Economic Challenges: USA before the Midterms: How much damage is Trump causing to the German business model?
A few days before the US midterm elections, Rürup and Hüther, who is connected from Boston, discuss how divided the USA is. They also ask what this means for Germany's export model.
In this episode of Economic Challenges, Handelsblatt's chief economist Bert Rürup and Michael Hüther, director of the German Institute for Economic Research, discuss the economic and political situation in the United States ahead of the midterm elections. Hüther, calling in from Boston, reports on a country where biotech hubs like Boston thrive, yet the bottom half of the population suffers from inflation.
Only around 55% of Americans now earn more than their fathers, down from 90% previously. Hüther attributes Trump's support to strong party loyalty, with the number of competitive House seats dropping from about 100 in 1997 to 43 today. Rürup warns about Germany's export model being at risk as the US moves away from free trade, China becomes a competitor, and aging populations combine with increased defense spending.
"The traditional German business model is, in my view, gone," Rürup asserts. Hüther cites Audi's billion-dollar investment in the US as an isolated case, noting that direct German investments there have been falling. He calls for less bureaucracy and more risk capital, asserting that it costs little but could further develop Germany's standing.
Rürup remains cautious, anticipating tough years ahead. To hear more, listen to the latest episode of Economic Challenges, moderated by Bert Rürup and Michael Hüther, produced by Max Rex. Exclusive subscription offer available for all listeners of Handelsblatt Economic Challenges at https://www.handelsblatt.com/wirtschaftsabo.
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