When? 22.03.2023, 3pm (CET)
Where? Online, Register here.

One obvious way to tackle gender inequality in economics is simply to promote more women to leadership roles within the discipline. Yet deeper structural impediments show that this option is not as simple as it seems. What more needs to be done to create the conditions for achieving genuine inclusivity in the field – especially for women from the Global South and other traditionally marginalized communities?

How to increase women’s labour force participation? – Blog post
Katharina Wrohlich, Makronom, 10.03.2023
Increased working hours for women could alleviate the shortage of skilled workers – and also reduce existing inequalities between men and women. Policy instruments to achieve these goals have been known for years.

Guns, Ships and Chips: On Economic Inflexibility – Opinion Piece (Paywall)
Paul Krugman, New York Times, 07.03.2023
What do shipping containers and artillery shells have in common? This isn’t a trick question. The answer is that both have been in very short supply at some point over the past three years. And these shortages tell us something disturbing about modern economies: They aren’t nearly as flexible as many people, myself included, had thought.

Legal opinion on the constitutionality of the wealth tax – Report (German)
Alexander Thiele und Hans-Böckler-Stiftung, 07.03.2023
A wealth tax is compatible with the Basic Law. In view of the high inequality in the distribution of wealth and the considerable financial challenges facing the Federal Republic, its introduction is not only well justifiable, it would also contribute to the realisation of fundamental constitutional principles.

Tearing Down Big Tech’s Walls – Article
Margarethe Vestager, Project Syndicate, 09.03.2023
For decades, tech platforms were left mostly free to do as they wished, and the harm caused by this approach has become obvious. Fortunately, the European Union has been pushing back on behalf of democratic and humanistic values, and it is now finalizing its biggest legislative and regulatory contribution yet.

What’s Next for Globalization? – Article
Dani Rodrik, Project Syndicate, 09.03.2023
With hyper-globalization in decline, the world has an opportunity to right the wrongs of neoliberalism and build an international order based on a vision of shared prosperity. But to do so, we must prevent the national-security establishments of the world’s major powers from hijacking the narrative.

When will ‘inheritance for all’ come? – Interview (German)
Antje Lang-Lendorff with Stefan Bach, taz, 07.03.2023
For a fair start in life, economist Stefan Bach proposes a basic inheritance for all. Similar small-scale models already exist elsewhere.

The Debt-Inflation Channel of the German Hyperinflation – Study
Markus Brunnermeier et al. (2023) – March 2023
Unexpected inflation can redistribute wealth from creditors to debtors. In the presence of financing frictions, such redistribution can impact the allocation of real activity. We use the German inflation of 1919-1923 to study how a large inflationary shock is transmitted to the real economy via a debt-inflation channel. In line with inflation reducing real debt burdens and relaxing financial constraints, we document a tight negative and convex relation between firm bankruptcies and inflation in aggregate data. Using newly digitized firm-level data, we further document a significant decline in leverage and interest expenses during the inflation. We show that firms that have more nominal liabilities at the onset of the inflation become more valuable in the stock market, face lower interest payments, and increase their overall employment once the inflation starts. The results are consistent with substantial real effects of the inflation through a financial channel that operates even when prices and wages are fully flexible.

In late January, the European parliament voted to relax capital regulations for banks. Its new official stance departs significantly from the original Basel III agreement, boosting shareholder profits but reducing bank stability. Numerous exemptions result in a decrease of additional capital requirements to just 4% by 2030 (rising to 7% by 2033) instead of the expected 20%.

Opponents of tougher rules argue that implementing stricter capital regulations would leave them at a disadvantage in comparison to their bigger and more profitable counterparts in the United States. This competitiveness argument was also put forward by German Federal Finance Minister Christian Linder at the Deutsche Bank Digital New Year’s Reception, as cited in this article:

“The priority is to reconnect financial stability with consumer protection and competitiveness. Explicitly, the competitiveness of the banking and financial centre is also one of my political goals,” he said.

