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the New Economy Ticker
The latest news, debates, proposals and developments on new economic thinking at a glance.
A recent article portrays how the paradigm shift in US-economic policy is impersonated by Isabella Weber and her ideas on inflation.
This astounding turnabout reveals a transformation in how we conceptualize the global economy. If you can understand Weber’s once forbidden theories, you can understand just how dramatically Washington’s economic assumptions have changed during the past two years—and what this new thinking might mean for the country’s future… At Joe Biden’s first press conference as President, he pitched his $1.9-trillion American Rescue Plan by announcing that he wanted to “change the paradigm” in economic thought.
Read the whole article here.
‘Degrowth’ starts to move in from Europe’s policy fringes – Article
Martin Sandbu, Financial Times, 30.05.2023
Unorthodox economic ideas are finding a mainstream audience as climate change bites.
The eurozone won’t work without safe government bonds – Article
Fabian Lindner, Social Europe, 30.05.2023
The arcane notion of ‘monetary dominance’ lay behind the last eurozone crisis. Unless challenged, it could underlie another one.
What is the cost of the world? 630 trillion dollars – Article (German)
Henrik Müller, Der Spiegel, 28.05.2023
A new study calculates how much fixed assets are worth around the globe. Within two decades, the sum has quadrupled. This raises fundamental questions about our economic system.
The Deficit Myth is Hanging On for Dear Life – Blogpost
Stephanie Kelton, Substack, 30.05.2023
The old playbook is making a comeback. Democrats and Republics are closing in on a “debt” limit deal with the “Fiscal Responsibility Act”
The anti-social recession – Column (German)
Marcel Fratzscher, Die Zeit, 26.05.2023
The economy has slipped into recession. This hits people on low incomes especially hard. Especially for them, no recovery is foreseeable for years.
IIPP to establish a Public Sector Capabilities Index – Press Statement
26.05.2023
UCL IIPP, with support from Bloomberg Philanthropies, has launched a new research initiative to establish a public sector capabilities index – the first global measure of governments’ capacity to solve problems.
Pride and Misjudgement (Paywall, German)
Sebastian Thieme, FAZ, 23.05.2023
Economics refuses to engage in a dialogue with Plural Economics. Yet the latter has long been able to prove its criticism of the subject.
A trade-off entails that not all conflicting goals can be realised at the same time. There must be compromises and prioritisation. As Jean Pisani-Ferry writes in a recent article, the European Union seems to be avoiding an obvious trade-off between climate protection, competitiveness and debt rules at the moment.
The most prudent course would be for the bloc to ease fiscal constraints through a green carve-out or a common-debt scheme, backed by an agreement to increase its own resources. Admittedly, such a move would risk triggering macroeconomic instability. But it would be less harmful than sacrificing competitiveness or letting the multilateral system crumble. Insisting on fiscal rectitude may confront the EU with significant losses on other fronts. Contrary to what some European policymakers may believe, the transition to clean energy will not be costless. The choice facing European policymakers is straightforward: act now to address these costs, or pay a much higher price later.
Read the whole article here.
Dieses Grundeinkommen wünschen sich die Deutschen – Article (German)
Florian Diekmann, Spiegel, 23.05.23
Jeden Monat Geld vom Staat für alle: Diese Idee ist in Deutschland sehr umstritten. Nun haben Forschende ermittelt, wie ein mehrheitsfähiges Grundeinkommen aussehen müsste, wie hoch es wäre – und wer besonders dafür ist.
European public goods and fiscal rules for the new economic policy – Article
Angel Ubide, El Pais, 21.05.23
The EU will not achieve its goals for strategic autonomy and decarbonization, without a budget to support them.
Economist Daron Acemoglu: ‘When mistakes involve powerful technologies, you’re going to have trouble’ – Interview
Rana Foroohar, FT, 19.05.23
The MIT professor on how AI can benefit the workers not ‘the takers’ — and seeing the world from Trump supporters’ point of view.
Wohlbefinden als neues Wachstumsmaß – Article (German)
Werner Mussler, FAZ, 16.05.23
Die Wachstumsaussichten für die EU sind in diesem und im kommenden Jahr eher mager. Ist das der Grund, warum die EU-Kommission sich neue Definitionen überlegt?
IWF fordert Reform der deutschen Schuldenbremse – Article (German)
Rheinische Post, 16.05.23
Alternde Bevölkerung, kaum Wirtschaftswachstum, hohe Inflation — der Internationale Währungsfonds zeichnet für Deutschland keine besonders rosige Zukunft. Um wirtschaftlich wieder leistungsfähiger zu werden, sollte die Bundesregierung die Schuldenbremse lockern, rät die Washingtoner Finanzorganisation.
Europe can’t decide how to unplug from China – Artikel (Paywall)
The Economist, 15.05.23
How should Europe handle China? The continent is trying to decide. After decades of pursuing trade, Europeans are pondering how much to decouple.
The IMF has in its recent mission report for Germany suggested to undertake reforms to create fiscal space for higher public investment and rising aging-related spending, and accelerate the green transition. In contrast to the current expenditure based austerity course of the traffic light coalition, the IMF proposes to gain fiscal space by revenue-side policies and an update of the fiscal rules. One example includes temporary solidarity taxes on higher-income households. But also reforming property taxes or reducing subsidies that are environmentally detrimental are named.
Although Germany has ample fiscal space to respond to shocks, there is hardly any room left under the constitutional debt-brake rule, which limits annual new structural borrowing to 0.35 percent of GDP at the federal level. [… ] To provide adequate funding for the green transition, digitalization, and boosting human and physical capital, Germany may need to create new fiscal room by undertaking expenditure reforms, mobilizing additional revenue, and/or adjusting the debt brake rule. Such measures could include, for example, reforming property taxes and/or reducing subsidies that are distortionary or environmentally harmful.
A reform of the German debt brake is also encouraged:
Germany should consider adjusting the debt-brake rule to better align it with EU fiscal rules and lessen reliance on extrabudgetary funds. To enhance transparency, cohesion with EU fiscal rules, and the effectiveness of the debt brake, the government should consider revising the rule to limit use of extrabudgetary funds and increase somewhat the annual deficit limit, perhaps by 1 percentage point of GDP. The latter change would make the rule more realistic, given Germany’s significant medium-term spending needs, while at the same time ensuring that debt continues to decline below 60 percent of GDP.
Read the whole IMF-statement 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.