display
Scare is always possible.
Take the terrible threat of Covid-19, mix it with the debt that has grown immensely as a result of fighting the pandemic, add a few old prejudices against minorities, garnish the whole thing with absurd conspiracy theories, and the horror cabinet of prophets of doom is ready.
What paralyzes societies in times of the Corona, provokes confused demonstrations, but also initiates government aid packages worth billions, is anything but a new strategy for fearmakers.
Rather, certain interest groups have long understood how by instrumentalizing concerns about the future, profits can be generated for some at the expense of others.
They use a difference between being afraid and being afraid, which is also open to economic analysis.
Lobby groups abuse bad news
display
Populists and nationalists are not the only ones to intimidate populations with horror scenarios of political, economic, social or cultural loss of importance.
The darker they paint the expected descent, the more convincingly their simple isolation strategies can be justified as the only effective rescue measures against complex threats.
Trade boycotts or tariffs are presented as effective shields for domestic jobs.
Or heavily fortified border walls serve as mighty defensive walls to prevent uncontrolled immigration.
Or the undermining of basic rights is declared to be a necessary evil to deal with the causes of fear.
Just like political, economic lobby groups abuse every opportunity of bad news in order to score points in parliaments and bureaucracies in Brussels or Berlin for their own interests.
The fact that the consistency (i.e. the logical connection between cause and effect) and incidence (what is the overall effect of action and political reaction) of argumentation and political countermeasures are often contradicting one another is often neglected all too quickly.
display
For example, when the economy is suddenly frozen in order to then settle the serious frost damage with aid packages worth billions of euros.
Or when first a social isolation strategy leaves people lonely, but then state-funded reactivation strategies and reparations are demanded.
The discussion of demographic development and structural change shows how grotesquely fearful individual parts of care are combined to create an overall threat.
Some recognize the lack of skilled workers as the mother of all future labor market problems.
Others fear that robots will take away people's work and that millions of employees will lose their jobs to automats and machines.
Viewed individually, neither a shortage of young talent nor robotization are trivial.
Taken together, however, they largely neutralize each other.
In the next few years, both will decline hand in hand: the labor supply of the population for demographic reasons and the labor demand of companies for structural reasons.
display
Which decline will occur more rapidly is more difficult to predict than many would like to believe.
What is certain, however, is that most of the claims predicted by the scare-mongers and disseminated by the lobbyists are simply over the top.
Neither the shortage of skilled workers nor the structural change from a labor-intensive to a robot-intensive mode of production will confirm the fears that they, both predicted separately, seem to arouse in some places.
Debt does not arise in a vacuum
Equally popular with fear mongers is the metaphor of the debt bomb that will one day explode.
The corona policy has now once again increased its explosive power.
Everything will implode from the now expected subsequent pressure waves.
On closer inspection, this fear also turns out to be unjustified.
The world economy is neither over-indebted, nor can it go bankrupt.
Because in the global dimension there is always a debt balance of zero.
Debt does not arise in a vacuum.
Every credit transaction requires two actors, a creditor and a debtor.
Claims of one person and obligations of the other cancel each other out to the point after the decimal point.
The amount of debt and credit are therefore completely identical worldwide.
They correspond to the top and bottom of the same medal.
However, debt causes distribution problems.
Namely, when states are increasingly deep in the chalk when it comes to private individuals.
Today's public debt is, in fact, tomorrow's taxes (to pay interest and principal).
While all children's children are affected and have to bear the public debt burdens of the past with their future taxes, some, but by no means all, will also inherit government bonds (i.e. claims and claims on the state) from their parents.
display
Thus, with a view to the treasury, some are born as net creditors and others as net debtors.
It is understandable that this worries some and is not rated as fair by others.
Full repayment guaranteed
However, the owners of the government bonds (i.e. the creditors of the states) run the risk that the states will not repay some or all of their debts.
It is now easy to understand why the Federal Ministry of Finance is still making money from getting into debt these days.
In the world of fear makers, Germany sells security.
It credibly guarantees its creditors full repayment of their claims, even for the very long term - with the greatest possible preservation of their real purchasing power.
The federal government charges a premium for this guarantee, which is only offered by a few other institutions worldwide.
In the absence of equivalent alternatives, it is accepted by security-oriented donors.
The negative yield on German government bonds exposes the nonsense of the doom scenarios.
It provides incorruptible evidence that the financial markets and their actors attribute to Germany the comparatively most stable and secure prospects of survival of almost all economies.
The creditors don't see anything in Germany that makes them existentially afraid - on the contrary and in contrast to a large number of other countries.
The economics of fear makers shows how much it pays to take a closer look at value judgments - in the name of the people and for the benefit of the people.
People who spread fear often have bad arguments.
Some instrumentalize the worries of others for their own purposes, be it to gain attention or to make a profit from it.
Where general interest is on the label, hazard warnings and crisis alerts are (too) often ultimately about individual interests.
From a macroeconomic perspective, one should always remember that it is the fear makers who create fear.
And not the realists.
Thomas Straubhaar is Professor of Economics, especially International Economic Relations, at the University of Hamburg