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the New Economy Ticker
The latest news, debates, proposals and developments on new economic thinking at a glance.
Focus on Produktivity, not technology – Article
Dani Rodrik, Project Syndicate, 07.07.2023
Scientific and technological innovation may be necessary for the productivity growth that enriches societies, but it is not sufficient. Without the right kind of complementary policies, technological progress may not lead to sustainably rising living standards; and in some cases, it may even set a country back.
Who’s rich here?- Article
Franz Kotteder, Süddeutsche Zeitung, 10.07.23
Germany is losing its middle class. That is no reason to gloat. The debate on parental benefits shows this: We need a new solidarity.
The federal budget weakens Germany’s prosperity – Article
Marcel Fratzscher, die Zeit, 07.07.23
German Finance Minister Christian Lindner wants to stick to the debt brake, more investment but no tax increases. He will not achieve any of this.
What if there is nothing central banks can do about inflation? – Article
Martin Sandbu, Financial Times, 06.07.23
Except for making things worse after it goes away by itself
The United States is changing the rules of the global economy, says historian Adam Tooze. Security is becoming more important than wealth. Germany must adapt and spend more.
Debate Monitor Skills Shortage – Article
Susanne Erbe, Makronom, 03.07.2023
In a Makronom series, researchers have examined the various aspects of the skills shortage from different perspectives. A new Debate Monitor summarises these and other findings on one of the biggest problems facing German economic policy.
This goal should be subject to public scrutiny and measured against current needs.
“The CDU must act more socially” – Article
Robert Roßmann, Süddeutsche Zeitung, 11.07.23
The workers’ wing criticises the party leadership for neglecting social issues – which also hurts in the debate with the AfD. But now Friedrich Merz is appointing Carsten Linnemann, of all people, as secretary-general.
Traffic light coalition gives the Cartel Office drastic powers – Article (DE – Paywall)
Julian Olk, Handelsblatt, 03.07.2023
Germany is getting the biggest competition reform for decades. The Cartel Office will be able to take market-dominating companies to task much earlier.
Florian Diekmann, der Spiegel, 04.07.2023
The AfD is particularly successful among workers and trade unionists. Here, Jena sociologist Klaus Dörre talks about what makes the right-wing party attractive to these people – and what strategy could help.
The energy crisis has hit the German economy hard – Article (DE – Paywall)
Tom Krebs, Handelsblatt, 01.07.2023
For Tom Krebs, four percent less gross domestic product and record losses in purchasing power contradict the assessment that we have weathered the crisis well.
Successful rebels – Article (DE)
Patrick Bernau & Alexander Wulfers, FAZ, 28.06.2023
When other scientists deviate from the majority opinion, they are often ostracised. Economists then become all the more influential.
Diane Coyle, Project Syndicate, 23.06.2023
The tercentenary of Adam Smith’s birth is an opportunity to consider how his insights into the dynamics of economic growth continue to shape our understanding of the world today. But what if the division of labor that underpinned Smith’s theory of growth has reached its limit?
How the rich became untouchable – Article (Paywall)
Lenz Jacobsen, die Zeit, 02.07.2023
Wealth inequality is becoming increasingly obscene, but politically hardly anyone seems to care. Why is that?
“1.5 million immigrants per year required” – Article – DE
The economic expert Schnitzer proposes more immigration to combat the shortage of skilled workers. The new Skilled Workers Act is already going in the right direction, but the Federal Republic of Germany as a whole is not making as much progress “as we could and should”.
Budget emergency endangers Lindner’s investment incentives for companies – Article (DE – Paywall)
Martin Greive & Jan Hildebrand, Handelsblatt, 29.06.2023
Finance Minister Lindner wants to boost business investment with super write-offs. Due to the poor budget situation, the project is now likely to be smaller.
How can the shortage of skilled workers be contained? In a recent interview with Makronom, IZA Director Simon Jäger talks about the extent of the shortage and possible countermeasures. Why the market, which should significantly increase wages when supply is tight, does not always regulate everything?
I think that the findings from modern labour market research on the market power of companies in the labour market play a crucial role in understanding. The labour market is not a perfectly competitive market and frictions are not the exception but the rule. The complaint about labour shortages is also evidence of wages being paid below labour productivity in some sectors.
To counter the problem, better immigration offers, for example, are an important pillar. The IZA proposes linking immigration to collective bargaining and expects a double dividend from this: An increase in labour migration together with an additional incentive for productive, growing companies to enter into collective bargaining agreements.
