Abitur NRW Sozialwissenschaften 2022 · GK · Haupttermin · bilingual Englisch

Christine Lagarde

Monetary policy during an atypical recovery [...]

The economy is back from the brink, but not completely out of the woods. After a highly

unusual recession, the euro area is going through a highly atypical recovery.

[...]

In conventional business cycles, the depth of the slump normally determines the pace of the

5 recovery. After exceptionally deep recessions, both demand and supply are often impaired

for many years. [...]

But during the pandemic, though GDP saw its steepest collapse on record, the overall economy

has reopened largely intact. We now expect GDP to exceed its pre-pandemic level by the end

of this year – three quarters earlier than we forecast last December – and it should come close

10 to reconnecting with its pre-crisis trend in 2023. From its trough, the recovery in GDP is the

steepest in the euro area since 1975.

This outcome is largely attributable to the combined response of monetary and fiscal policy,

which has preserved both demand and supply. For instance, real labour income fell by 3.6%

in 2020, but household real disposable income dropped by only 0.2%, because government

15 transfers filled the gap. This is in stark contrast with the sovereign debt crisis 1, when disposable

income fell by 2% year-on-year.

The atypical nature of the recovery is creating frictions in the economy, which can produce

opposing effects on growth and inflation.

[...]

20 Higher inflation today is largely the result of two exceptional effects.

First, inflation collapsed last year when lockdowns were imposed, which is creating strong

base effects as activity recovers. Half of total inflation in the euro area today is due to energy

prices, which are making up the lost ground from 2020. Base effects from last year’s German

VAT rate cut 2 and the unusual timing of sales periods are also playing a role.

25 In fact, the low inflation rate last year and the high inflation rate this year equal, on average,

the inflation rate observed in 2019 before the pandemic. So the price level now is roughly the

same as if inflation had remained stable at its pre-pandemic level.

Second, imbalances between demand and supply in some sectors are pushing prices up.

Goods inflation rose to 2.6% in August, well above its historical average of 0.6% as – in

30 addition to base effects – global supply chain disruptions met a sharp recovery in demand

for durable goods. Consumption of durables is already 1% above its pre-crisis trend, while

shipping costs are around nine times higher today than in June last year.

Services inflation has also been rising – to 1.1% in August – and it would have reached 2%

using the consumption weights of last year, slightly above its historical average. This is also

35 largely the result of demand returning to the sectors hardest hit by the lockdowns. Inflation

in high-contact services accounts for virtually all of the rise we are seeing in services.

Once these pandemic-driven effects pass, we expect inflation to decline.

Base effects should drop out of the year-on-year calculation early next year, although we are

seeing further increases in oil and gas prices.

40 It is harder to predict how long supply chain disruptions will last, but their ultimate impact

on inflation will depend on how persistent they are and whether they feed through into higher

than anticipated wage rises. [...]

Monetary policy should normally “look through” temporary supply-driven inflation, so long

as inflation expectations remain anchored. Indeed, we are monitoring developments carefully

45 but, for now, we see no signs that this increase in inflation is becoming broad-based across

the economy. A “trimmed mean” of inflation – which removes the items with the highest

and lowest inflation rates – stood at 2.1% in August. Furthermore, wage developments so

far show no signs of significant second-round effects 3.

[...]

50 In terms of supporting demand, our monetary policy will continue to provide the conditions

necessary to fuel the recovery. Indeed, our forward guidance has already led to a better

alignment of rate expectations with our new inflation target, while helping to strengthen

inflation expectations, which lowers real interest rates. We expect to see further progress

toward an even tighter alignment between the expected time of lift-off for our policy rates

55 and the most likely inflation outlook as markets continue to absorb the rationale and key

purpose of our forward guidance.

[...]

For our part, monetary policy is committed to preserving favourable financing conditions for

all sectors of the economy over the pandemic period. And once the pandemic emergency

60 comes to an end – which is drawing closer – our forward guidance on rates as well as purchases

under the asset purchase programme will ensure that monetary policy remains supportive of

the timely attainment of our medium-term 2% target.

