Marcel Fratzscher considers the role model of the Swabian housewife to be wrong and sexist.
(Photo: imago images/Kirchner Media)
Berlin Marcel Fratzscher is noticeably annoyed, downright annoyed. “The relationship between us Germans and money is characterized by fear, shame and guilt,” complains the economist. And he adds: In this country, saving is heroized and celebrated as a virtuous act. Going into debt, on the other hand, would be made into something disreputable. Both are, above all, a sober weighing up of the present and the future. Much more: Both belong together, without credit no savings.
In the course of his book it becomes clear: Fratzscher does not consider the deluded attitude of the Germans to saving to be a cute little peculiarity, but rather a tangible problem that blocks the way to an economically dynamic future.
“Money or Life” is the name of the new, fourth book by the economist, who heads the German Institute for Economic Research (DIW) in Berlin. It’s a pleasantly provocative statement, edgy and clear. One can agree with Fratzscher or work through his theses – either way, the reader will have fun. It’s quite possible that you’ll switch to your camp after reading it.
Fratzscher criticizes that saving in Germany has become increasingly politicized over the past few centuries. The caricature of the Swabian housewife – which he castigates as sexist – was wrongly chosen as a model.
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Never treat yourself to anything, always be on the safe side – and only buy something when you’ve saved the money for it? Not with Fratzscher! If saving is celebrated so much as a value in itself, the essential thing is lost sight of: namely, whether one saves sensibly – that is, with a good mix of risk and return. But that’s far too rarely the issue for the Germans, says Fratzscher. Hardly any people leave so much money sloping pointlessly in their accounts.
Marcel Fratzscher: Money or life.
Berlin publisher
Berlin 2022
256 pages
22 euros
The whole thing is also becoming a political problem, Fratzscher believes – after all, in Germany the private aversion to debt is transferred one-to-one to the state. The German debt brake would make it clear how shortened the view is: it is only interested in the amount of debt, but not in where the state invests its money. It’s like an analyst looking only at the liability side of a company’s balance sheet, but not the asset side.
No, Fratzscher does not consider national debt to be unproblematic per se. On the contrary: he sharply criticizes the German financial policy of the past few years. Despite a growing debt ratio, the state’s net assets have fallen by half a trillion euros in this millennium, he argues, citing the ailing infrastructure as the main problem.
This also makes it clear which size he wants to focus on – namely the difference between state assets and liabilities. With the latter, he also wants to see the obligations that the state enters into towards the citizens – for example in the form of pension promises. He calls for state investments in those areas that promise high returns – because they make the country fit for the future: climate protection, digitization, education.
Fratzscher’s book could be read as a reckoning with the conservative mainstream economists. On the other hand, Fratzscher’s views would probably be mainstream in many other countries. Just not in Germany, where the discourse is always a bit special. In this respect, Fratzscher brings some international flair to the debate with his book.
No right to positive interest
What also annoys Fratzscher is the constant grumbling of Germans against low interest rates and central bank policy. For him it is clear that it wasn’t the central banks that pulled the level of interest rates down, but that they could not act otherwise – given the macroeconomic climate.
Because people have accumulated a veritable flood of savings, but at the same time so little is being invested, the price of money has fallen. “The interest rates are ultimately the result of a market mechanism of demand and supply,” writes Fratzscher. A right to positive interest rates would not exist in a market economy.
For Fratzscher, the inequality of wealth and income is also partly to blame for the low interest rates: the wealthy would save a particularly large amount this way. And if the wealthy in a country are particularly wealthy, savings in the country are also particularly high. For Fratzscher, the way to a prosperous future also leads through tax and social reforms – with heavier taxation of assets and inheritances and a more balanced pension system.
Now, five weeks after the start of the war in Ukraine, reading a book that doesn’t mention the war feels strange – that’s how profound this event is. On the other hand, the economic debates that were initiated before the war have not all of a sudden become unimportant. Fratzscher’s book will remain relevant.
More: Money-Kondo-Method: Beginners can clean up their finances with these five tips.