Month: October 2021

New Foundation Of Policy EconomyNew Foundation Of Policy Economy

As a policy economist from The Hague, you work in a fun and exciting environment, with smart and ambitious colleagues and with a lot of current events. Unfortunately, the contribution of policy economists to well-thought-out and future-oriented policy is very limited. That’s a shame and could be much better. By the way, visit this site LA Century Law.

Examples of missing thinking

Let me describe this pity with a broad spectrum of examples, examples of straightforward shortages in terms of attention to obvious economic issues that would deserve urgent attention.

Current account surplus

For many years now, the Netherlands has had an exceptionally large current account surplus, ie a national savings surplus. This is also criticized by the European Union and the International Monetary Fund. I am not aware of any plan of approach from the policy economists in The Hague to do anything about it. And they are not questioned.

Lagging income development

Since the turn of the century, the income development of households has lagged behind that of companies. Until a few years ago, policy economists nevertheless maintained that wage moderation is the best recipe for the Dutch economy. But thinking about the function of the minimum wage or the level of welfare is dogmatic, and ignores the psychological possibilities and limitations of people at the bottom of the wage structure.

Cuts

After the credit crisis of 2008/2009, the Netherlands experienced a W-shaped recession, unlike the EU countries that we normally refer to. This was the result of the strict austerity policy of the Rutte II cabinet. This austerity policy was recommended and defended by the vast majority of policy economists in The Hague. After all, it was a balance sheet recession. It was only when the budgetary policy had to be considered in the current corona crisis that the realization dawned that austerity might not be the best way out of a crisis.

Wealth distribution

Every year, policy economists in The Hague are extremely busy with the distribution of income, the result of a political fixation on purchasing power figures. The fact that the Netherlands has an enormously skewed wealth distribution is completely ignored. Fortunately, the Central Bureau of Statistics has recently announced that it will provide more figures for this.

Investments

The policy economists are very focused on the economic effects of budgetary policy with regard to the current and forthcoming government term. Long-term effects of expenditure with an investment character are not covered, and therefore often excluded. As a result, the Netherlands has fallen behind in areas such as education (see the PISA scores) and sustainable energy, and we are also struggling with major overdue maintenance in the housing stock, physical infrastructure, and the environment. Policy economists have no answer for this because they have no model to estimate the long-term macroeconomic effects of investments. For the long term, the Central Planning Bureau (CPB) only looks at the effects of aging in a model.

Risk scenarios

There was no economic recovery scenario during the credit crisis. There was also no analysis of the functioning of the financial sector. At the beginning of this century, there was no single scenario to combat the climate crisis. Not even in 2010. Only a few years ago did the CPB, De Nederlandsche Bank and the policy economists in the ministries recognize the need for sustainability. And finally, there has not been a single economic scenario for the economic survival of a pandemic recently, although the National Security Profile 2016 explicitly pointed out how great the risk and impact of a pandemic is.

Thinking also falls short

It becomes more complicated with examples in which it becomes clear that economic thinking does not match reality. In the example about lagging household income development, I already hinted at this: the policy economist in The Hague assumes self-reliant citizens. Measures are devised with incentives that also have an effect on citizens’ actions because they understand these and see how they can prevent disadvantages or collect benefits. The fact that a large proportion of Dutch citizens is poorly educated has little ‘doing ability’ or comes from a different cultural setting has no place in this thinking. As a result, the social climate in the Netherlands is rather harsh. With a lot of in activities, a lot of debt, and the poor health of a large part of the population. Policy economists, including the CPB, have little connection with the analyzes and thinking of the Social and Cultural Planning Office.

Consequences of Corona to German EconomyConsequences of Corona to German Economy

corona-economy

The Corona crisis hit economic activity hard and had a massive impact. After the severe recession in the first half of 2020, the German economy appeared to be dealing with the consequences of the pandemic better than expected. However, due to the renewed partial lockdown in winter 2020/21, the effects could be more pronounced in the end.

How the virus crisis has affected the German economy so far, what causes the crisis in general, what consequences it has throughout the world, and how you try to counter this with the appropriate measures – that is what this dossier is about.

How is the Corona crisis affecting the German economy?

The world corona crisis with interrupted supply chains has overwhelmed German exports, but also private consumption. Exit restrictions, border closures, and the economy have seriously affected economic life since mid-March 2020. After ten years of growth, the German economy fell into a deep recession in 2020.
After the crisis of Corona, this initially led to another drop in economic output. In 2021, the German economy rebounded in the second quarter. According to the Federal Statistical Office, economic output was still 3.3 percent lower than in the fourth quarter of 2019, the quarter before the start of the Corona crisis.

How does the Federal Government support the German economy?

The federal government started an aid program at the beginning of the corona crisis. They have helped the German economy in the form of loans, recapitalizations, sureties, and guarantees. The economic consequences must be cushioned as far as possible with liquidity aids worth billions of dollars. Corona aid for commercial and autonomous companies is the largest aid package in the history of the Federal Republic. Find out more about the economy on https://www.lifetakesvisa.com/routing-number-for-chime-bank/.

Consequences of the crisis for globalization

The year 2020 will go down in economic history as a very special year. That is already clear today. The Corona crisis has caused a global decline in economic and finance growth that has not occurred since World War II. The global financial crisis of 2008 cannot continue either.

There are three reasons why it is extremely difficult to assess the consequences of this crisis. On the one hand, it is precisely its gigantic extension that breaks all previous horizons of experience and devalues ​​the corresponding comparisons.

On the other hand, it is the nature of the crisis that it does not originate in the economy itself, but in a simple medical fact: the extremely easy spread of a virus called: Covid19. And last but not least, its global dimension: almost every country in the world is affected, it is experiencing its own severe economic recession and, at the same time, it is severely affected by massive declines in trading partner countries.