[...]

1 sovereign debt crisis ( also: European debt crisis): Starting in late 2009, several eurozone member states were unable to repay or refinance their government debt, which triggered a multi-year economic crisis.

2 VAT rates (value added tax rates) were temporarily lowered by the German government to boost demand during the first phase of the pandemic.

3 second-round effects: Increasing prices as an effect of other increased prices. For example, if energy becomes more expensive, products requiring a lot of energy might also go up in price.

About the author: Christine Lagarde, born 1956, is a French politician and lawyer who has been the President of the European Central Bank (ECB) since November 2019.

About the source: The ECB Forum on Central Banking is an annual event organised by the European Central Bank that brings together central bank governors, academics, financial market representatives, journalists and others to exchange views on current policy issues. Its 2021 title was “Beyond the pandemic: the future of monetary policy”.

1. Describe the four phases of the business cycle and outline how each phase affects employment, inflation and economic growth. (24 Punkte)

Christine Lagarde

Monetary policy during an atypical recovery [...]

The economy is back from the brink, but not completely out of the woods. After a highly

unusual recession, the euro area is going through a highly atypical recovery.

[...]

In conventional business cycles, the depth of the slump normally determines the pace of the

5 recovery. After exceptionally deep recessions, both demand and supply are often impaired

for many years. [...]

But during the pandemic, though GDP saw its steepest collapse on record, the overall economy

has reopened largely intact. We now expect GDP to exceed its pre-pandemic level by the end

of this year – three quarters earlier than we forecast last December – and it should come close

10 to reconnecting with its pre-crisis trend in 2023. From its trough, the recovery in GDP is the

steepest in the euro area since 1975.

This outcome is largely attributable to the combined response of monetary and fiscal policy,

which has preserved both demand and supply. For instance, real labour income fell by 3.6%

in 2020, but household real disposable income dropped by only 0.2%, because government

15 transfers filled the gap. This is in stark contrast with the sovereign debt crisis 1, when disposable

income fell by 2% year-on-year.

The atypical nature of the recovery is creating frictions in the economy, which can produce

opposing effects on growth and inflation.

[...]

20 Higher inflation today is largely the result of two exceptional effects.

First, inflation collapsed last year when lockdowns were imposed, which is creating strong

base effects as activity recovers. Half of total inflation in the euro area today is due to energy

prices, which are making up the lost ground from 2020. Base effects from last year’s German

VAT rate cut 2 and the unusual timing of sales periods are also playing a role.

25 In fact, the low inflation rate last year and the high inflation rate this year equal, on average,

the inflation rate observed in 2019 before the pandemic. So the price level now is roughly the

same as if inflation had remained stable at its pre-pandemic level.

Second, imbalances between demand and supply in some sectors are pushing prices up.

Goods inflation rose to 2.6% in August, well above its historical average of 0.6% as – in

30 addition to base effects – global supply chain disruptions met a sharp recovery in demand

for durable goods. Consumption of durables is already 1% above its pre-crisis trend, while

shipping costs are around nine times higher today than in June last year.

Services inflation has also been rising – to 1.1% in August – and it would have reached 2%

using the consumption weights of last year, slightly above its historical average. This is also

35 largely the result of demand returning to the sectors hardest hit by the lockdowns. Inflation

in high-contact services accounts for virtually all of the rise we are seeing in services.

Once these pandemic-driven effects pass, we expect inflation to decline.

Base effects should drop out of the year-on-year calculation early next year, although we are

seeing further increases in oil and gas prices.

40 It is harder to predict how long supply chain disruptions will last, but their ultimate impact

on inflation will depend on how persistent they are and whether they feed through into higher

than anticipated wage rises. [...]

