As far as I know Germany is the only country that
has separate ministries for finance and economics. Described as ordoliberal tradition,
this theme has been in practice since the founding of Federal Republic in 1949.
Is this bifurcation an effective strategy in today’s geoeconomics power play?
As a German school of economic thought ordoliberal
tradition is expected to ensure free market by promoting competition
and preventing monopolies with a focus towards social market economy avoiding
concentration of finance and economics power within a coterie of people and enhancing distribution of wealth
across various social groups.
Let me look at the ministry of finance. The present
incumbent is Lars Klinbell of the SPD who overseas fiscal and monetary
policy, budgeting, taxes & debt, money–flow and the financial markets. Put it in other words earning &
spending.
On the other hand ministry of economic affairs
which is headed by Ms. Katherina Reiche from the CDU looks
after economic development, industrial & market policy, trade &
innovation, competitiveness, energy, climate and other assortments. The underlying current is growth & development.
Participating in international forum requires the
presence of both ministers who hail from different political parties whose
vision & mission differs substantially.
The strategy of separating power in terms of
different ministry for finance and economics has been at odds with the
consensus opinion held throughout by the globe. May be this is a German innovation! But today Germany
is in freefall in both theatres. German Exports to America is down 7.8%. If not
for the Euro as a common currency, assuming previous Deutschemark being legal tender
in Germany today, it would have fallen terribly in the financial market!
Now let me turn to USA. Instead of ministers America has Secretaries. Scott Bessent the
current Treasury Secretary handles both finance and economics. Howard Lutnick
is secretary of Trade. The state Department has an Under-secretary for economic
affairs. The present holder, Jacob Helberg in addition to his main task
supervises foreign economic policy related to growth, energy & technology.
The derivation is clear finance portfolio encompasses both finance and
economics whereas the trade & commerce is the forte of different
ministry.
In order to craft a winning strategy amid geoeconomics, the German Cabinet must immediately look into the matter of combining finance and economics under one roof!
Cheers!
Muthu Ashraff Rajulu
Strategy Adviser
Mobile: + 94 777 265677
E-mail: cosmicgems@gmail.com
Blog: Strategy Adviser
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