Sometimes it is coincidences that accelerate the course of history. At the beginning of the year, the old federal government was unable to agree on the fifth position in the council of experts. That is why the so-called economic wise men only submit their annual report to four people this Wednesday. And what happens in the process is what is numerically possible with four economists: There is a stalemate on key issues such as debt and investments. But this is not an industrial accident. The Council of Economic Experts is thus presenting itself more openly than before – at last.
For decades, the committee had been firmly in the hands of scientists who argue in a market-free manner. This is justified in some questions. Without competition, companies become slack. And if the state intervenes too much in the economy, it slows down innovation and growth. Last but not least, the financial crisis of 2008 proved what market liberalism can do when it congeals to the neoliberal dogma: banks (and other industries) need legal control, otherwise they will maximize profits at the expense of society and let the world economy crash.
The introduction of the minimum wage in 2015 showed how dogmatic the Council of Economic Experts had argued so far. The researchers found that wages should develop on the market. They ignored how the balance of power has changed. Today only half as many employers pay collectively agreed wages as in the 1990s. A minimum wage prevents the exploitation of millions of workers. The economic modes were unimpressed. Some have gone too far to predict that the statutory minimum wage will cost hundreds of thousands of jobs. The reality impressively demonstrated their error.
It is therefore a good sign that the Council is not only putting out the old records in its new report when it comes to the policy of the possible new federal government. In the traffic light trio, the SPD and the Greens in particular are looking for scope for investments in the future. You can now choose from two different recommendations.
Fiscal policy becomes questionable when it curdles into dogma
The economic wise men Veronika Grimm and Volker Wieland call for spending discipline and emphasize that private investments have priority. This position has something for itself. Because German governments traditionally limit debts, they were able to counter the financial and corona crisis without outside help. However, fiscal discipline becomes questionable when it congeals into dogma.
As was the case under Chancellor Angela Merkel, who made the balanced budget of the black zero the core of her (modest) economic and political balance sheet. Merkel saved the country to ruin. Schools and means of transport are in a deplorable condition. With its under-digitization, Germany exposed itself to ridicule at the latest in the pandemic.
It would be good if the traffic light did it differently. The coalition partners find out how this could work from the other two economists, Monika Schnitzer and Achim Truger. They point out that the state should invest more in education, digitization and climate protection – and that it can make economic sense to go into debt for this. And they describe how this is possible with investment companies outside the debt brake, if it cannot be reformed so quickly.
It is good that the plurality is reflected in the report
But doesn’t it seem strange that the experts do not give a unanimous vote as they did before? No. Many German economists are currently pondering how the investment backlog can be resolved. Ifo boss Clemens Fuest, otherwise a lawyer for budget discipline, is exploring financial leeway. Such contrasting researchers as the liberal market Lars Feld and the progressive Marcel Fratzscher present joint suggestions. It is good that this plurality is reflected in the new report.
The central advisory body of the government is thus only showing an openness that has long been necessary. Anglo-Saxon economists mock the German fixation on austerity rules for Europe too, which incidentally did not prevent the euro crisis. With its new report, the Expert Council has become more relevant than it was before as a dogma booth.