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The latest news, debates, proposals and developments on new economic thinking at a glance.
Three new survey studies take up the topic of social justice. All three are based on the European Social Survey, a cross-sectional survey for comparative analyses in Europe with the most recent survey in 2018/2019.
According to the survey, a large majority of working Europeans feel that the distribution of income and wealth is unfair. Nevertheless, only eight percent of all respondents in Europe feel they belong to a disadvantaged group. This proportion has risen, however, as women have become more sensitive to discrimination. Just under a third have doubts about equal opportunities in the labor market.
More information is available here (in German).
Herr Feld, bringen Sie die schwarze Null zurück ins Finanzministerium? – Interview (Paywall)
Lisa Nienhaus and Mark Schieritz, Zeit Online, 16.02.2022
Der neue Berater von Christian Lindner will, dass die Koalition spart und schmutzige Energie teurer wird.
Die junge Generation zweifelt an der Marktwirtschaft – Artikel (Paywall)
Florian Diekmann, Spiegel Online, 15.02.2022
Wohlstand für alle? Für die Mehrheit der 16- bis 29-Jährigen in Deutschland erfüllt die soziale Marktwirtschaft dieses Versprechen nicht. Der SPIEGEL-Umfrage zufolge wankt auch die Unterstützung für den Kapitalismus.
Der Digitalausschuss hat plötzlich etwas zu sagen – und darf in Zukunft Gesetze federführend beraten – Artikel
Daniel Delhaes, Handelsblatt, 15.02.2022
In den vergangenen vier Jahren belächelt, hat der Digitalausschuss in dieser Legislaturperiode viel Macht. Die 34 Abgeordneten wollen diese nun nutzen.
Supporting carbon taxes: The role of fairness – Studie (Paywall)
Stephan Sommer, Linus Mattauch, Michael Pahle, Ecological Economics, Vol. 195, May 2022
While the economic case for carbon pricing is compelling, public support for it remains low. Using a stated-choice experiment with a sample of 6000 German household heads, we examine how their fairness preferences influence support for carbon taxes under different revenue uses. We find that respondents who prefer green spending are more likely to support a carbon tax, but the support diminishes considerably for higher tax rates – in contrast to respondents who support social cushioning. Our findings have implications for advancing carbon pricing, as its support can be increased substantially when designed according to citizens’ fairness preferences.
Larry Fink’s Capitalist Shell Game – Artikel
Mariana Mazzucato, Prokect Syndicate, 11.02.2022
The chairman and CEO of the world’s largest asset manager has once again made waves by exhorting his fellow corporate leaders to embrace “stakeholder capitalism.” Unfortunately, their understanding of that concept is far too limited and stops well short of the radical reforms needed to transform capitalism in the interests of people and the planet.
Why inflation and the cost-of-living crisis won’t take us back to the 1970s – Artikel
Adam Tooze, The New Statesman, 07.02.2022
Surging energy prices force us to confront the suffering caused by inflation and our uncertain future. But a new wage-price spiral is still unlikely.
The minimum wage is currently high on the political agenda not only in Germany – numerous European countries are on the way to structurally higher minimum wages. The threshold of 60% of the median wage, which is also being discussed in the context of the European Minimum Wage Initiative, is considered a benchmark for an appropriate minimum wage level.
A new report by the Economic and Social Research Institute (WSI), which is close to the trade unions, shows that minimum wages at this level can be implemented if a clear political decision is made. With the planned increase of the minimum wage to 12 euros, Germany would come closer to this benchmark and thus move from being a laggard in minimum wage increases to being a pioneer in minimum wage policy within Europe.
Read the full report here (in German).
More on this topic: In a Makronom article Gabriel Ahlfeldt, Professor at the London School of Economics analyses the welfare effects of a minimum wage raise to 12 Euros in Germany (behind the paywall). The associated discussion paper is available here.
In an article, Harvard economist Dani Rodrik argues for a reorientation of global innovation in a more labor-friendly direction. As manufacturing technologies have become increasingly skill-intensive and automation have reduced labor’s share of manufacturing value added, bending the arc of technology to society’s needs, rather than expecting society to adjust to technology’s demands, should be as much a priority for advanced economies as it is a challenge for developing countries.
The article summarises a recent panel discussion of the International Economic Association with Frances Stewart (University of Oxford), Daron Acemoglu (MIT), Eric Verhoogen (Columbia University), Fabrizio Zilibotti (Yale).
Re-watch the whole session here.
America’s Not-So-Great Inflation – Article
Barry Eichengreen, Project Syndicate, 02/10/2022.
In the article, Berkely professor Barry Eichengreen describes why the current inflation does not parallel the stagflation of the 1970s.
“Die Inflation treibt mich um” – Interview (Paywall)
Lisa Nienhaus & Roman Pletter, Die Zeit, 02/09/2022
Prices are rising in Germany, too. In the interview, the new Bundesbank president explains what he intends to do about it. Joachim Nagel thinks: First the ECB should scale back its bond purchases, then raise interest rates.
Kompliziert und konjunkturell nicht passend: Ampel wird Superabschreibungen wohl verschieben – Article
Martin Greive & Jan Hildebrand, Handelsblatt, 02/09/2022
The traffic light coalition is negotiating the form of the investment premium for climate protection and digitization. Problems are emerging in the process. The project is likely to be delayed.
“Der Stabilitätspakt muss reformiert werden” – Article (Paywall)
Björn Finke & Alexander Hagelüken, Sueddeutsche Zeitung, 02/06/2022
Klaus Regling, head of the rescue fund, wants to allow euro states to have debts of around 100 percent instead of 60 percent and create a permanent financial pot for crisis states. This is dynamite for the German government.
Die Übergangenen Strukturschwach & erfahrungsstark – Zur Bedeutung regionaler Perspektiven für die Große Transformation – Study
Paulina Fröhlich, Tom Mannewitz & Florian Ranft, DPZ and FES.
The world, and thus also Germany, is facing a fundamental change, a Great Transformation. The aim of the study is to show how people affected by the Great Transformation can become co-creators of the future. The upcoming upheaval poses particular challenges for the inhabitants of structurally weak regions. From the perspective of those surveyed, climate plays a very important, if not dominant, role in the tasks facing the country. People are even more concerned about social imbalances such as social division, a lack of social cohesion and injustices within society.
How Novelty and Narratives Drive the Stock Market – Book Review
Nicholas Mangee, INET & Cambridge University Press
‘Animal Spirits’ is a term used to describe the instincts and emotions that drive human behavior in economic contexts. In recent years, this concept has been discussed in the context of the emerging field of narrative economics. When unforeseen events hit the stock market, from corporate scandals and technological breakthroughs to recessions and pandemics, the relationships that determine returns change in unpredictable ways. To deal with uncertainty, investors engage in narratives that simplify the complexities of non-routine change in real time. This book evaluates the novelty narrative hypothesis for the U.S. stock market through a comprehensive examination of unanticipated events using Big Data text analysis of financial news.
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.