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the New Economy Ticker
The latest news, debates, proposals and developments on new economic thinking at a glance.
Macron’s Win Is Not Populism’s Defeat – Article
Yanis Varoufakis, Project Syndicate, 25.04.2022
French President Emmanuel Macron was re-elected because he succeeded in presenting himself as the epitome of the efficient, competent administrator. But the election also showed that more voters than ever want the system blown up, not better managed.
Die Fiskalillusion: In wenigen Wochen wird die Ampel die Schuldenbremse fallen lassen – Article
Martin Greive, Handelsblatt, 25.04.2022
Federal Finance Minister Christian Lindner can only choose which death he wants to die in terms of fiscal policy. He is likely to cross one of the Liberals’ reddest lines.
Der kleine grüne Staat – Article (Paywall)
Daniela Gabor, Jacobin, 15.04.2022
The climate crisis brings back the state. But instead of organising an ecological transformation, it is merely supposed to take on the investment risks of private capital.
The Case for a New Bretton Woods – Book Review
Kevin P. Gallagher, Richard Kozul-Wright, April 2022
After the 2008–9 global financial crisis, reforms to promote stability, social inclusion, and sustainability were promised but not delivered. As a result, the global economic situation, marred by inequality, volatility, and climate breakdown, remains dysfunctional. Now, the economic fallout from the Covid-19 pandemic offers us a second chance.
Although the agreement with the European fiscal rules is emphasised, they are anything but uncontroversial. Proposals include, for example, accrual accounting of interest expenditure and raising the regular borrowing limit of the debt brake from 0.35% of gross domestic product (GDP) to the medium-term targets of the European rules (0.5%-1%). In addition, a kind of capped Golden Rules is being brought into play, in that investments could be privileged over consumptive spending.
The full report is available here.
There is a lively and ongoing debate about reforming EU debt rules. A new paper from the Dezernat Zukunft explores the possibilities of simple and useful adjustments that could be implemented quickly while the debate continues.
The proposal is based on updating the method of estimating potential output to better reflect actual economic potential, rather than extrapolating it largely from a past trend. This would not require a change in the law, would build on previous efforts by the EU-COM to refine potential output calculations, and could create fiscal space for Covid’s recovery as well as for climate, energy and security investments.
The full study is available here.
Wirtschaft: „Es braucht eine völlig andere Wettbewerbspolitik“ – Article
Stephan Kaufmann, Frankfurter Rundschau, 12.04.2022
Development economist Patrick Kaczmarczyk criticises economic models and calls for a rethink of wage and capital costs in Europe.
Tax Coordination Can Lead to a Fairer, Greener Global Economy – Blogpost
Vitor Gaspar, Shafik Hebous, Paolo Mauro, IMF Blog, 12.04.2022
Technology, globalization, and global warming have changed the world, and taxation must keep pace. Cooperation across countries can raise revenue, tackle inequality, and fight climate change.
Is Competition Always Good? – Article
Diane Coyle, Project Syndicate, 11.04.2022
Policymakers must now acknowledge that healthy markets require competition among different business models, as well as along traditional dimensions such as price, quality, and innovation. Achieving this will require either more active enforcement or regulatory intervention.
The world’s leading economist of inequality presents a short but sweeping and surprisingly optimistic history of human progress toward equality despite crises, disasters, and backsliding.
The book is a historical walk through the great socio-intellectual movements of past decades, the growth of capitalism, revolutions, imperialism, wars and the building of the welfare state. Piketty draws a surprisingly positive conclusion, namely that we have always moved towards a more equitable distribution of income and wealth and better access to healthcare, education and civil rights. In the end, he calls for this development to continue, but does not get much more specific about how exactly this should happen.
You find the book here. Diane Coyle has written a review in the Financial Times, available 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.