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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. 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.

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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.

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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.

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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.

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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.
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  • 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.

Our Credentials for Economic Consultancy

Economic consultancy deals with both local and global issues that affect the decision-making of organization, individuals, interest groups, society, governments and other societal settings. The Aim of economic consultancy is to offer methodology of understanding, structuring and resolving those issues that affect the society from different angles. If you are a local company being affected by global issues e.g. international trade policy in your businesses export destinations, you would like to know which strategies to apply in order to improve the sustainability of your local business.

Economic Expert from the Freiburg School of Economics

Our economic expertise originates from the Albert-Ludwig-University of Freiburg im Breisgau in Germany. At the Faculty of Economics and Behavioral Sciences we graduated with Master (M. Sc.) and Bachelor (B. Sc.) of Science in Economics in 2015 and 2012 respectively.

“Risk Sharing and Mobile money: Economic Impact of Mobile Money Technology in Africa.”

James E. Njoroge (M. Sc. Economics) (2015) Master Thesis at the Institute for Economic Research, Department for International Policy (Supervisor: Prof. Dr. Günther G. Schulze)

Announcements (1) Basics of Economics (7) Behavioral Economics (5) Business Administration (2) Coaching (1) Cooling Systems (1) COVID19 Coronavirus (5) Diversity (1) Econometrics (3) Economic Blog (17) Economic Consultancy (4) Economic Policy (1) Economic Research (1) Economics (3) Economics of Pandemics (5) English (11) Events (1) Financial Accounting (1) Financial Markets (3) Freiburg im Breisgau (3) Global Crises (4) Globalization (8) Health Economics (5) Health risks (1) International Economics (5) Leadership and Management (2) Macroeconomics (7) Markets (5) Microeconomics (5) Personal Finance (1) Public Policy (1) Scientific Writing (2) Social Distancing (1) Technology (1)

Importance of Economics as Science

Economics is the interdisciplinary science of decision-making that aims to explain:

  • The decisions made by economic subjects,
  • Content (what) , process (how), context (where) of decisions made,
  • Interconnections to other fields of study

… etc.

So why is economics such an important science? Human beings (or any organism) are confronted with the need to make decisions and have choices about certain alternatives in their existence or life. Think about the needs you had today and the choices you had to make today. How satisfied were you with your decisions and outcomes? Economics formally describes such social events and settings within normative and positive theoretical models and verifies their real life applicability through empirical analysis.

My inspiration for Economics

Economics is my third field of inspiration after (Aeronautical) Engineering and Architecture, followed by Psychology and Sociology. I enjoy viewing issues from an interdisciplinary perspective and this is what makes Economics interesting. When you start learning economics, you may ask yourself; why some analysis seems to be common sense, but still has to be formalized in an economic model. Economics coexists with other Scientific fields. My encounter with economics started back in my home country, Kenya -where I did my primary and secondary education- before continuing with my Bachelor and Masters degree (full time studies abroad) in Germany. In a practical way, my Mother taught me household economics by endorsing me to manage finances at home at the age of about 10. This means that I learned about budget allocation and expenditure optimization at an early age. It’s a skill that young people should be taught at an early age. I thank my Grandmother for her unforgettable support, patience, faith and guidance throughout my studies in Germany. Without her endurance and sacrifice, I would not have had the opportunity to embark on this journey. We function as a team. My topic for the master thesis “mobile money and risk sharing: social-economic impact of mobile money adoption in Africa” was inspired by her. I wanted to find the roots of generosity, selflessness, charity (issues that shape the coexistence of people of different social environments).

More inspiration

The Economic Concept of Opportunity Costs

The economic concept of opportunity costs is the most fundamental issue of economics as a social science. It explains the decision-making and behavior of economic subjects. Economic subjects are private households, firms, and the government as a public household. While explaining the economic concept of opportunity costs, focus on the question: why do people choose to do, consume, or even spend time and resources on what they do? How do you make your choices and decisions?

