Corona and the economy: the state as savior


Status: 03.03.2021 4:28 p.m.

With the pandemic, the state’s influence on the economy has increased massively – a question of survival for many companies. But how long should he help?

January 8, 2009 is considered by some economists to be the fall of man in recent economic history. In the course of the global financial crisis, the German state bought into the private Commerzbank, which was considered systemically important. The bank was partially nationalized because an insolvency might have had secondary effects and further destabilized the already unstable financial system.

Partially nationalized airline in crisis

Back then, the crisis only made possible in exceptional cases what has become almost everyday occurrence today in the corona pandemic: the state as a company savior in times of need. The Federal Republic of Germany has been supporting the airline Lufthansa since the summer of last year. The state invested nine billion euros in the former industry leader and became the largest shareholder.

Other companies also called the state for help in the pandemic: the travel company TUI, for example. He too received billions in funding. State-guaranteed loans should help first, then the Economic Stabilization Fund (WSF) stepped in. The state created it specifically to help companies that got into difficulties due to the Corona crisis.

“Where companies have to cease business by government decision without any fault, appropriate compensation is a matter of course,” says Michael Hüther from the Institute of German Economy (IW) in Cologne. “However, participation in the aviation or tourism industry must not become permanent in order to avoid distortions of competition. State investments generally remain a problematic intervention in the market.”

Overwhelmed with industrial policy?

Nonetheless, the state also bought into the pharmaceutical company CureVac – to take part in the race for a corona vaccine. 300 million euros should ensure that the Tübingen-based biotech company is at the forefront of drug development. The company was not in the crisis.

Economists like Ulrich Kater from DeKa-Bank in Frankfurt am Main see this critically: “Investments and research should be promoted through tax instruments. The state is overwhelmed when it wants to pursue industrial policy, that is, where bureaucracies find the products and technologies of tomorrow However, he is responsible for setting the rules for markets and companies. ”

Economists agree that the global pandemic is an exceptional situation. “But we have to make a clear distinction between problems on the supply side and those on the demand side,” emphasizes IW boss Hüther. He advocates a distinction between whether the state helps companies or the citizens.

While the state’s stakes in companies are intended to support the supply side and the bridging aid is intended to ensure the continued existence of smaller companies in particular, the short-time working allowance, the family bonus and the reduction in VAT have boosted demand. The state has intervened more strongly than it has in a long time.

“Symbiosis between state and market”

“In a debate strongly influenced by neoliberalism, the state and the market are too often portrayed as opposites,” says Marcel Fratzscher from the German Institute for Economic Research (DIW). “That is wrong. This crisis in particular shows how important the symbiosis between the state and the market is. In this crisis, the state helps companies to survive, without which there can no longer be a well-functioning market. The crisis shows that not state institutions are the problem, but that there cannot be a functioning social market economy without them. ”

“The importance of the state and the market in practical economic policy has fluctuated throughout history,” says DeKa economist Kater. “The introduction of broad redistribution systems in the democratic states and the dominance of the state in the socialist economies was followed by a renaissance of the freer forms of the market economy from the 1980s. more market ‘. ” The decisive factor for actual economic policy, says Kater, is the political climate of opinion in the countries: “In the past two decades, more and more dissatisfaction has developed, especially with the distribution of income and assets. Therefore, the pendulum is now swinging back in the direction of the state Interventions. ”

Michael Hüther admits: “One can see that the crisis is often used to enforce one’s own ideological standpoint and in places to demand a complete change of course. Some arguments are less rigorous because the situation is more complicated. Pure teaching does not help good in the crisis. ”

When to get off again?

Even if it is unclear how long the pandemic will force the state to continue its stabilization programs: From the point of view of economists, an exit is advisable in any case. “You shouldn’t stop them all at once,” suggests Kater, “but they should be reduced slowly over the course of 2021 and then faster in 2022.” And Hüther notes: “The state must fundamentally rely on the innovative strength and flexibility of companies to adapt. This ultimately opened the way for the future again, even during the crisis.”

DIW boss Fratzscher, however, points out: “The misconception of neoliberalism in the superiority of the market brought us the global financial crisis of 2008, and now at the latest with this pandemic we should be aware of the enormous importance of a strong state and good state institutions – be it with economic aid, short-time working allowance, with a good health system and with daycare centers and schools. ”

By the way: Although the state has scaled down its involvement with Commerzbank, it is still involved. Almost 13 years after he started.

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Corona economy state savior


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