Monetary policy should normally “look through” temporary supply-driven inflation, so long

as inflation expectations remain anchored. Indeed, we are monitoring developments carefully

45 but, for now, we see no signs that this increase in inflation is becoming broad-based across

the economy. A “trimmed mean” of inflation – which removes the items with the highest

and lowest inflation rates – stood at 2.1% in August. Furthermore, wage developments so

far show no signs of significant second-round effects 3.

[...]

50 In terms of supporting demand, our monetary policy will continue to provide the conditions

necessary to fuel the recovery. Indeed, our forward guidance has already led to a better

alignment of rate expectations with our new inflation target, while helping to strengthen

inflation expectations, which lowers real interest rates. We expect to see further progress

toward an even tighter alignment between the expected time of lift-off for our policy rates

55 and the most likely inflation outlook as markets continue to absorb the rationale and key

purpose of our forward guidance.

[...]

For our part, monetary policy is committed to preserving favourable financing conditions for

all sectors of the economy over the pandemic period. And once the pandemic emergency

60 comes to an end – which is drawing closer – our forward guidance on rates as well as purchases

under the asset purchase programme will ensure that monetary policy remains supportive of

the timely attainment of our medium-term 2% target.

[...]

1 sovereign debt crisis ( also: European debt crisis): Starting in late 2009, several eurozone member states were unable to repay or refinance their government debt, which triggered a multi-year economic crisis.

2 VAT rates (value added tax rates) were temporarily lowered by the German government to boost demand during the first phase of the pandemic.

3 second-round effects: Increasing prices as an effect of other increased prices. For example, if energy becomes more expensive, products requiring a lot of energy might also go up in price.

About the author: Christine Lagarde, born 1956, is a French politician and lawyer who has been the President of the European Central Bank (ECB) since November 2019.

About the source: The ECB Forum on Central Banking is an annual event organised by the European Central Bank that brings together central bank governors, academics, financial market representatives, journalists and others to exchange views on current policy issues. Its 2021 title was “Beyond the pandemic: the future of monetary policy”.

a)

Analyse the speaker's stance on the economic situation in the European Union during the Covid-19 pandemic. (30 Punkte)

b)

Explain, with reference to two passages from the text, in what way the speaker's position can be linked to economic concepts. (16 Punkte)

Christine Lagarde

Monetary policy during an atypical recovery [...]

The economy is back from the brink, but not completely out of the woods. After a highly

unusual recession, the euro area is going through a highly atypical recovery.

[...]

In conventional business cycles, the depth of the slump normally determines the pace of the

5 recovery. After exceptionally deep recessions, both demand and supply are often impaired

for many years. [...]

But during the pandemic, though GDP saw its steepest collapse on record, the overall economy

has reopened largely intact. We now expect GDP to exceed its pre-pandemic level by the end

of this year – three quarters earlier than we forecast last December – and it should come close

10 to reconnecting with its pre-crisis trend in 2023. From its trough, the recovery in GDP is the

steepest in the euro area since 1975.

This outcome is largely attributable to the combined response of monetary and fiscal policy,

which has preserved both demand and supply. For instance, real labour income fell by 3.6%

in 2020, but household real disposable income dropped by only 0.2%, because government

15 transfers filled the gap. This is in stark contrast with the sovereign debt crisis 1, when disposable

income fell by 2% year-on-year.

The atypical nature of the recovery is creating frictions in the economy, which can produce

opposing effects on growth and inflation.

[...]

20 Higher inflation today is largely the result of two exceptional effects.

First, inflation collapsed last year when lockdowns were imposed, which is creating strong

base effects as activity recovers. Half of total inflation in the euro area today is due to energy

prices, which are making up the lost ground from 2020. Base effects from last year’s German

VAT rate cut 2 and the unusual timing of sales periods are also playing a role.

25 In fact, the low inflation rate last year and the high inflation rate this year equal, on average,

the inflation rate observed in 2019 before the pandemic. So the price level now is roughly the

same as if inflation had remained stable at its pre-pandemic level.

Second, imbalances between demand and supply in some sectors are pushing prices up.

