Is the party over, economist?

#11 – Present photography meets future economics

P: It's going downhill, economist!

E: With you?

P: With the economy in Germany. We're in the middle of a recession.

E: Ohh, the photographer has read the news.

P: Exactly. If there is less economic output for two quarters in a row, the definition of a recession is met.

E: You remember that well.

P: Is the big economic crisis coming now, economist?

E: Am I a prophet?

P: You economists always pretend to be.

E: No unacceptable generalizations, please.

P: Anyway, you economists are often making forecasts.

E: That are often wrong.

P: Someone is distancing himself from his guild, isn't he? Perhaps economists should leave the forecasts to artificial intelligence in the future.

E: Not a wrong thought, I guess.

P: Will economists then become unemployed?

E: Ask AI!

P: But I want to know what you think.

E: I think economists should, above all, explore and understand connections, relations, correlations; calculating forecasts can then be done by artificial intelligence.  

P: And what's the connection to the current recession?

E: In Germany, as is well known, energy prices rose first, followed by the rise of other prices, such as those for food. This is, you know that, called inflation. The task of our central bank, the European Central Bank in Frankfurt, is to keep the value of money relatively stable. The ECB, as the central bank is called in short, takes this order seriously. It had therefore raised the price at which it lends its money, the euro. This price is the so-called key interest rate. So the thing here is that interest rates go up. This means anything that requires borrowing money is less worthwhile. It’s just getting more expensive. Investing in new factories decreases. Fewer houses are built. The economy falters, and prices fall again. The central bank has done its job.

P: So the current economic slump is intentional.

E: So to speak. It is the price of ending inflation.

< silence> 

P: Perhaps the economic slump also has its good side.

E: What good side?

P: For the climate, for example. Less growth means less resource consumption, less CO2 emissions, so less climate change.

E: - 

P: Speechless? 

E: I don't know where to start.

P: Try a short version.

E: The point is that we have to decouple growth and resource consumption, including the resource "good climate". Contrary to popular belief, this is happening today in the European Union. CO2 emissions are falling while the economy is growing, at least most of the time.

P: How does that work?

E: By capping CO2 emissions by law. With even lower caps every year. With the allowed emissions divided into certificates and made tradable. This is what is happening in the European Union.

P: But CO2 emissions are increasing worldwide.

E: That's correct. I just wanted to clarify that the connection between growth and CO2 emissions is not compelling. When the rules of human coexistence are well set, obviously, people are smart enough to invent things that will bring further growth while at the same time being less harmful to the climate.

P: So it's not all bad.

E: It isn't. Quite a lot of things are pretty good, I would say.

P: I like your optimism, economist.

E: I like your pictures, photographer. At least the rarely optimistic ones.