What is Note worthy of the Grand coalition? How useful is a German industrial policy? And in which subject he quarrels the most with the Chancellor? The host schafst way Christoph Schmidt in the Interview.
RWI-President, Economics and a Professor at the Ruhr-University of Bochum, Germany Christoph Schmidt
DW: Professor Schmidt, you are for ten years a member of the expert Council for the assessment of overall economic development and for the past six years this Council, whose members are also popularly economy. They’re like the wisest Economist in this country. The Federal government makes use of their wisdom to use?
Prof. Schmidt: We play as the German Council of economic experts, in my view, an important role for politics and society. Because we consult not only the Federal government, but also politics and society as a Whole. We provide our insights and our Analytics available to everyone, all the decision-makers, including the company, the Business leaders and the tax payers. Everyone has the same access to our documents. We play an important role as a lateral thinker, because we are independent, so not part of the government apparatus. Thus, our ideas and our ideas are not always congruent with the dominant opinion in the political process or in public discourse. This makes us a particularly valuable impetus. Of course, we don’t have a monopoly on wisdom. There are a lot of good analysis and lots of good voices. In sum, all these arguments can then seek out the responsible citizen or responsible politician what he or she perceives as the best Basis for its own or their own judgment. Therefore I think that the Advisory Council is a very important institution. I am very proud of the fact that I had this opportunity to work for ten years.
It’s true that the economy may actually be no recommendations for the government?
We are actually prompted from our technical competence as a so-called Expert judgments prepare to form your own Position and to represent the then also to the outside. But we have no Mission in the sense that we want to convince someone of this Position or to. We should form a Basis for an informed discourse in society and in politics. This is not to say, however, that, for example, we say: “We recommend that a minimum wage of ten euros.” Such specific recommendations are what we make. We provide our assessment, which we follow, for example, in the case of introduction of a nationwide minimum wage in which the Economic cycle is expected.
You have mentioned the keyword. If I remember correctly, you have spoken out against a minimum wage. Now he has been since January 9,19 euros raised. What impact will this have in your opinion?
We have, in the run-up to the introduction of a nationwide minimum wage is a critical discussion. In our annual report we have set out the arguments for, and which speak against it. And, above all, we have collected all the evidence there is in the international context on the effect of minimum wages. A common negative effect is that young, well-trained workers will be marginalized tend to be, especially in economically bad situations. On the other hand, it raises the income of other workers. This is a very complex Situation, as always in economic Events winners and losers at the same time from a soft position to come out. In weighing the risks and opportunities we have said at the time, we would not advice the Federal government to take this step. Now she has taken the step anyway, and in a time in which the economy boomed. The German labour market is now incredibly been robust over the past decade and was able to cope with the minimum wage easy. The big question from our point of view, but still: What happens in a downturn? Of 9,19 euros is now out in view of the continuing good economic situation, a strong negative pulse. The concern about what happens when the economy starts to look a bit different, however, remains. We have a very well-functioning System of poverty in Germany, the works on taxes and Transfers. Therefore, we have comparatively little relative poverty and not absolute poverty. To strengthen this System, would have been my silver bullet – instead of a minimum wage. But now we have him, and it is also not the end of the world.
Prof. Schmidt DW-editor Zhang Danhong
At the Moment we have the lowest unemployment rate since reunification, and record tax revenues. Thus, the Grand coalition would have to get to now precisely a year, One of them on the certificate.
We don’t give out grades, because the compaction of the action too much. In the complex situation, in which the Federal government act on a national and international must – be, we always find many good and many questionable elements. So we have been, for example, in the handling of the Euro crisis is largely in line with the Federal government. National we find some of the choices, however, not so successful. Now, the Federal government can do neither of the boom alone, yet it can’t be held responsible when it comes to time as well. Notes would imply that the government controls it very well, if it’s going well and that you controls are particularly bad when it’s running bad. So easy, the world is not. Likewise, we would also take no praise for that, if our forecasts predict high growth for Germany before. Because the messenger is not the one who leads the result. The policy has, of course, a considerable share of the result. But you can’t accomplish the result alone.
We are in year ten of the economic growth is slowing but is now clear. This is also due to the weather situation. The Brexit, we need to set us on a prolongation of the uncertainty. We read and hear, on what a disaster the UK is heading. But what is the Brexit for Germany, loses a close ally in the economic issues actually mean?
