Lars Feld (left) and Jens Sudkomm discuss, among others, the EU Commission’s industrial policy proposals and joint European borrowing.
(Photo: Imago)
Berlin Federal Economics Minister Robert Habeck (Grenz) has declared 2023 the “Year of Industrial Policy”. In the latest release with the US subsidy program “Inflation Reduction Act” (IRA), which includes $369 billion in state aid for green industries, demands for state intervention in the economy are piling up in Europe. This week the EU Commission proposed tax cuts and a relaxation of state aid rules in response to the IRA.
But how much industrial policy should there be, and where is the limit? Two German economists have very different views. Lars Feld, president of the Freiburg Euken Institute and independent principal advisor to Finance Minister Christian Lindner (FDP), considers restraint necessary even in these times. “More industrial policy is harmful,” he says. Jens Sudkomm, professor of international economics in Düsseldorf, counters this, saying, “We will not go any further with textbook logic alone.”
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