“Leftovers” from the old days: Stiglitz: “You should get rid of the debt brake”

“Leftovers” from the old days
Stiglitz: “You should get rid of the debt brake”

Nobel laureate in economics, Joseph Stiglitz, sees a great need for investment in Germany. The new government must now “spend a lot of money,” advises the US economist in an interview with ntv. The debt brake is an “economic brake”, an instrument that is no longer up to date.

The American Nobel Prize in Economics, Joseph Stiglitz, advises the new federal government not to save now, but to spend significantly more money. The German economy is in great need of modernization. “A more dynamic economy has to be created. Germany has to move away from production. That was a great success, but the economy of the 21st century is not in manufacturing,” said Stiglitz in an interview with ntv. Because there are fewer and fewer jobs in industry, investments must be made in growth areas.

In order to adjust the economy to the issues of climate change and digitization, the state must also go into debt, recommends Stiglitz. The SPD, Greens and FDP are currently looking for ways to take out more loans despite the debt brake. The economist advises, however, to consistently close the cap on new borrowing. The debt brake is a “brake on growth”, “a remnant of a very special view of the world from a time with high inflation a good 40 years ago that should be gotten rid of “. No company would only look at the debt side. If you want to build large companies like Tesla or Google, you have to” borrow money for the future. “The economist recommends the same also for building a strong economy.

“The sky doesn’t fall on our heads”

The economist sees the fight against climate change and the inequality of income among the population as overarching issues for the new German government. “Although Germany is doing a better job than the US in closing the income gap and bringing the population closer together, it is still big,” Stiglitz continued. All people would have to be taken along. The minimum wage is an effective approach here, “I think that would be good for the German economy”. Stiglitz also considers strengthening the bargaining power of the union to be an important measure.

The economist does not expect the current high inflation to last. “Some surcharges have already disappeared, others more stubborn.” The corona crisis was “a real trauma” for the economy. But: “We should remember that we plucked the limit of two percent out of thin air. The sky does not fall on our head when we are briefly above it,” says the Nobel laureate for economics.

The European Central Bank is aiming for inflation of just under two percent, in September it was 3.4 percent. If inflation continues to rise, it doesn’t matter. “Even if inflation is not so temporary, it will stay within a certain range. I am sure that the central bankers will manage that.” Stiglitz is a New Keynesian, and in 2001 he received the Nobel Prize for Economics. From 1997 to 2000 he was Chief Economist of the World Bank and from 2011 to 2014 President of the International Economic Association.

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