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the New Economy Ticker
The latest news, debates, proposals and developments on new economic thinking at a glance.
What actually is financialisation? Why are more and more areas of life and the economy becoming the target of speculation? A new video series gives a first insight into the topic:
Here is some more information on this topic.
How working time exacerbates inequality – Article (Paywall, German)
Alexander Hagelüken, Süddeutsche Zeitung, 18.08.2022
Many young professionals and mothers would like to work more, but are not allowed to – while high earners have to work more than they want to. What the state can do about it.
Gas surcharge drives inflation: This is how gas prices could still be capped – Article (Paywall, German)
Julian Olk, Handelsblatt, 16.08.2022
The amount of the new levy is fixed. Economists expect the inflation rate to rise significantly. Calls for a price cap are growing louder.
Federal government agrees on principles for reform of EU fiscal rules – Press release (German)
BMWK, August 2022
The German government has agreed on principles for a reform of the EU fiscal rules. It will introduce these as the German position in the European discussion on the next reform of the Stability and Growth Pact in the coming months.
In the current times of crisis, Christian Lindner never tires of emphasising that the belt must be tightened because of hard times and categorically insists on compliance with the debt brake: “We must not allow ourselves politics on credit”. The other side of the coin is the revenue side of the state, which, according to the Ministry of Finance, should not be tampered with either – as respect for performance (“Leistung“). Yet it would not take a broad increase in income tax or a war soli to generate additional revenue for public budgets.
In a new essay, Gerhard Schick calls for a reform of inheritance and gift tax in order to relieve the state budget. He says it is a matter of correcting privileges for the super-rich that have been created over the last 30 years, such as the lower taxation of capital and real estate income compared to earned income. Inheritance is purely a matter of luck and a lax inheritance tax therefore has nothing to do with respect for performance. The main argument for exempting business assets from inheritance tax is that this would secure jobs, even though this position was challenged already years ago by a report of the Scientific Advisory Board at the Ministry of Finance.
Read the whole essay in German here (paywall).
The way to fight inflation without rising interest rates and a recession – Article
Meg Jacobs und Isabella M. Weber, Washington Post, 09.08.2022
History shows targeted price caps work when accompanied by a public campaign.
Skilled workers sought, business methods found – Article (German)
Matthias Kaufmann, Spiegel Online, 09.08.2022
Two of the five seats on the panel of economic experts were not filled. Soon, the panel is to meet again in full size – thanks to interesting new additions.
Getting Productivism Right – Article
Dani Rodrik, Project Syndicate, 08.08.2022
Establishing new economic-policy paradigms requires developing novel approaches, not just emulating the old. If productivism is to be successful, it will have to move beyond conventional social protection, industrial policies, and macroeconomic management.
The Inflation Reduction Act: Bidenomics 2.0 – Blogpost (Paywall)
Noah Smith, Substack, 08.08.2022
The Senate has just passed the Inflation Reduction Act, a major piece of fiscal legislation that’s mostly aimed at boosting energy supply and raising taxes to restrain inflation. The new economic paradigm gets a rapid reboot.
Germany must abandon its debt brake to make up for the lost Merkel years – Article
Thorsten Benner, The New Statesman, 08.08.2022
Only by getting rid of the constitutional limit on new debt can Germany properly invest in itself and complete its “Zeitenwende”.
Minimum wage in Germany has increased productivity – Article (German)
Spiegel Online, 05.08.2022
For quite a few economists, the minimum wage almost meant the downfall of the West. The fears were probably exaggerated, as a study now shows.
A new study by Gechert and Heimberger (2022) conducts a meta-analysis on the empirical literature on growth effects of corporate tax cuts, examining 441 estimates from 42 studies on the topic. Taking the unweighted average, a corporate tax cut of 10 percentage points would be associated with an increase in growth rates of around 0.2 percentage points. However, the authors conclude that due to publication bias, insignificant results are not published, which translates into an asymmetric distribution around the true value. If one controls for this bias, one cannot exclude a zero effect.
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.