Wednesday , September 18 2019
Home / IFO Hans-Werner Sinn & Clemens Fuest / ifo Researchers Criticize the Equal Living Conditions Commission Approach

ifo Researchers Criticize the Equal Living Conditions Commission Approach

Summary:
The German federal government has appointed a high-ranking commission to reduce regional inequality. By the middle of the year, this commission is to draw up recommendations for action on how to ensure “equal living conditions” both in cities and in rural areas. In a recent essay, Marcel Thum and Joachim Ragnitz from the ifo Institute’s Dresden Branch criticize the Equal Living Conditions Commission approach. “In a democratic state, decisions of this magnitude with an impact on public expenditure cannot be left to a commission comprising representatives of the executive, the affected regions, and civil society. Experience teaches us that this leads to calls for impossibly huge spending,” explains Thum, Director of the Dresden

Topics:
Clemens Fuest considers the following as important:

This could be interesting, too:

Clemens Fuest writes ifo Institute: Economic Experts Fear Tariff War Will Shrink World Trade

Clemens Fuest writes ifo Economists’ Panel: Economists Do Not Expect East German States to Catch up Any Further

Clemens Fuest writes CESifo Newsletter 2019/04

Clemens Fuest writes Légère amélioration de l’indice ifo du climat économique mondial

The German federal government has appointed a high-ranking commission to reduce regional inequality. By the middle of the year, this commission is to draw up recommendations for action on how to ensure “equal living conditions” both in cities and in rural areas. In a recent essay, Marcel Thum and Joachim Ragnitz from the ifo Institute’s Dresden Branch criticize the Equal Living Conditions Commission approach.

“In a democratic state, decisions of this magnitude with an impact on public expenditure cannot be left to a commission comprising representatives of the executive, the affected regions, and civil society. Experience teaches us that this leads to calls for impossibly huge spending,” explains Thum, Director of the Dresden Branch. If policy focuses on establishing regional “equality,” this will tie up funds that could otherwise be spent on other public objectives. Ragnitz, Deputy Director of the Dresden Branch, added: “Ultimately, it’s up to the budget legislator to decide which services of general interest to provide, and how and where to provide them.”

The “equivalence of living conditions” is granted by the German constitution. However, since there is no consensus as to what regionally equivalent living conditions are, all attempts at measurement are doomed to failure. Fundamentally, any discussion of the equivalence of regional living conditions will focus on the region and not on the citizens living in a region, who tend to have widely differing opinions of the value of (public) services. After all, these consist of a bundle of different goods. While some set particular store by a city theater’s cultural offerings, others enjoy recreation in parks or nature reserves. It might be that less adequate provision of individual services is offset by excellent provision of other services. Since people have very different preferences and the exact preferences of people living in a region are unknown, it is difficult to determine whether citizens actually perceive an undersupply of certain services as a deficit. “Purely enumerative lists of public services or the absence thereof are fundamentally unsuitable for identifying below-average regional living conditions,” Thum says. Ragnitz adds, “Regional differences in service provision should be allowed if this corresponds to the preferences of the regional population.”

Article (in German)

  1. Ragnitz, Joachim and Marcel Thum, "Zur Debatte um die Gleichwertigkeit der Lebensverhältnisse: Was soll man tun und was nicht?", ifo Dresden berichtet 27 (02), 2019, 03–05 | Details | PDF Download

Publication (in German)

  1. "ifo Dresden berichtet 02/2019", ifo Institut, Dresden, 2019, 01–26 | Details | PDF Download

All Articles in this Issue:

  • Zur Debatte um die Gleichwertigkeit der Lebensverhältnisse: Was soll man tun und was nicht?
  • Soziale Ungleichheit in Deutschland – Wahrnehmung und Wirklichkeit
  • Vom Sinn einer geschlechterneutralen Erziehung und Bildung
  • Grundrentenpläne sind leistungsfeindlich
  • Anker der Demokratie geschwächt: Sachsen hat seit 1990 drei von vier Kommunalpolitikern verloren
Clemens Fuest
Clemens Fuest took over from Hans Werner Sinn as chairman of the IFO Institute in April 2016. He is professor at the Faculty of Economics of the University of Munich.

Leave a Reply

Your email address will not be published. Required fields are marked *