„Mastering structural change“ – or: how good ideas threaten to fizzle out once again

 

The current report of the German Council of Economic Experts (SVR) was handed over to the Federal Government today. An annual ritual, including the presence of the Chancellor. The report 2019/20 is entitled „Mastering structural change“ and comprises more than 350 pages. Among other things, it deals with the economic outlook and recommendations on current economic policy issues.

As a rule, these chapters offer the most easily accessible fodder for public discussion. This is also the case this time. Is there a recession? Many commentators thought yes in the last weeks, the Council says no. And: How do you hold it with the black zero and the debt brake? The SVR has a majority in favour, but not all members agree.

Surely it’s particularly interesting for the media if you can identify positions on content with people. And in this case in particular: the fact that Prof. Schnabel, the German candidate for a seat on the Executive Board of the ECB, distinguishes herself from the majority of her colleagues on this internationally controversial issue and calls for a change to the debt brake enshrined in the Basic Law gives cause for discussion.

Unfortunately, it is also routine for the less easily accessible chapters of the report dealing with the need for structural reform in Germany to be forgotten relatively quickly. This time we are dealing with such important issues as the declining trend in productivity growth against the background of demographic ageing, the opportunities and limits of industrial policy, the major challenges facing German banks in a very difficult environment, the development of inequality of wealth and income and the implications for social systems, among others.

These issues are not easy to digest and cannot be dealt with exhaustively in a short press article or blog post. They require an intensive, and certainly controversial, discussion of important economic and social policy issues. But they are absolutely central to the long-term positioning of Germany as a business location and must be tackled.

Therefore the discussion is to be welcomed also, how the expert advice can be given a larger influence at least on the discussion of economic policy. Apart from a few exceptions (the report 2002/03 „Twenty Points for Employment and Growth“ had a major influence on the „Hartz reforms of the Schröder government“), the SVR reports unfortunately have a very limited effect on the discussions in political Berlin and the practical government action. This is not only a pity, but also unforgivable in view of the future viability of the German economic model.

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