Goods inflation rose to 2.6% in August, well above its historical average of 0.6% as – in

30 addition to base effects – global supply chain disruptions met a sharp recovery in demand

for durable goods. Consumption of durables is already 1% above its pre-crisis trend, while

shipping costs are around nine times higher today than in June last year.

Services inflation has also been rising – to 1.1% in August – and it would have reached 2%

using the consumption weights of last year, slightly above its historical average. This is also

35 largely the result of demand returning to the sectors hardest hit by the lockdowns. Inflation

in high-contact services accounts for virtually all of the rise we are seeing in services.

Once these pandemic-driven effects pass, we expect inflation to decline.

Base effects should drop out of the year-on-year calculation early next year, although we are

seeing further increases in oil and gas prices.

40 It is harder to predict how long supply chain disruptions will last, but their ultimate impact

on inflation will depend on how persistent they are and whether they feed through into higher

than anticipated wage rises. [...]

Monetary policy should normally “look through” temporary supply-driven inflation, so long

as inflation expectations remain anchored. Indeed, we are monitoring developments carefully

45 but, for now, we see no signs that this increase in inflation is becoming broad-based across

the economy. A “trimmed mean” of inflation – which removes the items with the highest

and lowest inflation rates – stood at 2.1% in August. Furthermore, wage developments so

far show no signs of significant second-round effects 3.

[...]

50 In terms of supporting demand, our monetary policy will continue to provide the conditions

necessary to fuel the recovery. Indeed, our forward guidance has already led to a better

alignment of rate expectations with our new inflation target, while helping to strengthen

inflation expectations, which lowers real interest rates. We expect to see further progress

toward an even tighter alignment between the expected time of lift-off for our policy rates

55 and the most likely inflation outlook as markets continue to absorb the rationale and key

purpose of our forward guidance.

[...]

For our part, monetary policy is committed to preserving favourable financing conditions for

all sectors of the economy over the pandemic period. And once the pandemic emergency

60 comes to an end – which is drawing closer – our forward guidance on rates as well as purchases

under the asset purchase programme will ensure that monetary policy remains supportive of

the timely attainment of our medium-term 2% target.

[...]

1 sovereign debt crisis ( also: European debt crisis): Starting in late 2009, several eurozone member states were unable to repay or refinance their government debt, which triggered a multi-year economic crisis.

2 VAT rates (value added tax rates) were temporarily lowered by the German government to boost demand during the first phase of the pandemic.

3 second-round effects: Increasing prices as an effect of other increased prices. For example, if energy becomes more expensive, products requiring a lot of energy might also go up in price.

About the author: Christine Lagarde, born 1956, is a French politician and lawyer who has been the President of the European Central Bank (ECB) since November 2019.

About the source: The ECB Forum on Central Banking is an annual event organised by the European Central Bank that brings together central bank governors, academics, financial market representatives, journalists and others to exchange views on current policy issues. Its 2021 title was “Beyond the pandemic: the future of monetary policy”.

Draft a speech in which you respond to Lagarde in your role as a participant at the ECB Forum on Central Banking. Take up two of her statements on economic growth and inflation and put forward one monetary policy proposal that fits the "atypical nature of the recovery" (l. 17). (30 Punkte)

Vivien Schmidt

What’s next for European integration?

[...]

Already in the decade preceding the Covid-19 pandemic, the EU’s economic governance

suffered from a range of problems. By mandating austerity and structural reform policies,

the Eurozone came to be characterised by ‘governing by rules and ruling by numbers,’ with

the wrong rules and numbers, which didn’t work. This led to what I have called the EU’s

5 ‘crisis of legitimacy,’ in which doubling down 1 on the procedural rules led to poor economic

performance and increasingly toxic politics.

Fortunately, the EU’s pandemic response represents a new beginning. Most notable among

initiatives are the European Central Bank’s Pandemic Emergency Purchasing Program (PEPP)

and the European Commission’s Next Generation EU, focused on investing in the green

10 transition and the digital transformation while addressing social inequity, accompanied by

the Resilience 2 and Recovery Fund (RRF) to provide investment funds for countries in need.