Definition of Opportunity Costs

Opportunity costs are defined as costs incurred by a forgone alternative (opportunity). A foregone opportunity can either be the opportunity to incur costs, the opportunity to gain revenues, earn profits or cause losses. Economic subjects constantly get involved in decision-making processes, where choices have to be made. Take the following examples:

  • Example 1: non-monetary opportunity costs – the reason why a student would attend high school (an institution of education) is determined by the opportunity cost incurred if the student would not attend the school e.g. the impression of the parents about their daughter or son. Such opportunity cost are not measurable in monetary units.
  • Examples 2: mental accounting – whenever you act or choose not to act in certain manner, you are weighing alternative options and therefore intrinsically accounting for cost that would be incurred by alternative mode of behavior.
  • Example 3: relative costs – a job-seeker may prefer a job that pays less, but offers a better work-life balance, at the cost of a better paying job under worse work-life balance.
  • Example 4: Specialization and relative cost/benefit advantage – the opportunity cost of Germany producing autos are the cost incurred for not producing other goods that Germany prefers to import from other countries, e.g. Coffee from Kenya.
What are opportunity costs?
What are opportunity costs? (C) Evansonslabs

Literature

The following Literature will help you to expand the spectrum of knowledge in this Field:

  • Varian, H. R. (2020). Intermediate Microeconomics: A modern approach ; media update (Ninth Edition, International Student Edition). New York, London: WW Norton et Co.

Read more about Economics

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Democracy in Modernity

How is democracy coping with “modernity”? Is the modern global society the Democracy we want, and the World in which the future generations would like to be born into? The youth, “generation z”, is challenging the generation in power to consider their interest in the future of the environment. They will have to take over as the next generation transits to economic and political power.

Peace, Liberty and Justice on Earth or “Heaven”?

Will there be a better place to establish peace among a plural, cosmopolitan, and global society? In a society where neighborhoods comprise a multicultural coexistence of plural communities, constructive dialogue between members is crucial for the promotion of peace, inclusive justice, and respect for all people’s liberty (human rights). Any distortion and subversion of the ultimate goal to achieve the maximum security of peace, liberty, and justice for the global society are tyrannical and an injustice to the global society (both to the future and current generations). There is neither second earth nor a first “heaven” to flee to. It is the negligence of the environment that has caused the conflict between the generations as they debate about generational justice.

“#FridaysForFuture is a movement that began in August 2018, after 15 years old Greta Thunberg sat in front of the Swedish parliament every school[-]day for three weeks, to protest against the lack of action on the climate crisis. She posted what she was doing on Instagram and Twitter and it soon went viral.

On the 8th of September, Greta decided to continue striking every Friday until the Swedish policies provided a safe pathway well under 2-degree C, i.e. in line with the Paris agreement.” –

Source: FridayForFuture

The opportunity costs of the future generations

What kind of environment is the current generation willing to leave behind for the future generations and at whom’s costs are current liabilities being incurred and profits being earned? Those incurring higher costs may not be the payer of the cost, but the future generations. What does global society gain, if it lives at the very essential cost of future generations? How many measures of self-interest (if not selfishness), reciprocal behavior, and altruism is the optimal diet for the unlimited amount of wishes of the current generation?

Impeachment in USA: Should leaders take responsibility of their behavior towards the democracy?

Impeachment is the political process of removing an incumbent holder of a political office from the public office they hold. Leaders elected in their public office should represent the public in a responsible manner, but who really represents the will of the People in a democracy? Where are the checks and balances in the Arms of Government? Is it the Judiciary or the Executive or the Parliament. Are executive privileges above the constitution? Can the executive coerce the legislature (Senate and Congress) to opportunistic behavior and lower the political moral standards? Below is a RSS from CNN for a follow up.

“The President, Vice President and all civil Officers of the United States, shall be removed from Office on Impeachment for, and Conviction of, Treason, Bribery, or other high Crimes and Misdemeanors.

Article II – Executive Branch, Section 4 of the Consitution (Ratified 17.06.1788 and as ammended) of the United States of America (USA)

More inspiration

  • 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? Financial Markets adjust to Corona-Crisis
  • The Magic Square and Hexagon of Macroeconomic Policy Objectives
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  • 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.

Critical questions about Democracy

  • What is democracy at a global level?
  • Is democracy valued by the current and will it live up to the future generations?
  • How do the principles of democracy affect international policies?
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