Volume 72, Issue 2

From an economic point of view, there is a consensus that sufficient consumer protection cannot be achieved solely through effective competition policy aimed at limiting the abuse of market power to the detriment of consumers. However, the economic justification for an explicit policy of consumer protection is far less uniform. In the past, the standard approach to explain consumer behavior and to justify government consumer protection derived from information economics. However, the fact that consumer protection based solely on information economics has been repeatedly criticized in recent years points to the need for a broader theoretical foundation of consumer protection policy. Against this background, the article aims at broadening the perspective of an economically based consumer policy by resorting to institutional economic as well as behavioral economic considerations, which will be contrasted with each other in their respective insights.

Child poverty is a structural problem in Germany. More than one child in five is at risk of poverty. The introduction of a basic child benefit is therefore an effective measure to prevent poverty. To this end, it must cover the age-related needs of children, be effective above all at the lower end of the income scale in order to support in particular those children who grow up in poverty. It must also be transparent and unbureaucratic, making it is as easy as possible for families to claim this benefit.. Simulations show the effects of a basic child benefit in terms of poverty prevention and the labour market, as well as the costs involved. Studies provide evidence that parents use the money for their children and that cash benefits to combat poverty pay off for the state in the long run. In the interest of the next generation, the introduction of a basic child benefit should therefore be a priority.

German policy-makers currently discuss the introduction of a basic income for children (“Kindergrundsicherung”). While many details are still unclear, two main goals are pursued with this instrument: a simplification and unification of a number of different current transfers addressed at children, and an increase in the level of financial support. In this contribution, it is argued that simplification is a reasonable goal, but an increase in transfers is unlikely to yield significant positive economic effects. In particular, a large negative effect on labor market participation of parents is likely, with adverse effects on Germany’s potential output growth. Reasonable goals such as increasing social mobility would be better pursued with investments into the education system, rather than higher transfers. Finally, the fiscal scope of the federal budget will also be limited in the medium term, and therefore any proposal for an expensive expansion of the welfare state should be met with great caution at this time.

The opportunities of children and young people in social and cultural life in Germany depend to a large extent on the disposable income of their parents. Against this background the question arises: What can be done for poor families to improve opportunities for all children? In addition to a basic guarantee of a family-friendly social infrastructure, the guaranteed child allowance (Kindergrundsicherung) was proposed as a financial contribution to securing opportunities for children. After one year of unfruitful political debate about the funding of the guaranteed child allowance, the support for the project is shrinking.

An increasing contribution rate in social long-term care insurance is likely to be unavoidable in the future. To achieve the possibility of contribution rate stability, we consider the idea of a freezing model with partial degressive benefit dynamization. Using a projection model to calculate the potential future development of the contribution rate, we analyze the dampening effects of this proposal. In terms of contribution rate stability and sustainable financing in social long-term care insurance, the considered approach is able to make a significant contribution. Conclusively, it represents a compromise between subsidiarity and solidarity by transferring more responsibility to younger generations and continuing to guarantee social support to older generations.

Sovereign wealth funds (SWFs), with their massive assets, have been the subject of media attention and academic scrutiny for more than 20 years. The acquisition and exercise of power by SWFs should raise particular alarm where these are controlled by authoritarian regimes. This paper considers possible routes for SWFs to gain influence over Germany’s largest corporations, specifically the 40 members of the DAX equity index. It further examines whether any SWFs would have sufficient assets to be able to acquire blocking minorities, simple majorities, or qualified majority control to the extent possible in these 40 major corporations. The conclusion is that certain SWFs controlled by authoritarian regimes, particularly those of China and the UAE, have sufficient financial resources to enable the acquisition of significant power exercise potential through this route.