All of this constitutes a massive achievement, and a major break with the past. But to ensure

a brighter future for the European economy, much more needs to be done. New ideas call for

an enhanced role for ‘state’ actors — EU and national — as public entrepreneurs to promote

15 growth and provide investments for greening the economy, digitalising society, and ensuring

greater social equity.

[...]

The EU has made a great leap forward through the Next Generation EU and the temporary

Resilience and Recovery Fund (RRF). But this needs to be reinforced through the development

20 of permanent EU level debt 3 that could provide investment funds for all member-states on a

regular basis. Think of a permanent RRF as an EU wealth fund, akin to national sovereign

wealth funds, which issues debt on the global markets to use to invest through grants to the

member-states in education, training, and income support; in greening the economy and

digitally connecting people; as well as in big physical infrastructure projects.

25 [...]

The EU faces several possible obstacles and stumbling blocks with regard to implementing

some of these new ideas. Political divisions remain in the EU Council, in particular between

the so-called Frugal Four Plus 4, who insisted that the RRF be temporary, and had opposed any

grants at all. If the RRF fails to deliver on growth or if the extra investment is not used wisely

30 in the main countries targeted (Italy and Spain), enthusiasm will wane, and the likelihood of

creating a permanent fund will diminish. In addition, the austerity hawks 5 are likely to be back,

in particular once the pandemic is over and things get back to some kind of new normal.

[...]

How do we make any of the ideas just discussed possible, given the existing political

35 differences among member-states along with the institutional and legal obstacles? I can’t see

the member-states moving forward in lockstep 6, toward any kind of ‘United States of Europe,’

a deeply integrated ‘real social and economic union,’ or even toward a ‘hard core’ around the

Eurozone.

Rather, we need to be prepared to rethink integration as more differentiated. I tend to think

40 of such differentiation in terms of a ‘soft core’ Europe, made up of overlapping clusters of

European countries participating in the EU’s many different policy communities, all

administered by a single set of EU institutions, with voice for all member-states in all

communities, but with vote only in those in which they actively participate.

[...]

45 The Eurozone is only one of such many policy communities, and even it would need to allow

for further differentiation. For example, we could envision that were some member states

to block a permanent fund, member states willing to move forward could use enhanced

cooperation to pledge their own resources to an EU budget. Their representatives would then

be the only ones to vote on the budget and its use, although everyone could discuss it (no

50 separate Eurozone Parliament, then, but separate voting for MEPs in a deeper budgetary

union).

This said, there can be no differentiation in the EU’s core commitments to the rule of law.

And the EU needs to do more to reinforce citizen representation and participation. For the

Eurozone in particular, this at the very least demands more involvement of the European

55 Parliament through the co-decision method 7 in Eurozone decision-making and of national

parliaments in the European Semester 8. The ECB would also benefit from enhancing its

accountability and transparency while democratising the process. One such way could be to

increase ECB accountability to the European Parliament, say, through formal requirements

for ECB-EP dialogues.

60 Turning Eurozone treaties into ordinary legislation, moreover, would help break the stalemate

that makes it impossible to change such legislation (given the unanimity rule), and ensure that

they would be subject to political debate and possible alteration. But the European Parliament

would also need to find more ways to bring national parliaments into EU level decision-

making. And the EU as a whole must devise new means of encouraging citizen participation

65 at all levels.

1 to double down on sth.: to continue to do sth. with even more determination or effort

2 resilience: ability to recover and return to original form or strength

3 permanent EU level debt: (in etwa) dauerhafte Möglichkeit der Schuldenaufnahme auf EU-Ebene

4 the Frugal Four Plus („die Sparsamen Vier Plus“): Austria, Denmark, the Netherlands, Sweden “plus” Finland. These countries have informally cooperated in advocating limited government spending.

