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the New Economy Ticker
The latest news, debates, proposals and developments on new economic thinking at a glance.
“The country needs investment,” is the key message of Cerstin Gammelin and Alexander Hagelüken in their article for the Süddeutsche Zeitung, where they present key studies undertaken for the occasion of the Forum’s recent VIII New Paradigm Workshop. As figures from the Macroeconomic Policy Institute (IMK) suggest, the German government would have to invest around one percent of gross domestic product, or about 460 billion euros, to make up for past shortcomings and achieve a sustainable level of investment. A massive sum – how can this possibly be financed? According to Philippa Sigl-Glöckner of ‘Dezernat Zukunft’, a reform of government spending policy is urgently needed – moving away from a minimal debt ratio towards a state policy that strives for lower unemployment rates, better wages and a reduction in involuntary part-time work.
Also at the center of the debate: calls for increased spending on climate-friendly technologies such as renewable energy based hydrogen. According to a recent study by Tom Krebs of the University of Mannheim, instead of its currently planned 12 billion euros, the German government would have to invest up to 100 billion euros in a hydrogen climate strategy.
Not only in terms of future investments, but also in present terms, the government is challenged to act: Stefan Bach and Markus Grabka of the German Institute for Economic Research (DIW) argue for an expansion of collective wage agreements and a tax reform to specifically promote the incomes of those who have little. In particular, they say, the proportion of people in Germany who own their own home is far too low by European standards and needs to be elevated.
All studies cited in the article were undertaken on behalf of the Forum New Economy for its eighth New Paradigm Workshop on the Future of the German Model, taking place May 25-27.
The full article can be found here.
Joe Stiglitz, Gordon Brown, and many others join forces and urge US president Joe Biden to consider a temporary waiver of WTO´s intellectual property rules during the Covid-19 pandemic. The hope brought up by vaccine rollouts in wealthier countries is far from reaching low- and middle-income countries. Vaccine access in those countries urgently needs to be scaled up if the ultimate goal is that of saving as many lives as possible and reaching global herd immunity – an open sharing of know-how and technology is thus a moral imperative.
This the core message of the open call published on Project Syndicate and signed by many Nobel laureates and former heads of state and government: “If the past year has taught us anything, it is that threats to public health are global, and that strategic government investment, action, cooperation, and solidarity are vital. The market cannot adequately meet these challenges, and neither can narrow nationalism.”
You can read the full article here.
Online conference: A systemic Recovery
When? Wednesday, 28 April, 2021: 3:00 pm – 6:00 pm
Where? Online conference: Join the livestream via this link.
The first session (15:00) features a High-level Panel discussion, chaired by Rana Foroohar and Martin Sandbu of The Financial Times, on avoiding post-COVID stagnation, negative spill-overs on emerging and developing economies, and how to transform our economic and financial system to achieve environmental and social goals. The speakers include UN Special Envoy on Climate Action and Finance, Mark Carney; IMF Chief Economist, Gita Gopinath ; UCL Professor, Mariana Mazzucato; Harvard economist, Kenneth Rogoff; and Nobel Prize-winning economist, Paul Krugman.
The full agenda is available here.
Is Joe Biden to F. D. Roosevelt what his new spending and fiscal plans are to the New Deal? This image is crystallising more and more. In our recent series of articles analysing the ´rescue plan` first and the ´infrastructure plan` then, we already hinted that Joe Biden’s proposals were close to ending the era of neoliberal policies so cherished by Reagan and his successors, and that – as discussed in our December Short Cut with James Galbraith – with Joe Biden in power the possibility of a new New Deal was approaching.
Now even the influential French weekly magazine L’Obs promotes Joe Biden as the new Roosevelt and devotes 10 very interesting pages to him, where it also addresses the question of whether the EU is prepared to embrace this paradigm shift in terms of public spending and fiscal rules coming from overseas.
Not only are the multilateral institutions‘ economists relaxed about the massive deficit spending by rich countries connected to rescue packages due to the pandemic, but they are also in favour of spending on education or redistributive measures. The International Monetary Fund, for instance, has proposed a ‘solidarity’ tax on high earners and very profitable companies in order to pay up to bolster social cohesion in light of the pandemic.
Quoting Martin: „New Consensus: Spend big on public health. Fiscal probity, long the core of IMF prescriptions (the joke was that the initials stand for “it’s mostly fiscal”), is no longer about reining in public spending but about getting value for money — and spending more where the value can be found.“
The full article can be found 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.