The former economist Ulrike Malmendier remains critical of the German government’s crisis relief packages. Speaking to Spiegel, the professor of financial markets at Berkeley, she expressed dissatisfaction with the “shotgun approach” of these measures.
In her view, a far more sensible approach than offering a universal fuel discount would be to focus support on those who genuinely need the relief, perhaps targeting only the bottom 20% of the population. Malmendier argues that officials must finally improve the connection between various datasets, including income tax records, social assistance registries, and disbursement mechanisms, which she finds bafflingly low priority.
Had the Federal Ministry of Finance possessed and linked all the necessary data, Malmendier suggests they could have differentiated the fuel discount based on income and need-by using commuting data to determine travel patterns, or vehicle tax records to identify owners of oversized cars. While she concedes that a perfect system is unrealistic, she insists that granting the same subsidy to every citizen is senseless.
According to Malmendier, targeted interventions could save enormous sums of money. The former government consultant stated that if the government could precisely target aid and decide who benefits, it might be possible to manage without having to raise taxes whatsoever.
She also points to substantial untapped potential in bureaucracy and labor market regulations. If the governing coalition could better balance the existing tax system, discussions about increases or decreases might become unnecessary. For recipients of basic income or rent subsidies, she notes that current systems often lack work incentives. When someone receives government support and manages to earn even one Euro over the threshold, the state often reduces their earned income by a significant amount. This, Malmendier questions, makes people wonder why they should bother seeking a job. She believes this incentive problem must be addressed first, before any discussion about wealth redistribution can take place.
