When facts change

“When the facts change, I change my mind,” said John Maynard Keynes. But once again his disciples are overwhelmed with the teachings of the Master.

America: People walk past the New York Stock Exchange after stock prices have fallen.

Dhe pandemic and the policy to combat climate change are two major events within a short period of time that are already influencing and will continue to have a strong influence not only on individual countries, but on the lives of very many people around the world. These major events are accompanied by a digital revolution that is not only significantly transforming economic life. Do we seriously believe that this meeting of major events and a digital revolution should invite us to simply extrapolate trends from the past, as if nothing extraordinary was happening?

Consider the risk

Two examples from these days give cause for thought. In the United States, the inflation rate reached 4.2 percent in April, its highest level since 2008; In Germany, the inflation rate is likely to exceed the 3 percent mark over the course of the year. It is undeniable that temporary effects are also currently having an impact on inflation. And it would be dubious to assume significantly higher inflation rates as safe in the long term.

But they cannot be excluded. The significantly increased national debt and central bank balance sheets need not drive the rate of inflation, but if monetary policy does not counteract this in good time, it is not impossible that they will. In any case, the capital markets are gradually beginning to take the risk of higher inflation rates into account in their decisions. Perhaps the monetary politicians will also notice this.

The restructuring of entire national economies under the sign of climate policy will cost a lot of money in a foreseeable period and bring about significant changes in how we do business and how we live. A huge investment requirement awaits companies that want to shape this change. What should one think of it when, precisely in such a situation, economists respond to the FDP’s idea of ​​lowering corporate taxes that in times of secular stagnation, companies hardly need any investment? John Maynard Keynes wrote the famous phrase: “When the facts change, I change my mind.” Once again, his disciples are overwhelmed by the teachings of the Master.