Economics and politics - comment and analysis
29. December 2024 I Heiner Flassbeck I Ecology and Growth, Economic Policy, Economic Theory, Europe

Restless and senseless – the complexity of the modern world is overwhelming politics

What do you do when problems get too much for you? You bury your head in the sand or you take refuge in hectic activity that you sell as the solution to all problems. Our politicians almost always choose the second option and they regularly fail miserably. Germany, France, Italy, the United Kingdom and the United States can apparently only be governed if someone like Donald Trump leads people to believe that all they need to make everything ‘great again’ are the right and most immovable prejudices.

Is it the sheer volume of problems that overwhelms politics, or is it the inability of today’s politicians to form a well-founded judgement on the basis of which a viable solution could be found? Both certainly play a role. However, symptomatic of the inability is the devastating tendency of politicians to sell the shallow and meaningless chatter in television talk shows to the people as an objective debate. Robert Habeck, the German minister for the economy, is now taking it to the extreme, sitting down at any kitchen table for a public blah-blah instead of dealing with the best experts behind the scenes.

Wherever you look, you find an escape from complexity and a refuge in all-too-simple phrases. Creating enemy images is the new supreme discipline of the shallow thinkers. If you have a clear idea of who the enemy is, you no longer need to think. The colours black and white are assigned from the outset, shades of grey are forbidden. Anyone who comments on current conflicts and does not use the slogans of the shallow thinkers is immediately and irretrievably sorted out from the ranks of those who are to be taken note of.

Ukraine is the main victim of Western superficiality. Because Russia was immediately declared an enemy without even a second’s thought about the history of the conflict, it is no longer possible to end the war without the Western elites losing face. But because Russia is improving its military position practically every day, the Western loss of face is growing from day to day. Every day, many people die on both sides, and their deaths are also a consequence of the Western mental blockade. Just imagine: only someone like Donald Trump, who explicitly does not consider himself part of the Western elite, can end the conflict, even against the phalanx of warmongers in NATO and the EU.

The conflict between Israel and the Palestinians is not much different. Because people refuse to acknowledge that there must be hard limits to the right to self-defence, even between states, they allow Israel to drive the conflict towards genocide. The endless misery of the Palestinian population, however, is the basis for new hatred. The children who have been robbed of their parents and their childhood will carry this hatred back to Israel. You may have defeated Hamas, but in its place there are tens of thousands united in their hatred of Israel, just waiting for the opportunity to take revenge. Israel’s irresponsible political leadership has deprived itself of the chance to live in peace and quiet for decades to come.

The Western notion that nation-building can be achieved once traditional or religious structures have been destroyed has proved to be nothing more than a laughable fiction throughout the Arab world. In Syria, we are once again seeing how a power vacuum is being brutally exploited by all sides, with no prospect of a sustainable solution. Once again, the West is in the thick of it, but only to pursue its own interests and without any idea of what a sustainable solution might look like. The fact that Israel is also interfering and once again blatantly violating international law without any critical comments from the West fits into the picture of Western elites ridiculing themselves.

But even those in the West who claim to have the best interests of the developing world at heart do not want to see that the West is causing direct harm in many developing countries because it sells its world model as having no alternative. The Western world stands firmly by the institutions operating out of Washington, particularly the International Monetary Fund. Although the alliance of states known as BRICS is undoubtedly the result of the failure of this institution, no politician in the Western world would dream of questioning this post-colonial instrument of domination and seriously considering a new global monetary order. Development aid can be cut down dramatically by giving the developing countries the opportunity to take out loans without committing to a neoliberal ideology.

Instead of starting with their own mistakes in dealing with developing countries, migration from developing countries to ours for economic reasons is demonised and even declared ‘the mother of all problems’. Immigration due to economic necessity in our country, on the other hand, is considered the ideal solution to our demographic problems. This is precisely the kind of schizophrenia that shows the countries of the South that northern selfishness is unsurpassable and forces them to rely on new and unorthodox ways to overcome their difficulties.

It is also borderline schizophrenia to move practically without transition from the narrative of a serious shortage of skilled workers to the diagnosis of significant unemployment among skilled workers. While the shortage of skilled workers in Germany was still considered one of the biggest obstacles to dynamic economic development last year, it is now being noted with astonishment that tens of thousands of skilled workers are being put out on the street by companies with nothing but a snap of their fingers because politicians have simply slept through the economic downturn.