Read the whole interview (in German) here.
The Global Minimum Corporate Tax Needs More Work – Article
Jo Stiglitz & Tommaso Faccio, Project Syndicate, 19.06.2023
Two years after a “historic” deal to establish a new global corporate-tax regime, the consensus is eroding, and developing countries are taking matters into their own hands. Their efforts are perfectly understandable, given that the agreement’s main provisions may have done more harm than good.
“We have a lot to lose in Germany” – Article (German)
Michael Brächer, 22.06.2023, Der Spiegel
Many Germans fear social decline, and the AfD is stronger than ever. Economist Andreas Peichl says whether the pessimism is justified. Or are we simply bad at dealing with change?
Finding the money to fix the world requires a rethink on tax, says Jayati Ghosh – Article
Jayati Ghosh, The Economist, 13.06.2023
The co-chair of an independent tax commission on why the focus should be on squeezing more from big business and billionaires.
America is telling a very different story about trade – Article
Rana Foroohar, Financial Times, 18.06.2023
A paradigm shift is under way — even if the details are still catching up with the narrative.
A wealth tax could help poorer countries tackle climate crisis, economists say – Article
Fiona Harvey, The Guardian, 19.06.2023
Taxing world’s wealthiest people could help poorer countries shift economies to low-carbon and recover from climate damage.
Le Maire calls for room for investment – Article (German)
Carsten Volkery, Handelsblatt, 16.06.2023
Ahead of the meeting of EU finance ministers, Bruno Le Maire distances himself from Christian Lindner. However, the states agree not to increase the EU budget.
Fiscal policy is about to change beyond recognition – Article
Martin Sandbu, Financial Times, 15.06.2023
We must prepare — institutionally and politically — for the permanently higher state investments new times require.
Our Debt to Future Generations – Article
Jo Stiglitz, Project Syndicate, 14.06.23
No one argues that policymakers should not think about future generations. But, rather than focusing narrowly on financial debt, we should consider what kind of world we are bequeathing to our descendants, and what current policies and fiscal commitments will better serve their interests.
The inefficiency of growth in poverty reduction – Article (German)
Arthur Zito Guerriero, Makronom, 12.06.23
Global poverty has fallen sharply since the turn of the millennium – but this required high growth rates and brought with it great environmental burdens. And only a minimal share of the newly generated economic output actually benefited the poor, while it was mainly the rich income groups that profited.
Higher tax rate only for millionaires – With this idea the Union wants to rule again – Article (German)
Karsten Seibel, die Welt, 10.06.23
The CDU wants to relieve the burden on people with incomes of up to a little more than one million euros. Current calculations by the Taxpayers’ Association serve as a blueprint. Now only potential coalition partners have to agree.
National Sovereignty’s Silver Lining – Article
Dani Rodrik, Project Syndicate, 09.06.23
Despite the dire predictions that have accompanied the decline of global governance, less international cooperation does not necessarily mean disaster. In fact, national governments can prioritize domestic prosperity and social cohesion over multilateralism without harming the global economy.
The economy and banks need nature to survive – Blogpost
Frank Elderson, ECB, 08.06.23
Humanity needs nature to survive, and so do the economy and banks. The more species become extinct, the less diverse are the ecosystems on which we rely. This presents a growing financial risk that cannot be ignored, warns Frank Elderson, member of the Executive Board of the ECB and Vice-Chair of the Supervisory Board of the ECB.
Markups, Profit Shares, and Cost-Push-Profit-Led Inflation – Article
Michalis Nikiforos & Simon Grothe, INET, 06.06.23
To what extent is profit-led inflation compatible with what we know about the price-setting behavior of firms and income distribution?
Gender Pay Gap – From the Role – Article (German)
Helena Ott, ze.tt, 08.06.23
After the birth of a child, many women are stuck in mini-jobs and thus remain dependent on their partners. And the state? It does a lot to keep it that way.
16 Reasons For Fast Action – Tipping Points And Their Significance For Climate Policy – Article (German)
Vera Huwe, Levi Henze, Janek Steitz, Dezernat Zukunft, 07.06.23
A new background paper deals with tipping elements in the Earth system and the associated mechanisms and risks. Climate science research on tipping elements has recently made great advances in knowledge that have far-reaching implications for climate policy, but have gone largely unnoticed by the general public.
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.