There is, however, evidence that the regulatory shift in Europe is (at least in part) a capitulation to the European banking industry’s lobbying activities. As new research by Finanzwende shows, Banking industry lobbyists outnumbered civil-society representatives 176 to 2 in meetings on Basel III regulation with the European Commission since the end of 2019. And as Thierry Philiopponnat, the chief economist of the European non-profit Finance Watch, is cited in a recent opinion piece by Rana Foroohar:

Moves to make Basel III transitional arrangements permanent ‘will not defend EU banks against US ones but only protect the vested interests of European megabanks, vis-à-vis their smaller European competitors.’

Thus, the conventional wisdom that America leads on innovation, Europe on regulation, seems to be challenged, as the US is toppling the EU from its regulatory throne.

Reinventing the European Union – Article
Jean Pisani-Ferry, Project Syndicate, 02.03.2023
Russia’s invasion of Ukraine and new economic imperatives have called into question the EU’s long-standing reliance on regulatory standards as a form of soft power. To survive in a world where autocrats increasingly flout the rules governing the international order, the EU’s member states must find a new route to integration.

“Then the government has failed in its job” – “I have to defend myself against economic nonsense” – Interview (Paywall, German)
Julian Olk & Jens Münchrath, Handelsblatt, 02.03.2023
Sachverständigenrat head Monika Schnitzer and IW director Michael Hüther argue about whether the German government should raise taxes to finance the crisis and transformation.

ECB confronts a cold reality: companies are cashing in on inflation – Article
Francesco Campa, Reuters, 02.03.2023
Higher margins, not wages are driving inflation.

No fear of bans – Column (Paywall, German)
Mark Schieritz, die Zeit, 01.03.2023
Gas, combustion engines or sugar: the state sets framework conditions for production and consumption. Bans can be very helpful for both.

It’s no use: Taxes must go up – Commentary (Paywall, German)
Claus Hulverscheidt, Sueddeutsche Zeitung, 27.02.2023
The Finance Minister’s party, of all parties, has walled itself off in its “any tax increase is the devil” ideology. Germany can no longer afford this.

How much work can go? – Article (German)
Malene Gürgen, taz, 26.02.2023
In the UK, a pilot project on the 4-day week was successful. What is the argument for working less? And what can that look like in concrete terms?

Works councils help against the right – Study
Uwe Jirjahn, Thi Xuan Thu Le, January 2023
If there is employee representation in a company, the workforce tends less towards radical right-wing parties. This is the result of a study.

Where and how should the boundary between state and private activity be drawn? According to Diane Coyle’s review of Mariana Mazzucato’s newest book ‘The Big Con: How the Consulting Industry Weakens Our Businesses, Infantilizes Our Governments and Warps Our Economies’, this question the true topic of the book:

We wouldn’t want the government to manufacture its own stationery rather than buy it, nor hospitals to make their own wound dressings. Similarly with payroll services or couriers — although they were largely in-house in private and public sector alike until the 1980s. But what about IT systems? Or cataract surgery? Outsourcing the former seems not to have gone well in general, given the number of prominent, costly IT failures, while technological advance has made it easy and efficient for cataract operations to be contracted out to specialist private providers.

When thinking about the costs of outsourcing, one should therefore not only consider costs related to asymmetric information and the price of monitoring the agents (e.g. consultancies), but also about lock-in costs which keep state capacity low. As Henry Mance writes in the Financial Times:

Consultancies and outsourcers, Mazzucato argues, know less than they claim, cost more than they seem to, and — over the long term — prevent the public sector developing in-house capabilities. ‘We’re not against consultants. The problem is when an industry [has] no incentive to get government to be independent. A therapist who has their client in therapy forever obviously isn’t a very good therapist.’ Consultants are not ‘neutral’ about the role of the state, either, Mazzucato argues, citing their private sector work. They promoted slimming the state after 2008.

Moreover, positive spillover effects of public investments should not be missed in the calculus. Governments must learn how to get rewarded for their investments, not only de-risking private activities without reaping the benefits. Mazzucato recommends, to strengthen the civil service, to rebuild internal capacity within government, to improve the process of contracting and evaluation of outsourced outcomes, and to require consultancies to disclose conflicts of interest when they bid for public sector work.

In this article, you can read the main ideas of the book.