Wolfgang Schäuble: Coronavirus to cause ‘structural’ economic change
The coronavirus pandemic will change the fundamental relationship between the state and the economy in Germany, Wolfgang Schäuble, the former finance minister and current president of the Bundestag, told the Tagesspiegel am Sonntag newspaper.
He also warned against the idea that government bailouts alone could save the economy, adding that “we will experience structural changes in the economy, society and politics.”
“There is this sense … at the moment of a growing feeling that we can solve every problem through unlimited state funds, and we will get the economy going again with a stimulus package,” he said. “The state cannot replace revenue in the long run.”
The longer the crisis continues, the less the state would be able to use classical means to combat the economic effects of the virus, said Schäuble.
Germany’s parliament earlier this month approved a €750 billion ($814 billion) aid package to protect the economy after the government ordered many non-essential businesses closed in a bid to stop the virus spreading.
The rescue package provides various-sized businesses as well as freelancers with a mix of loans and direct payouts.
In the Tagesspiegel interview, Schäuble advocated using the economic upheaval to tackle Germany’s growing wage disparity and address environmental issues.
He questioned if a widening gap between high earners and those on low incomes was unavoidable as general wealth increased. Addressing this would mean higher prices for consumers, but “one has to accept that.”
“I strongly do not suggest that we do away with the market principle of competition. But as part of a social market economy, we need to be in the situation to discuss stronger balancing and limiting mechanisms.”
Addressing environmental concerns
On the environment, Schäuble said he hoped there would not be a vehicle scrappage premium — used widely in Europe after 2008 to help stimulate the economy — to make it possible for industry to carry on as before.
Climate change, caused by people and above all Europeans, remains one of the biggest problems alongside the pandemic, said Schäuble.