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Standing still is a natural reaction to uncertainty – but it can be fatal
Photo: Justin Paget/Getty Images
When people are in danger, their instinctive reaction is to flee: break away, run away, rushed and in need without reassurance.
The exodus of millions of Ukrainians in recent months underscores this pattern of behavior.
Just go!
And that is undoubtedly reasonable.
Elsewhere in Europe, people are also affected by the Ukraine war, but the threat is less direct.
Prices are rising, energy is becoming scarce, and an extension of the war to NATO territory has not yet taken place, but is by no means out of the question.
Accordingly, it is not surprising that some dream of seeking safety elsewhere - in Portugal, for example, at the westernmost tip of Europe, or at least in Switzerland, even if it is expensive.
In fact, most of them stay where they are.
just gone?
Rather not.
In Germany we are not in immediate danger.
Rather, we are experiencing a phase of uncertainty.
People typically do not react to this by fleeing, but, quite the opposite, by standing still: waiting, not acting, standing motionless.
If you don't know how to proceed, you won't go any further.
This is also reasonable for the individual.
But when entire societies follow this pattern, it becomes problematic.
Standing still is not a solution.
We are dealing with epochal challenges: the Russian attack on Ukraine is not a singular event, but just the latest in a long series of shocks of uncertainty.
The 21st century has been traversed by a chain of crises – from the terrorist attacks of September 11, 2001 to the war in Ukraine.
From a German point of view, the earthquakes are getting closer, they are becoming more frequent and more violent.
Uncertainty is trending upwards – a worrying development.
Escape is not a solution, nor is waiting
The world order is in upheaval, a slide into chaos is possible.
Western democracies are under massive pressure, from without and from within.
The global climate is changing faster than expected.
Our energy systems are fragile.
Aging and shrinking populations are calling into question our previous social contract.
It is quite obvious: we must not stand still.
We should proceed boldly and act energetically, defensively and sustainably.
Escape is not a solution, nor is waiting.
But the increasing uncertainty has the potential to hinder us because it tempts us not to act.
Uncertainty is a dazzling concept.
Scientists use it to describe circumstances in which the future appears unpredictable.
Small moments of insecurity dissipate quickly.
But major shocks have profound effects, especially for the economy: companies stop investment projects, private citizens cut their consumer spending.
uncertainty unsettled.
Societies are approaching a state of paralysis under these conditions.
Rising uncertainty often, though not always, leads to recession - worse, perhaps stagnation and passivity.
How to measure uncertainty is not a simple question.
Because it is precisely about the unpredictable uncertainty.
Still, how big a shock is is highly relevant.
An approach based on the analysis of media content has therefore gained popularity among economic researchers in recent years.
This is obvious insofar as citizens arrive at their assessments of the state of society and the world as a whole primarily through news consumption.
In this sense, the »Uncertainty Perception Indicator« (UPI), which our Dortmund research center DoCMA calculates, shows the media perception of economic uncertainty in Germany.
What's more: using big-data-based text mining methods, he identifies the sources from which the collective perception of risk emanates.
(Details on the method and the database can be found here.)
Current, as yet unpublished figures are now available, which include data up to and including July.
The results are somewhat alarming.
Precisely those factors of uncertainty that reflect direct effects on the economy have recently approached record levels.
The Putin shock now seems almost as severe as the Corona shock of 2020. And it triggered one of the deepest recessions in the Federal Republic's history.
Here, Now and Soon
At the beginning of the war in Ukraine it was different.
At first, the alarm at the erosion of the geopolitical order was in the foreground.
That a war of aggression in Europe is again possible, that a nuclear power launch a large-scale offensive against a neighboring country to which it had previously guaranteed territorial integrity in an international treaty (the 1994 Budapest Memorandum) was shocking enough.
The uncertainty factor geopolitics reached levels in the spring that had never been measured for Germany in this century.
However, political shocks can pass without triggering immediate consequences for the real economy.
Such events included the Brexit referendum and the election of Donald Trump as US President in 2016. The fact that the two great old Anglo-Saxon democracies would produce such excesses of populism moved the German public massively.
The economic consequences, however, were hardly noticeable at first.
They only became apparent with a long delay: When Trump started his trade war and later Brexit actually became a reality, this had concrete effects.
But the element of surprise that created uncertainty was missing;
you could prepare.
A major political shock without massive immediate economic consequences - that could have happened this time too.
In the spring it was at least conceivable that Russian gas and oil supplies could continue to flow largely unhindered.
There was a mutual interest in it.
But things turned out differently.
Since Russia continued to cut back gas and oil supplies, initially selectively and now across Europe, the level of economic uncertainty has risen massively.
The energy factor and its impact on the economy are now dominating German perceptions of uncertainty, as evidenced by the latest UPI numbers.
The geopolitical upheavals, on the other hand, have largely disappeared from the focus of attention.
It is now about the very concrete here, now and soon.
Is the income sufficient despite the sharp rise in inflation?
Are we threatened by cold apartments in the coming winter?
Will the industry then collapse in parts?
Many scenarios that not so long ago would have been considered mere nightmares have become real possibilities.
It is becoming increasingly clear to us contemporaries that this is not a short war, as many initially assumed, but a break in an epoch: the beginning of a long military showdown on NATO's eastern border, a radical turnaround in energy supply, and possibly also forced decoupling from Russia's partner China, which has so far been Germany's most important trading partner outside the rest of the EU.
The ifo Institute has just calculated what serious consequences the end of China business would have for Germany.
A "new Germany"?
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Henrik Mueller
Short-cut politics: How permanent outrage destroys our democracy
Publisher: Piper
Number of pages: 256
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Uncertainty, it seems, is no longer descending on us in short-term shocks, but is trending up to higher and higher levels.
That means we must do what humans have always done: we must adapt ourselves, our behavior and our institutions to this new harsh world.
This is not a time for standing still, even though the feeling of insecurity creeping up suggests this same pattern of behavior.
It is a time for action, and that also means courageous but level-headed leadership, especially from the government and its boss.
Because the changed geopolitical climate is forcing business, society and the state to correct course in so many places that it is necessary to set clear priorities.
What is important now?
what can wait
Germany, writes the British magazine The Economist this week in its cover story, has finally understood.
Now this country is in the process of taking on sorely missed responsibility in Europe and beyond.
A “new Germany” is showing itself there.
A nation of hands-on people who, after a long phase of sleepiness and ignorance, are finally on the way to doing justice to Germany's size and international role.
Well, it would be nice if it came like that.
I'm not so sure about that.
The most important economic dates of the coming week
Expand areaMonday
Beijing -
The situation under Xi
- The statistics office reports on the economic development in July.
Reporting season I
– business figures from Henkel, HelloFresh, Nordex.
ExpandareaTuesday
Earnings Season II
– Delivery Hero, Home Depot, Walmart financials.
ExpandareaWednesday
Luxembourg -
Europe's resilience
- The EU statistical authority Eurostat publishes preliminary figures on gross domestic product and employment in the second quarter.
Reporting Season III
– business figures from Uniper, Carlsberg, Swiss Life, Cisco Systems, Target.
Expand areaThursday
Luxembourg -
Europe's pains
- Eurostat releases key figures on inflation.
No topic currently excites EU citizens as much as the escalating cost of living.
ExpandareaFriday
London –
Inflation, Brexit, wages
– Collective bargaining is getting tougher: London Underground workers are on strike in a fight for better working conditions and pensions.
Earnings Season IV
– Deere, Foot Locker financials.
