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05/06/2020

The beginning of an important bridge construction

Patrick Bungard

Original source: https://enorm-magazin.de/wirtschaft/konjunkturpaket-zur-coronakrise


The beginning of an important bridge construction
On 3 June the German government adopted a Corona economic stimulus package. Numerous measures and 130 billion euros are intended to boost the economy. The individual measures were already criticised, sometimes severely, on the first day. Opinions differ widely as to their potential effectiveness. However, it is important not to lose sight of the big picture and to see the positive basic message of the package.

Most importantly, the Corona crisis is not the trigger of the economic crisis, but a relentless revelation that our economic system was in a continuously worsening crisis long before Wuhan. In many respects, the compulsive economic understanding of many corporations, which is purely focused on efficiency and profit maximisation, has long since reached its, in the truest sense of the word, natural limits - the social and the ecological ones. In times of climate change and the rapidly advancing extinction of species, the need for significant structural changes was already apparent before the crisis, and both politicians and many companies have so far completely underestimated these changes.

Example automotive industry
This is particularly evident in the industries that are central to Germany, such as the automotive sector. The trend towards sustainable mobility was recognised much too late. Much too late, the turnaround in mobility was recognised by leading car manufacturers as an urgent necessity in the fight against climate change and at the same time as an enormous business opportunity. Much too late, it was understood that sustainability and economic efficiency are not contradictory, but mutually dependent. For far too long, attempts were made to justify the current corporate orientation from past successes instead of courageously investing in the future - in the future of the younger generations and in the survivability of their own company beyond the horizon of the prevailing management cycles.

If there is one thing Corona has shown up to now, it is that the crisis can only be resolved through the interaction of business, society and politics. The economy cannot be saved at the expense of the health of the population, nor can society do without a healthy economy.

The cessation of global economic interdependence triggered by the Corona crisis and the impending recession represent a historic opportunity for policy-makers to create essential framework conditions and incentives to ensure that economic and social interests can interact positively in the interests of sustainable development of our planet.

Politics is rethinking
And it is precisely at this point that a rethink in politics now seems likely to take place. It is the declared goal of the coalition partners to “lead Germany quickly onto a sustainable growth path that will secure jobs and prosperity”. It is now “a matter of investing as much and as quickly as possible to overcome the deep recession triggered by the coronavirus”, they said in part of the statement.

To contribute to this as effectively as possible, the grand coalition has apparently refrained from ideological trench warfare and has put together a comprehensive aid package. Instead of supporting individual interests of certain industries or continuing to try to keep companies that are not fit for the future artificially alive, as many critics rightly feared, the package is aimed at the socially weak and sustainable industries.

Looking at the measures, the package does indeed appear to be forward-looking and addresses key issues for sustainable development. In addition to monetary support for families and municipalities, reductions in the price of electricity or the reduction of VAT, a great deal of money is to flow into education and research, all-day schools, digital teaching materials, modern hydrogen technology and renewable energies. In addition, the programme includes a specially designed future package. The investments in topics such as science and research, artificial intelligence, quantum technology and climate protection are a clear signal to adapt Germany as a business location to the global challenges of our time.

No absurd purchase premiums in the economic stimulus package
The fact that the automotive industry is not to be supported with absurd purchase premiums for cars with fossil combustion engines, but rather that electric mobility is to be strengthened, is certainly another unexpected exclamation mark of the government. The total amount of the package of 130 billion euros for the period 2020 and 2021 also indicates that the package marks a turning point in the era of electric mobility.

No absurd purchase premiums in the stimulus package
The fact that the automotive industry is not to be supported with absurd purchase premiums for cars with fossil combustion engines, but rather that electric mobility is to be strengthened, is certainly another unexpected exclamation mark of the government. The total amount of the package of 130 billion euros for the period 2020 and 2021 also indicates that the package is intended to herald a new era.

The stimulus package could be a first stone in the long-awaited and urgently needed bridge-building between economic and social and environmental sustainability. The key to solving the climate crisis and the economic crisis can only lie in bringing these two enormous challenges together. Investing in this paradigm shift is therefore the key message of the package and should be interpreted as a very positive and important sign. Yes, the cost of the 130 billion will be borne by future generations. But the costs for the younger generations will be far higher if we do not succeed in both slowing down climate change and relaunching the economy. It is right and imperative that the transformation of the economy be initiated now with sustainable investments, instead of falling back into the old economic paradigm with austerity measures.

No one will be able to seriously predict how effective the measures will ultimately be and to what extent every euro the government invests now can actually promote environmental and economic change. It is quite clear that the package is only a first step in the right direction and not the ultimate solution. Without a consistent political follow-up of this new way of thinking, the impact of the package will evaporate as a drop in the ocean. But there is no doubt that it is a bold and correct approach and hopefully more than just a positive signal to the younger generations. The economic stimulus package addresses the basic problem of the separation between economic efficiency and sustainability, which has been accelerated and reinforced by Corona. This is the real positive aspect of this historic stimulus package. 

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