Economic Policy Adjustments in Germany and in the USA amid Coronavirus-Pandemic and Corona-CrisisEconomic Policy Adjustments in Germany and in the USA amid Coronavirus-Pandemic and Corona-Crisis

How are Governments courageously dealing with the Coronavirus-Pandemic and the Corona-Crisis? Worldwide politicians are reacting very differently. Reactions to the pandemic have now become a war between optimism and pessimism. While some politicians realize how serious the current health crisis will be, others are busy procrastinating about an optimistic future. Early birds catch the worm and can navigate through the health crisis, taking leadership on flattening the pandemic spread of the Coronavirus. Optimists want to end the economic shutdown and go back to business as usual. Despite the facts: which responsibilities and consequences will a misinterpretation of the health crisis have on the economies? Healthy cows give more milk than sick cows.

Advertisements

Which solutions to current health and future economic shocks are being proposed by politicians? 

Globally, economies have embarked on unprecedented economic policy adjustments. The Federal Republic of Germany and The United States of America (USA) have passed their economic stimulus packages. Any huge economic policy adjustments seek to alleviate or eliminate the impact of the Coronavirus-Pandemics and the subsequent potential economic risks of the Corona-Crisis in Germany and the USA, although this crisis has a global scope.

Photo by Burst on Pexels.com

Noting the sequence as well as the simultaneousness of events is the first important issue. The global health shock such as the Coronavirus-Pandemic should first be contained using adequate health measures. Therefore, the total shutdown of the social and economic interactions is unavoidable to contain the spread of the COVID-19 disease. After health recovery has reached the necessary threshold, the politicians should start focusing on the economic shock or what we now call the Corona-Crisis. Pessimists of the economic shutdown are full of the optimism of opening the economy to economic and social activities, but they playing with pandemic fire. No genuine tradeoff between health risk and economic risk would maximize the welfare of the society while facing current facts.

Global policy versus national policy

The Coronavirus remains a global pandemic that demands a globally coordinated response of all economies. A pandemic never abides by the politicians’ timeline of decision-making. Neither does the Health crisis wait for dispute resolution about the superiority of global health policy and national health policies of nations. Instead, the pandemic would continue to ravage the world population, if poorly managed.

Photo by Stanley Ndua on Pexels.com

The exponential rise of the Coronavirus infections around the globe has revealed how vulnerable the health systems, even in most developed G7 countries, have become. The competition of systems has begun. Each nation evaluating the effectiveness of the political response of other nations. Does it help when the USA compares itself with China, Germany, Spain, and Italien? China’s health system is not the same as in the USA. The non-ignorable reality is that a nation cannot entirely combat global Coronavirus-Pandemic only with its national policies. Economies need to cooperate with the global community to find a common goal. Surely, globalization is an opportunity and a threat. Globalization requires a diversity of strategies to utilize the benefits and to curb the losses.

Advertisements

Federalism, Devolution of Power and Competition of Economic Systems

The high competition between different levels of government could interrupt the management of both the economic and health crisis. At the lower levels of governments, local authorities, starting with the mayors in cities in lower levels of local governments and governors in federal states are overpressured to find quick solutions to a quick-spreading pandemics. Higher levels of government, heads of states and government (presidents, prime ministers, monarchs) and the like, are overwhelmed by the events caused by the Corona-Pandemic due to belated attention to facts.

Who is responsible for implementing the policies? Facing the challenge to come up with solutions to the pandemic, the world leaders in all levels of government have been engaging in a war of blame and facts. Blaming each other of responsibility and communication problems reveal the unpreparedness.

Who should and must do what? Federal governments blaming state governments and vise versa. Healthy conflict is allowed to gauge ideas. All levels of government should harmoniously work together. Judicial functions, as well as legislative functions of government, should also be protected. By doing diligent deeds and public service, the pandemic should not harm the representation of the people.

Market Economy System Versus Social Market System

No doubt, the political leadership globally is at the crossroad between the tradeoff between health and economics. Both nations, Germany and The USA, have federal government systems with elected state governments in a power-sharing system. On the one side, the German economic system applies the social market order, which combines the allocative market system with a redistributive social system. Contrary to that, the market economy system is the American way of life. To capture the difference, answer the following questions. What happened to ObamaCare in the USA? What could have happened to ObamaCare in Europe? The differences in political and economic systems may explain the difference in the enacted economic policy adjustments.

  • Economic Policy Adjustments in Germany and in the USA amid Coronavirus-Pandemic and Corona-Crisis
    How are Governments courageously dealing with the Coronavirus-Pandemic and the Corona-Crisis? Worldwide politicians are reacting very differently. Reactions to the pandemic have now become a war between optimism and pessimism. While some politicians realize how serious the current health crisis will be, others are busy procrastinating about an optimistic future. Early birds catch the worm and can navigate through the health crisis, taking leadership on flattening the pandemic spread of the Coronavirus.
  • Health Economics and the Coronavirus: How do Pandemics contribute to Innovation?
    The Coronavirus has caused the Corona-Pandemic disease COVID-19 ravaging human health around the globe. But are we at the edge? Will health scientists find solutions to this pandemic? How can the Coronavirus Pandemic contribute to […]
  • Synergy between Health and Economics: Oil-Price-Crash or Corona-Crash
    Health shocks can also cause economic shocks (ceteris-paribus). The coronavirus pandemic is one of the health shocks that might unravel another global economic shock. Why is that the case? Fact number one, health is a basic human need. Consequently, the satisfaction the health needs requires human decision-making in all economies. Decision-makers face the challenge of managing the synergies between health and economics amid a health shock. How is the Scenario?
  • Corona-Crash 2020 and the impact on the global economy
    Monday 09.03.2020, will historically be remembered as the Global Corona Crash, a global health shock, that hit almost all economies worldwide. What will be the global macroeconomic and microeconomic impact of the Corona Pandemic? The financial markets reacted to […]
  • The magic square and hexagon of macroeconomic policy objectives
    What is the magic square, the magic hexagon? How are both related to economic policy goals and measures in macroeconomics? Firstly, each national economy has an economic order that pursues some quantitative as well as […]
  • Future of Sustainable Cooling Systems
    ABB has the patent (No. PCT/EP2013/064008) with the topic “Discharge of heat from the electrical switch house on the crane”. The inventors are Bo Edmundsson and Horst Schneider. In the electrical switch house (E-House) there are heat generating as well as sensitive components. In order to guarantee operational safety, the heat generated must be efficiently extracted from the electrical building.
  • What is econometrics?
    Econometrics is part of the economic as a science, which deals with the statistical (empirical) modelling of economic theories (hypotheses) in order to explain, confirm or disprove economic theory empirically.
  • The Technique of Scientific Writing in Economics
    Since I started training individual students from several economic faculties in German Universities about the technique of scientific writing, they asked me where they could find some inspiration to get an appropriate topic for their […]
  • Why diversity Programs Fail.
    Diversity in organizations can fail. Organizations need a clear strategic plan for implementation of diversity in their organizational environment using the following tools:
  • Our Credentials for Economic Consultancy
    Economics was my third-best option career after Aeronautical Engineering and Architecture respectively, but now I understand the reason why we need to share knowledge across disciplines.

1 thought on “Economic Policy Adjustments in Germany and in the USA amid Coronavirus-Pandemic and Corona-Crisis”

Comments are closed.