Talk to a very important topic. The consequences will not only be purely economic in nature and have a direct impact on, for example, supply chains, production chains, and the like. The actual dramatic effects may be on the political level in the further development of the European Union. In fact, the economy has made liberal voice in the United Kingdom an important contribution to the further development of Europe. Europe is very diverse and heterogeneous. From this diversity of Europe can draw on an incredible amount of force. But this is only possible if those who hold more commitment from the state, a much stronger welfare state and a highly regulated labour market properly, together with those who rely more on free markets and division of labor. It has also been shown in the past. If the British voice is missing in this discourse in the future, then that would be for the further development of Europe as a whole is bad. This is, in my view, far more important than the short-term economic effects are also significant, especially for the UK.
Today is the annual national people’s Congress comes to an end in China, which means that the normality is restored. The negotiations with the United States in matters of commercial dispute can now enter into the final phase. What do you expect?
If you look at the history of the past decades, the international trade to be a Win-Win Situation. The more the international division of labour allows for the better individual economies on their own Strengths and focus, and in the international Happen to the economic performance win, at the same time with the other. One should not misunderstand and think that it is a zero-sum game. Therefore, one can only hope that all the arm wrestling of two giants at the end of a solution comes out that the international world trade order is still open.
The trade dispute, it is ultimately also to the further rise of China and whether or not the prevent from the US point of view, or to slow down. Against this Background, also the whole discussion on Huawei in my opinion. How to position themselves in Germany? To exclude the Federal government on Huawei from the construction of the 5G mobile network?
This is a very difficult question, to which I say as a business expert is comparatively little. Because the allegations in the room who need the information, maybe the Federal government, scientists are but the outside economy is closed. I therefore would hold me back at this point. Basically, it is so that Germany as an open economy, with very great interest, in Association with the other European economies to ensure that the liberal international trade order, even if, from a German point of view, the challenges by international competitors to be very large. Is being discussed on an industrial policy. We take China and Germany as an example: Both are each other’s important trading partners. If both countries are investing to allow companies from each other, and thus competition for the domestic companies to create, then both have what it. A Situation in which, for example, only China company sends to Germany, but in China the German company will not come so freely, is not sustainable. If Germany closes in response to the German market from Chinese investors is also not a long term sensible solution. It would be best if you would create a “level playing field”. China should open and European companies as well as companies from other countries allowed to invest in China without the use of pads as a certain proportion of Chinese products or the information be disclosed. The long-term for China would be good, because of the transfer of knowledge that comes voluntarily, is worth much more than the Knowledge, what you can skim, maybe short-term obligations. Germany would do well to keep in mind the fact that the openness to foreign investors brings new Knowledge and new competitive pressure that leads to performance. Conclusion: We all have very much to gain, if we deal openly and fairly with each other – according to the principle of reciprocity.
The Brexit or trade dispute, Germany has little option. But the Federal government can do a lot of the country fit for the future equip. Keywords: demographic development, digitalization, or artificial intelligence. Does the Federal government, in your opinion, enough?
She is doing very much. Germany has a very good base when it comes to the working population to prepare for the future. We have in the international comparison is a powerful school system, a powerful System of higher education, and especially vocational training. Companies wishing to produce or research units, to settle, to find a very good workers. But it could be better still, especially on the digital change we could prepare our future generations are even better. You could invest more. All in All, I think the German System of social market economy, due to its ability to adapt to big challenges while maintaining social cohesion incredibly powerful. That is not to say, however, that we criticize the Federal government. On the contrary, in individual policy fields, such as, for example, in the case of pension policy, we criticize them very strongly.
Gabor Steingart has said this week in his Podcast, Ms. Merkel does not want to Reform, and turmoil. You want a good night’s sleep and lunch. We will have to wait until Mrs. Merkel delivers her Chancellery, to the hope that swing more times for Germany?
It is the role of journalists is to sharpen and to fuel the debate, and it is the role of scientists is to emphasize the objectivity. If you look at the time in government, Mrs Merkel is a historical look back, you will see that it has led in times of great crisis, a very difficult-to-control ship due to the hurricanes. Of course, this is equivalent to the fact that some of the reforms, one would have wished for, are more likely to have not been addressed. Take, for example, the energy transition, one of the main challenges globally. We need to somehow move away from the use of fossil fuels and the Emission of CO2 into the atmosphere. As we have done in Germany a lot, but the really brave step to leave us with comprehensive on the market, economic processes, and a CO2 pricing, we are not gone. On the other hand, also applies to the policy as with all other ventures: first of all, the better.
Prof. Dr. Christoph M. Schmidt, President of RWI – Leibniz Institute for economic research, Chairman of the expert Council for the assessment of overall economic development and a Professor at the Ruhr-University of Bochum.