The German economic model is facing headwinds: a loss of secure energy from Russia, renewed urgency to rebuild its defense capabilities, and a fragmenting global economy where not everyone plays by the rules. Can Germany implement an economic Zeitenwende to spark growth, and what role does Europe play in managing the new economic order? President of the Kiel Institute for World Economy Dr. Moritz Schularick joins The Zeitgeist to discuss the German economy, how German politics is impacting new investments, and what the new European Commission means for European competitiveness.



Host

Jeff Rathke, President, AGI

Guests

Peter Rashish, Vice President and Director, Geoeconomics Program, AGI

Moritz Schularick, President, Kiel Institute for the World Economy



Transcript

Jeff Rathke 

Well, I want to welcome all of our listeners to this episode of The Zeitgeist. We are speaking on September 19th with Moritz Schularick. Moritz, thanks for joining us.

Moritz Schularick 

Thanks for having me.

Jeff Rathke 

Moritz Schularick is one of Germany’s leading economists, and I have to say, reading through a list of items you have authored or co-authored in recent years, it covers basically all of the global challenges in a period of enormous structural reform and global change. Not just in the economy, but in, I think, the phrase you use is geoeconomics and the intersection of international affairs, security policy, and economic relations. So, we’re really delighted to have the opportunity to talk with you about geoeconomics and the German and European economic model. Peter Rashish is here with me, a senior fellow, vice president of AGI, and director of our Geoeconomics Program.

Peter Rashish 

Hello Jeff and Moritz.

Jeff Rathke 

And so, I wanted just to get us started with one thing that always nags me when I look at the German and European economic situation and in particular the debate around international challenges. There is a prevailing wisdom that Germany enjoyed cheap energy from Russia before February 24th, 2022. It doesn’t seem to be well backed up by data and analysis, but you’re more of an expert on this than I am. How do you see this?

Moritz Schularick

Right, Jeff, it’s true that with the war in Ukraine, gas prices in Europe spiked and in Germany, because the supplies from Russia were no longer coming in. But as far as gas is concerned, prices are now back essentially to where they were before the war. So that is no longer a concern. That doesn’t make it a less attractive narrative for many people who want to put the finger on Germany’s current problems. When you talk about electricity, we can talk for literally hours and hours, because the picture is not very clear. It has to do with a lot of things including deferential treatments for industry, depending on how energy intensive they are. It depends on what sorts of energy, what day. So getting something like a time series for the average industrial electricity price in Germany is more art than science at this stage. We have European prices, and they indeed show that the price differential relative to the U.S. and China has grown a little bit over the last few years. So there is a concern, but it’s—in my view—not the only not the only problem we’re facing.

Jeff Rathke 

Well, thanks for indulging my curiosity at the start. But we’ve invited you on because in addition to your many writings, you’re also the President of the Kiel Institute for the World Economy, a position you’ve held for just over a year, and one that plays an extremely important role—not only you personally, but the institution as well—in trying to inform the econom...