Heiner Flassbeck, Friederike Spiecker: Still on a knife’s edge? German federal government fails to recognise the true economic situation

Anyone in the civilised world who wants to drive a car must prove that he can correctly assess the direction of movement and speed of his vehicle, master the aids of stabilisation and gain a certain overview of the traffic situation. The obligation to pass a driving test meets with general approval among the population, because the person willing to drive a car can put not only himself but also others in danger if he does not have the required skills and knowledge. Those who steer a national economy do not have to prove anything of the sort, although the general danger to the life and welfare of the population posed by their errors of judgement and misconduct is enormous.

Such comparisons come to mind when describing how the German federal government is currently handling the country’s economy. The responsible politicians generally do not seem to understand how dangerous the business cycle dynamics can be once the economy is on a downhill track. This follows directly from the belief in the self-healing powers of the markets, to which at least one coalition partner in German government is attached to. To be precise, the government is currently overlooking the signs that indicate the economy will continue to slide and will not recover on its own. Accordingly, the economic policymakers are unwilling to use the levers available to stabilise the system in time.



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