5 hawk, here: a supporter of rigorous action

6 in lockstep: in complete agreement or conformity

7 co-decision method: officially known as the “ordinary legislative procedure”

8 European Semester: annual cycle of economic and fiscal policy coordination between EU institutions and member states

About the author:

Vivien Schmidt, born 1949, is Professor of International Relations at the Pardee School of Global Studies in Boston. She is the founding director of the Center for the Study of Europe at Boston University.

About the source:

International Politics and Society (IPS) is an online journal published by the Friedrich-Ebert-Stiftung, a political foundation associated with the SPD.

Topic: Europe in a pandemic – Do we need new approaches to European integration and government debt?

1.

Describe three key differences that distinguish two conceptions of European integration from each other. (24 Punkte)

2. a)

Analyse the author's stance on European integration against the background of the Covid-19 pandemic. (30 Punkte)

2. b)

Using two passages from the text, explain how the author's position relates to the two conceptions you described in assignment 1. (16 Punkte)

Vivien Schmidt

What’s next for European integration?

[...]

Already in the decade preceding the Covid-19 pandemic, the EU’s economic governance

suffered from a range of problems. By mandating austerity and structural reform policies,

the Eurozone came to be characterised by ‘governing by rules and ruling by numbers,’ with

the wrong rules and numbers, which didn’t work. This led to what I have called the EU’s

5 ‘crisis of legitimacy,’ in which doubling down 1 on the procedural rules led to poor economic

performance and increasingly toxic politics.

Fortunately, the EU’s pandemic response represents a new beginning. Most notable among

initiatives are the European Central Bank’s Pandemic Emergency Purchasing Program (PEPP)

and the European Commission’s Next Generation EU, focused on investing in the green

10 transition and the digital transformation while addressing social inequity, accompanied by

the Resilience 2 and Recovery Fund (RRF) to provide investment funds for countries in need.

All of this constitutes a massive achievement, and a major break with the past. But to ensure

a brighter future for the European economy, much more needs to be done. New ideas call for

an enhanced role for ‘state’ actors — EU and national — as public entrepreneurs to promote

15 growth and provide investments for greening the economy, digitalising society, and ensuring

greater social equity.

[...]

The EU has made a great leap forward through the Next Generation EU and the temporary

Resilience and Recovery Fund (RRF). But this needs to be reinforced through the development

20 of permanent EU level debt 3 that could provide investment funds for all member-states on a

regular basis. Think of a permanent RRF as an EU wealth fund, akin to national sovereign

wealth funds, which issues debt on the global markets to use to invest through grants to the

member-states in education, training, and income support; in greening the economy and

digitally connecting people; as well as in big physical infrastructure projects.

25 [...]

The EU faces several possible obstacles and stumbling blocks with regard to implementing

some of these new ideas. Political divisions remain in the EU Council, in particular between

the so-called Frugal Four Plus 4, who insisted that the RRF be temporary, and had opposed any

grants at all. If the RRF fails to deliver on growth or if the extra investment is not used wisely

30 in the main countries targeted (Italy and Spain), enthusiasm will wane, and the likelihood of

creating a permanent fund will diminish. In addition, the austerity hawks 5 are likely to be back,

in particular once the pandemic is over and things get back to some kind of new normal.

[...]

How do we make any of the ideas just discussed possible, given the existing political

35 differences among member-states along with the institutional and legal obstacles? I can’t see

the member-states moving forward in lockstep 6, toward any kind of ‘United States of Europe,’

a deeply integrated ‘real social and economic union,’ or even toward a ‘hard core’ around the

Eurozone.

Rather, we need to be prepared to rethink integration as more differentiated. I tend to think

40 of such differentiation in terms of a ‘soft core’ Europe, made up of overlapping clusters of

European countries participating in the EU’s many different policy communities, all

administered by a single set of EU institutions, with voice for all member-states in all

communities, but with vote only in those in which they actively participate.

[...]