The discussion about the citizen’s income (Bürgergeld in Germany) and the great savings potential that is assumed to exist has also come out of the madhouse. So far, no one has really come up with the idea of asking what would happen if you took away some of the income of poor people who spend all of theirs. The answer is simple, but it is beyond most economists and politicians: since the recipients of the citizen’s income have no choice but to reduce their demand for goods and services, the full amount of the ‘savings’ is at the expense of companies. If you save ten billion of government expenditure, you reduce the income of companies by exactly ten billion. But the very same people, with the boss of the CDU, Friedrich Merz as their figurehead, want to use the ten billion saved to relieve the burden on companies in order to boost the economy. It doesn’t get much more stupid than that.

The discussion about the national debt in Germany and in Europe under the leadership of Germany is taking place at the same level. Almost all the participants in the discussion, including the vast majority of German economists, persist at the level of the frugal housewife. The step to the macroeconomic level is obviously overwhelming for some and is rejected by others for ideological reasons. So they talk for hours about debt without once mentioning the savings that are at the root of the problem. They say that the state has to make it with the income (the famous 1,000 billion euros) it collects in taxes and should not live beyond its means. But no one says that the attempt by private households and companies to live below their means, i.e. to save, can only be successful if the state lives beyond its means.

Germany’s inability to understand this compelling logic is driving Europe to the brink. Those who insist that countries like France and Italy must reduce their national debt, even though private households and companies are also saving on balance there, are demanding something that these countries cannot do precisely because Big Brother Germany has blocked the only way out for them, namely their own current account surpluses, since the beginning of monetary union.

The low intellectual level at which German politics addresses economic issues is demonstrated better than anything by the obsession with competitiveness. Once again, no distinction is made between the company level, where competitiveness naturally plays a major role, and the economy as a whole, where it cannot play a role. Yet all the major parties see this as the key to getting the economy back on a growth path.

Was it not the policy of the Agenda that brought Germany a long period of economic growth? Should we not repeat this with an Agenda 2030 to revive the economy? Far from it! It is precisely because Germany has been so successful for a number of years that there is a major divide that threatens to tear Europe and the euro apart. German mercantilism is also unrepeatable because the new US government, in particular, is no longer willing to take on the role of the deficit partner. Trump has issued clear threats. Consequently, the European partners can no longer cope with deficits, and the US no longer wants to. What is the point?

The climate issue also requires us to think in different terms. The latest climate conference has once again shown that there is no chance at the global level of even initiating a phase-out of fossil fuels in the next few years. The US will probably withdraw from the Paris Agreement. As a result, even more ambitious phase-out attempts by the other industrialised countries will have no global impact whatsoever. This week, the International Energy Agency reported that global demand for coal has reached a record high this year. Europe is wasting enormous amounts of political energy on an issue it cannot solve. If there is a global effort to ensure that fossil fuels remain in the ground, a country like Germany can provide political support for this process, but it can never replace the global effort.

Finally, it is more than regrettable that in Germany there has been no attempt to subject the many questionable political responses to the coronavirus pandemic to a retrospective review. But it fits into the overall picture of a hopelessly overburdened political class. The response from many citizens is clear: first, politicians made decisions based on nothing more than gut feeling, and now they are shirking the political responsibility they themselves have repeatedly invoked. They try to excuse themselves with great uncertainty and haste in making decisions. But even if you admit that, what remains is much more than a bad aftertaste. This is blatantly obvious when it comes to vaccination. A vaccination that was only approved to alleviate severe cases was sold as an infection protection. So many wrong decisions and misinformation were associated with this that it is hard to say how many resignations would be justified. Nothing has happened. This has once again caused serious damage to democracy.

Ultimately, however, the plight of our political class only reflects the general plight of a society that is increasingly losing the ability to think critically. The lack of criticism and judgement in the media and politics is due to the fact that we are no longer trained from an early age to question language and content with a critical mind. In a society in which everyone is allowed to have their opinion, it is far from true that every opinion must be taken seriously. Thinking starts at school. You have to force the students to think in a complex and logical way, and not just in maths, but wherever you can’t get by without logic. Those who only know values and attitudes, but no logic, are doomed.