The dramaturge of a TV series about a newly elected government probably wouldn’t have dared to throw such a number of sticks between the main characters’ legs as those that the federal government has had to deal with since it took office. The traffic light coalition was actually committed to transforming the country. The country should become more modern, more digital and more climate-friendly. But the new government was thrown into a pandemic, into a war in the middle of Europe, which triggered an energy crisis, inflation and an economic downturn. Good advice is welcome. The Research and Innovation Expert Commission (EFI) is also responsible for this. This Wednesday she handed over her latest annual report to the Federal Chancellor. And what is your advice?
The committee, led by Jena economics professor Uwe Cantner, is particularly concerned that the necessary transformation process will be neglected if holes need to be filled in the short term. But it is not just this budget competition that is endangering the country’s restructuring. “If you want to stimulate the economy, this change in direction must also be taken into account,” says Cantner zur South German newspaper. “People cannot cope with the transformation policy.” In his opinion, this is because the social component is not sufficiently taken into account. “Who can afford a heater for 30,000 euros?”
“Smartly set incentives”
In the commission’s opinion, the transformation is not a task that the state in particular has to master. “Transformation policy does not mean subsidy policy,” is how Commission head Cantner sums it up. The economist is certain that the state should limit itself to setting framework conditions, “a lot can be achieved with that.” Although it can’t be done completely without subsidies, the economy actually has to find the solution. Start-up financing and “smartly set incentives” could trigger developments. However, the solutions should be left to the market, demands the Commission and thus opposes a “policy of requirements and prohibitions in which politically prescribed solutions have to be implemented”.
The experts also criticize the fact that the transformation policy has “so far not been very consistent”. “Many measures are neither well coordinated in terms of time nor content,” says Cantner. Added to this are the numerous crises. This may make the plan for a profound change in energy supply, for example, a long way off. “Now we have to manage the transformation out of an economic stagnation and in the context of foreign policy threats.”
The commission also sees a “great need for reform” in education. “We are falling behind at Pisa,” says Cantner, partly because the positioning is simply “too antiquated.” Even in research, the conditions under which it can take place are often too complicated. Cantner cites data usage laws as an example. Many things are regulated too precisely and thus hinder research. Another problem that Germany is still struggling with is the transfer of research results into functioning business models.
“Train hasn’t left yet.”
When it comes to the big hype topic of artificial intelligence (AI), the Commission believes that Germany has not yet left the train. It is true that “we are behind when it comes to generative AI”. But such technology “develops over generations. We should be there for the next wave,” says the economist and head of the commission. He recommends not over-regulating, but rather acting agilely and making adjustments if problems arise. Chancellor Olaf Scholz (SPD) also said that it is now “a matter of not being too afraid. We also have companies in the pharmaceutical sector that know what they can do with this technology.”
The state, whether it acts as an entrepreneur or just sets framework conditions and provides start-up financing, should at least know whether the measures taken have had the desired effect. But that rarely works, says commission member Guido Bünstorf from the University of Kassel. The commission examined 81 so-called evaluation studies from 2019 to 2023. In other words, studies that were intended to evaluate the impact of certain government measures.
In 59 of these, observable developments were simply causally classified as effects of the measures. “But only in seven cases did the methods used allow such statements about cause-effect relationships,” writes the commission. Its boss Uwe Canter classifies it as follows: “With a better knowledge base, policy measures could be specifically adapted and their effectiveness improved. A lack of knowledge prevents policy learning.”