, but those who inherit businesses often do not have to hand over anything to the tax authorities. Soon the Federal Constitutional Court will deal with the issue.
“A new underclass has emerged in America” – Interview (Paywall, German)
Interview by Ines Zöttl, Spiegel, 03.10.2023
In his new book, Angus Deaton, winner of the Nobel Prize for Economics, takes aim at American capitalism. The majority of the population is disconnected – and the rise of Donald Trump is the logical consequence.
Happiness beats money – Commentary (Paywall, German)
Alexander Hagelüken, Süddeutsche Zeitung, 06.10.2023
Economic performance alone says little about how people are doing in a country. It’s time to define prosperity differently and to pay more attention to those who are dissatisfied. Otherwise, they will be driven into the arms of right-wing populists.
Germany must invest to neutralise the far-right threat – Opinion piece
Adam Tooze, Financial Times, 01.10.2023
A once successful growth model has run out of steam and migrants are needed to fill labour market shortages
How Claudia Goldin transformed our understanding of women and work – Commentary
Soumaya Keynes, Financial Times, 13.10.2023
The winner of the Nobel Prize in economic sciences has explored expectations, incentives and constraints.
Accompanying institutions for industrial policy – Blog post (Paywall, German)
Achim Wambach, Makronom, 11.10.2023
The controversies surrounding industrial policy are not new, but the current problems are. Accompanying institutions that evaluate the measures and feed findings into policy are necessary.
More and more external shocks such as wars or earthquakes complicate short-term modelling and forecasting, and necessitate qualitative assessments of future challenges. In a recent contribution, Martin Sandbu has proposed three ways to think about the (longer-term) future world economy. He identifies three structural shifts, each of which entail certain problems.
- Globalisation: Fragmentation of the world economy into different blocs. Potential cost: Loss of trade-induced efficiency gains (e.g. by duplication of production in different blocs). But costly only under the assumption of large economy of scale effects.
- Climate: Increased volatility through climate change, geopolitical shocks, or financial crises. (Potential) cost: Higher insurance costs.
- State: Rise of the supply side. More actively intervening governments, e.g. with industrial policies, managing climate change, the digital transition, or the de-risking of global supply chains. Potential cost: Inefficiencies. Potential benefits: mitigation of costs associated with volatility or fragmentation.
This list could easily be complemented by additional challenges. Take for example (within and between country) inequality or the rise of right-wing populism. Solving all these issues together, which are inherently interconnected, will require more than just hoping for the free forces of the market. Which underlines the importance of an overarching and consistent new economic paradigm.
Global carbon pricing has a bright future – Column
Martin Sandbu, Financial Times, 05.10.2023
The Biden scorecard: the verdict of Unhedged and Chartbook – Article
Adam Tooze, Financial Times, 05.10.2023
The first of three collaborations with historian Adam Tooze
From missed chances to green advances: The case for a green industrial strategy – Report
Institute for Public Policy Research, Report, October 2023
The transition to net zero is the economic opportunity of the 21st century. But claims of UK leadership in capturing the economic benefits of the transition to a green economy are wide of the mark.
Industrial Policy with Conditionalities: A Taxonomy and Sample Cases – Study
Mariana Mazzucato and Dani Rodrik, Working Paper, September 2023
This paper illuminates how conditionalities can be applied to catalyse investment, innovation and growth that is aligned with the goal of shaping more sustainable, inclusive, and resilient economies.
How Finance Became the Problem – Article
Katharina Pistor, Project Syndicate, 05.10.2023
Over time, finance has evolved from playing a crucial but merely intermediary role in the economy, to becoming the driving force behind most decision-making, even by governments. Financialization has become so deeply rooted that we seem to have unlearned politics.
No industrial policy is no solution either – Article (German)
Henning Vöpel, Makronom, 05.10.2023
Why transformative regulatory policy is better than dirigiste industrial policy.
Europe in the Age of Industrial Policy – Article
Michael Spence, Project Syndicate, 26.06.2023
While China and the US take advantage of scale to pursue large-scale investment in critical sectors, the EU struggles to follow suit, owing to its decentralized fiscal structures and rules limiting government subsidies to industry. A new EU-level investment program is urgently needed.
What the market does not know – Article (German, Paywall)
Lisa Herzog, FAZ, 22.09.2023
Market faith is reaching its limits, decisions are not always made exclusively rationally. Now the reasonable citizen is called upon.
State without a plan – Essay (German, Paywall)
Georg Diez, die Zeit, 13.09.2023
After decades of neoliberal deregulation, the state is once again in demand. All the more reason why a vision of what the state should look like in the future is finally needed in this country.
Europe’s rightward drift is not set in stone: our new research should give hope to the left – Article
Julia Cagé and Thomas Piketty, The Guardian, 26.06.2023
We’ve examined French voting data going back to the revolution – and it shows the politics of migration is a dead end.
Germany must now make a fresh start – Guest article (German)
Isabella Weber, die Zeit, 08.09.2023
In response to the crisis, Germany now urgently needs a comprehensive investment agenda. An industrial electricity price is indispensable, but only one building block.
Wie Minimum wages work – Article (German)
Bernd Fitzenberger, Mario Bossler, FAZ, 26.09.2023
Has the introduction of the statutory minimum wage led to a decline in employment in Germany?
In its recent monthly report, Germany’s central bank has issued a stark warning about the country’s economic vulnerability due to its heavy reliance on trade with China. The report identified several key factors putting Germany’s “business model” at risk, including its dependence on China, high energy prices, and labor shortages. According to the Bundesbank, de-risking from trade with China also adds to the economic slowdown, with the IMF expecting 0.3% shrinkage in growth for 2023.
Read the whole report (in German) here, which is also featured in a recent Financial Times article here.
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.