45 The Eurozone is only one of such many policy communities, and even it would need to allow

for further differentiation. For example, we could envision that were some member states

to block a permanent fund, member states willing to move forward could use enhanced

cooperation to pledge their own resources to an EU budget. Their representatives would then

be the only ones to vote on the budget and its use, although everyone could discuss it (no

50 separate Eurozone Parliament, then, but separate voting for MEPs in a deeper budgetary

union).

This said, there can be no differentiation in the EU’s core commitments to the rule of law.

And the EU needs to do more to reinforce citizen representation and participation. For the

Eurozone in particular, this at the very least demands more involvement of the European

55 Parliament through the co-decision method 7 in Eurozone decision-making and of national

parliaments in the European Semester 8. The ECB would also benefit from enhancing its

accountability and transparency while democratising the process. One such way could be to

increase ECB accountability to the European Parliament, say, through formal requirements

for ECB-EP dialogues.

60 Turning Eurozone treaties into ordinary legislation, moreover, would help break the stalemate

that makes it impossible to change such legislation (given the unanimity rule), and ensure that

they would be subject to political debate and possible alteration. But the European Parliament

would also need to find more ways to bring national parliaments into EU level decision-

making. And the EU as a whole must devise new means of encouraging citizen participation

65 at all levels.

1 to double down on sth.: to continue to do sth. with even more determination or effort

2 resilience: ability to recover and return to original form or strength

3 permanent EU level debt: (in etwa) dauerhafte Möglichkeit der Schuldenaufnahme auf EU-Ebene

4 the Frugal Four Plus („die Sparsamen Vier Plus“): Austria, Denmark, the Netherlands, Sweden “plus” Finland. These countries have informally cooperated in advocating limited government spending.

5 hawk, here: a supporter of rigorous action

6 in lockstep: in complete agreement or conformity

7 co-decision method: officially known as the “ordinary legislative procedure”

8 European Semester: annual cycle of economic and fiscal policy coordination between EU institutions and member states

About the author:

Vivien Schmidt, born 1949, is Professor of International Relations at the Pardee School of Global Studies in Boston. She is the founding director of the Center for the Study of Europe at Boston University.

About the source:

International Politics and Society (IPS) is an online journal published by the Friedrich-Ebert-Stiftung, a political foundation associated with the SPD.

Topic: Europe in a pandemic – Do we need new approaches to European integration and government debt?

3.

Discuss whether an increase in public debt is justified given the Covid-19 pandemic. Take into account borrowing at the European Union level as well as at the national level in Germany. (30 Punkte)

Topic: The Covid crisis and social inequality – is increased public spending necessary to reduce social inequality?

1. Point out what is meant by the term social inequality and outline two of its dimensions, giving one fitting indicator for each. (24 Punkte)

Torsten Bell

Wishful thinking will not close Britain's inequality gaps

Optimism helps get us through tough times, and the Covid pandemic has had plenty of those. The recent reopening of the UK economy has provided grounds for optimism, with firms hiring at a swift pace. But wishful thinking can be dangerous and, when it comes to the economic legacy of this crisis, there's far too much around.

5 The coronavirus crisis has cost tens of thousands of lives, and everyone understands its negative health effects will last, from long Covid to an overstretched NHS 1. But on the economy, despite driving the deepest downturn for 300 years, people seem desperate to believe the pandemic will help the UK overcome some of its deep-rooted challenges. Apparently it will help us level up by closing regional gaps, give low-paid workers the respect – and pay – they deserve and save the local high street.

10 Much of this wishful thinking rests on futurology about home working. Everyone being able to work wherever they fancy will apparently mean people can earn London salaries while living in Lincolnshire. The shift of spending power, from where offices sit to where homes are concentrated, will drive a rebirth of the high street. Home working won't just spread the jobs out – it'll spread the Prets 2 out too.

15 What is becoming increasingly clear however is that hybrid working, with about three office days a week, will become the norm. That might mean some people commuting further, but more people living in Tunbridge Wells 3 won't do much for the north-south divide 4. And while home-working professionals have helped posh bakeries boom in some high-income neighbourhoods, Covid's real legacy has been the acceleration of the decline of high street retail with record numbers of store closures.

