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Lars Feld before resignation: No more the fairy tale of economic practices

2021-02-26T19:46:29.954Z

The nagging about the head of the Advisory Council shows one thing above all: how deeply the country is caught in the thought that there is one single truth in the economy. New answers are needed.



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The economic methods: Monika Schnitzer, Achim Truger, Lars Feld, Veronika Grimm and Volker Wieland

Photo: Expert Council

It could be that Germany will experience a terrible crash shortly.

No, not because the third corona wave is just beginning or the climate is changing.

Worse.

This weekend, Lars Feld has to hand over membership and chairmanship of the Advisory Council to assess the economic situation.

This corresponds to the custom of the so-called economic methods and sounds rather unspectacular, but with some sensitive observers it leads to seeing the country's downfall coming.

Thomas Fricke, arrow to the right

Born in 1965, has headed the WirtschaftsWunder internet portal since 2007.

From 2002 to 2012 he was chief economist at the Financial Times Deutschland.

He is co-founder of the »Forum New Economy«, in which experts have come together to develop a new economic leitmotif.

Professor Feld stands for “economic reason”, is the “voice of freedom”, utters “uncomfortable truths” - and stands for “a lean state” and “tax cuts” in general and per se.

With his resignation there is a threat of a "return to the tax-increasing and debt state," says one from the CSU.

Even the new CDU leader, who had not attracted much attention as an observer of the academic world, stepped in and found that Feld was "one of the most renowned scientists in the social market economy."

What is now "feared of evil" as others do not think.

And the editor-in-chief of “Welt” discovered attitudes journalism - the man is good because he has the right attitude towards the market economy.

Well, then that's it with the social market economy.

Economic reason.

And freedom.

Night, Germany.

Unless one or the other exaggerates in evaluating the personality.

And an understanding of what economic reason and wisdom are.

It is even quite possible that the angry rumble reveals that Germany could use a little more wit in the matter - perhaps also a more contemporary understanding of the economy.

That doesn't even work with virologists

The misunderstanding apparently begins with the name - to call the economists who sit on the council as "economics" not only leads to real satirical consequences such as the fact that everyone who leaves is an ex-economist.

That's rubbish.

It also reflects a rather absurd understanding of whether there is such a thing as wisdom and truth in economics - beyond a few basic principles.

As if it were enough to put the best together - and what is right comes out: economic reason.

That doesn't even work with virologists who are dealing with much clearer things.

Looking back, one can already guess that there is no permanent wise answer to questions of economy.

Until the 1970s, the (then exclusively) men represented in the council what was common at the time - which included the expansion of the welfare state as well as the belief that the economy could be stabilized by spending more in the doldrums and less in the boom.

When that no longer seemed to work and a number of conservative influencers advanced, the "wise men" officially announced in the fall of 1977 that they had found new "wisdom" - and from now on, basically all problems were on the supply side In German: it basically just has to be about making everything easier for companies, lowering wages, deregulating them, unconditionally dismantling the state and paying homage to the market - everything that was so popular back then.

Since the financial crisis of 2008 at the latest, this dogma has also been less and less valid among economists than the wisdom of the last word - to put it cautiously: because markets are apparently by far not as efficient per se, the more unevenly the wealth is distributed the more freely it is and globalization leads to serious social ruptures and counter-reactions à la Donald Trump.

Or the state in crises like 2008 and now has a much more important role than the mantra of the miraculous power of the markets had long suggested.

New thinkers have come

Since then, new thinkers have moved into major advisory institutions around the world, and scientists have developed much more sophisticated explanations - whether moderate or more radical, whether at the IMF or the OECD, whether at the Bank of England or the Fed.

There have long been a number of young economists who can no longer do anything with the anti-statistic reflexes operated in a religious manner.

This is not proof that they are right.

And that in itself does not constitute a new paradigm.

Only representatives of German ordoliberalism would with a high degree of certainty emerge as a small minority in polls today.

more on the subject

Icon: Spiegel PlusIcon: Spiegel PlusDispute about economic methods: What do Lars Feld, Marcel Fratzscher and Veronika Grimm stand for? By Benjamin Bidder and Stefan Kaiser

This is where the deeper German dilemma lies.

In the minds of many politicians and some editors-in-chief, the scheme continues to haunt in a simple form.

