Prof. Dr. Sarah Necker

Bundestag und Bundesrat haben sich auf ein Sondervermögen zur Modernisierung der Infrastruktur von bis zu 500 Milliarden Euro für Investitionen geeinigt. Durch diese Grundgesetzänderung werden nicht nur die finanziellen Möglichkeiten des Bundes ausgeweitet, sondern auch die der Länder und Kommunen. Ein Gastbeitrag von Sarah Necker, Sebastian Blesse und Mario Hesse.

The future economic policy in Germany should once again rely more on market-based mechanisms and competition, as envisaged by the original social market economy concept. This is the recommendation of a report by the ifo Institute for the German Federal Ministry for Economic Affairs and Energy. “Although general approval of the social market economy is very high, there is little acceptance of market-based instruments to solve specific problems,” says Sarah Necker, Director of the Ludwig Erhard ifo Center for Social Market Economy in Fürth. “Education and training can help strengthen adaptability in times of change and boost confidence in market-based instruments.”

To avoid the costs of excessive bureaucracy in Germany, policymakers should rely more on market-based instruments when it comes to new legislation. “Market-based approaches usually entail less bureaucracy, as they are based on general rules and require less state control and monitoring,” says Sarah Necker, Director of the Ludwig Erhard ifo Center for Social Market Economy in Fürth. One example in the area of climate protection is CO₂ pricing. It requires far fewer administrative resources than detailed regulation such as the EU taxonomy for sustainable finance.

The ifo Institute advocates reforming how government funding is allocated to municipalities. “Complex bureaucratic requirements often pose major problems, in particular for small municipalities. The complexity runs through the entire funding process, from the search for information and the great time required for applications, to the documentation obligations during and after the funding period. It would make more sense to replace funding programs more and more with regular lump-sum payments to the municipalities,” says Sarah Necker, Director of the ifo Center for Social Market Economy in Fürth. 

The 9-euro ticket has reduced car traffic in Germany by 4 to 5%. However, trains were delayed 30% more often due to higher capacity utilization, as shown by a study conducted by the ifo Institute, Friedrich-Alexander-Universität Erlangen-Nürnberg (FAU) and the University of Salzburg (PLUS). “The 9-euro ticket cost the federal government EUR 2.5 billion and only slightly reduced car traffic, making it an expensive and inefficient climate protection measure,” says Sarah Necker, Director of the Ludwig Erhard ifo Center for Social Market Economy in Fürth.

A majority of the German population wants Germany to play a pioneering role in climate action. A total of 55 percent are in favor of this, while 33 percent are against such a role. A further 12 percent do not want to say one way or the other. But support for CO₂ prices on carbon intensive activities is weak. These are findings of a representative survey conducted by the Ludwig Erhard ifo Center for Social Market Economy in Fürth in cooperation with the Nuremberg Institute for Market Decisions (NIM).

The “climate money” planned by Germany’s traffic light government has met with little approval among the country’s population. This is shown by a representative survey conducted by the Ludwig Erhard ifo Center for Social Market Economy and Institutional Economics in cooperation with the Nuremberg Institute for Market Decisions (NIM).

Tax relief for home maintenance services is not an effective means of tackling tax evasion. In Germany, it would cost the government a great deal of money while only marginally improving tax compliance. This is the finding of a survey of just under 2,000 private households in Germany by the Ludwig Erhard ifo Center for Social Market Economy and Institutional Economics. “In total, 55 percent of respondents say that they would request an official invoice even if this didn’t entitle them to tax relief,” says the Director of the Ludwig Erhard ifo Center for Social Market Economy and Institutional Economics, Sarah Necker. 

Around one-half of Germans feel that the reality in Germany no longer matches the basic ideas underpinning the social market economy. This is the result of a survey conducted by the ifo Institute. The survey examined whether or not respondents’ attitudes toward the social market economy changed after receiving information about the basic ideas behind it. “Among those who felt our information correctly represented reality, acceptance of the social market economy increased slightly. Among those who disagreed with our description of the economic order, the already low level of approval declined. Overall, support for the social market economy remained virtually unchanged,” says Prof. Sarah Necker, Director of the Ludwig Erhard ifo Center for Social Market Economy and Institutional Economics.

The majority of Germans associate the social market economy with social rather than market aspects. This is according to a representative survey of 2,000 citizens conducted by the Ludwig Erhard ifo Center for Social Market Economy and Institutional Economics in Fürth and the ifo Center for Public Finance and Political Economy. While 49 percent of respondents associate the term with fairness, distribution, and a social safety net, 34 percent identify it with market processes. Just under one-quarter of those surveyed associate the social market economy with both social and market aspects.

Three out of four Germans have a positive take on the social market economy. This is according to a representative survey of 2,000 citizens conducted by the ifo Institute. The social market economy received an average score of 6.8 out of a possible 10 points.

Sarah Necker has been appointed Director of the new Ludwig Erhard ifo Research Center for Social Market Economy and Institutional Economics, a branch of the ifo Institute which will be located in Fürth. The 40-year-old economist will begin her duties on June 3, 2022. The new ifo Center is concerned with further developing the guiding principle of the social market economy. The appointment is linked to a professorship in economics at Friedrich-Alexander University of Erlangen-Nuremberg (FAU).