To this day, the Council has never officially abandoned the offer dogma (in contrast to 1977 in the opposite direction).

In the 2015 report, the professors, on the contrary, rumbled once again against anything that was opposed to them.

The treatise reads like a defiant attempt to question almost everything that is mainstream in modern economics international today: no, there is no such thing as inequality;

no, there is no need for large government investments;

and no, there is no problem with Germany having such high export surpluses.

A minimum wage?

Will skyrocket unemployment.

And against the climate crisis?

The free play of market forces is most likely to help.

All-inclusive solution.

All of that sounds pretty old now.

There is, of course, plenty of evidence that there is a serious problem of unequal conditions in the country.

The minimum wage has not led to more unemployment.

In the meantime, even industrial associations admit that the government would have to invest three-digit billions.

And of course, saving the climate also requires a lot of government investments and requirements, as is the case now with the success of electric mobility.

The question is rather how it works - after a couple of decades in which the supposedly wise people thought everything the state does to be stupid per se.

In 2021 it sounds like physicists are going to set out with the thesis that the world might be flat after all.

Social market economy - who, please, is questioning it?

Which brings us back to the question of what distinguishes an economist as a consultant for the world of today.

To classify a professor as highly qualified because he is "a scientist of the social market economy" is either ill-conceived nonsense.

Who, please, this side of the left wing of the left isn't somehow in favor of "social market economy"?

Or it is nicer packaging for that understanding of economics, according to which what the market (in terms of work) creates is social (quote from Lars Feld, by the way).

But that is only the cheat name for the (outdated) belief in the universal healing powers of the market economy;

The zealous polemic initiative New Social Market Economy has been carrying the sales trick for years.

What is at stake today is more than just having someone to plead if the state intervenes somewhere - or is valued for being in favor of a lean state and tax cuts.

This will not solve the climate crisis, nor will it eliminate the inequality, for example in wealth, where a few benefit from the stock or real estate markets - and most do not.

And the classic ordoliberal cartel policy will not be enough to limit the power of the digital giants who define entire markets themselves.

more on the subject

  • Merz, Lindner and Co.: The Descent of the Super Liberals A column by Thomas Fricke

  • Dispute about the right way of living: climate rescues can also be done without a home bansA column by Thomas Fricke

  • Vaccination drama and lockdown: State or market: who fails here more? A column by Thomas Fricke

What rulers need today are advisors who rethink all this, discard old anti-statistic reflexes and re-sound out when and where it is better for the market to regulate it - and when and how an efficient, modern state is needed to find a solution .

For example, to make the economy climate neutral as quickly as possible and to invest in hydrogen, for example.

That would take far too long on market prices alone.

What is needed is a much more sophisticated industrial policy than the one that the Minister of Economics develops ad hoc - also because among the old ordoliberal economists there are only those who find such a policy per se stupid;

and rather the mission-oriented industrial policy proposed by the economist Mariana Mazzucato.

It's also about how we can collectively prevent individual regions from falling.

Or how to ensure that wealth does not drift so much apart - taxing the rich only helps to a limited extent.

The ordoliberal representatives are still there

All of this does not mean that you have to be a sociologist to advise the government as a professor.

Nonsense.

The great British thinker Timothy Garton Ash recently demonstrated this impressively - in an essay in which he called on liberal-minded people to say goodbye to the old technocratic economic liberalism.

Christian Democratic thinkers who, like Wolfgang Schäuble, now speak of the dark side of globalization, suggest that something new is needed.

Of course, there is also value in having people who make sure that markets can work freely where they work best.

It's just a bit of fair weather economics at a time when there are huge challenges that markets cannot handle on their own.

If that is true, the country will not go under if the representative of a liberal market teaching that is in great need of renewal resigns after ten years;

he doesn't go away and is just a former economist.

Then it is rather strange that one of the supposedly most important advisory committees has been shaped so significantly by people who adhere to a philosophy whose marriage was sometime in the 1990s.

Then it would be time for a new turning point - like it was in 1977. Or for a completely new council with people who advise their rulers without any pretense of wisdom in what they are planning.

Anything better than the fairy tale of economic wise and the only true economic reason.

Icon: The mirror

Source: spiegel

All business articles on 2021-02-26

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