20

Indeed, the main way the pandemic has helped to narrow economic gaps is by levelling down rather than up. London's economy, reliant on commuting and foreign tourists, is recovering much slower than the rest of the country. By July it had recovered about only half the 6% of

25 employees lost during the crisis, while the north of England reported an increase.

The sheer scale of focus on working from home reflects the types of work done by economists and commentators pondering our future. But among low earners, home working is very rare indeed. While half of managers did some home working in 2020, that dropped to fewer than

30 one in 20 of those in so-called elementary occupations, which require minimal training.

And because most low-paid jobs can't be done remotely, low-paid workers have borne the brunt 5 of this crisis. As well as facing the highest health risks, they have been three times as likely as higher-paid workers to experience a labour market hit, such as losing their job or being furloughed 6.

35 What have low earners had in exchange for this highly unequal burden? Wishful thinking. At the start of the pandemic everyone recognised that it was low earners who kept our economy and health service running. They were clapped from our doorsteps and told greater dignity for such work would follow.

40 It hasn't. Low earners still have no minimum notice period for their shifts (more than one in three workers recently surveyed were given less than a week's notice of their work patterns) and no right to a contract reflecting the hours they actually work. Worse, the government recently decided not to extend sick pay to low earners – something it previously favoured.

45 We're now told that current hiring difficulties will suddenly deliver lots of bargaining power for low-paid workers, automatically leading to surging pay and better-quality work. But data from the jobs site Indeed shows that it's higher paid roles, in transport, manufacturing and construction that are seeing fast increases in advertised wages. […]

The Covid crisis has led to huge changes in how economic activity takes place. Some of those

50 will last; some will be beneficial. But they are not magic bullets targeted at the big economic challenges the UK faces. If we want some positive change to come from the pandemic we need to make, not wish for it, to happen. The pandemic has highlighted the inequalities

55 scarring Britain – but also shown this Conservative government that acting boldly can make a huge difference, as with furlough.

The insecurity at the bottom of our labour market can be tackled with new rights and proper enforcement to make them a reality. We can level up by keeping the £20 a week increase to universal credit 7 that one in three working-age families in "red wall" 8 constituencies rely on.

60 We can properly fund our further education colleges if we want to tackle disgraceful gaps in education.

Covid has made us poorer. It has widened wealth gaps and educational inequalities. Almost everything important we need to achieve as a nation has been made harder, not easier. So, put the wishful thinking aside. Silver linings to Covid won't solve our deep-seated economic problems. We have to.

Footnotes:

1 NHS: National Health Service

2 Pret: abbreviation for Pret a manger (prêt à manger is French for ready to eat) which is an international sandwich shop franchise chain based in the United Kingdom

3 Tunbridge Wells: wealthy suburb, 60 km southeast of London, with lots of commuters working in London

4 north-south divide: cultural, economic, and social differences between Northern and Southern England

5 to bear the brunt: to suffer the main part

6 furlough: During the pandemic, employers could agree to put some or all of their staff on temporary leave ('furlough'). This included 'flexible furlough', where employees worked some of their hours and were put on furlough for the hours they did not work.

7 universal credit: payment for people over 18 but under State Pension age who are on a low income or out of work. It includes support for the cost of housing, children and childcare, and financial support for people with disabilities, carers and people too ill to work.

8 red wall: The red wall is a term used in British politics to describe a set of constituencies in England and Wales – mainly in the Midlands, Northern England and North East Wales – which historically tended to support the Labour Party.

About the author:

Torsten Bell is the Chief Executive of the Resolution Foundation, an independent British think tank established in 2005. Its stated aim is to improve the standard of living of low- and middle-income families.

Source: The Guardian, 26 August 2021

Aufgabenstellung (Teilaufgaben 2 und 3)

2. a)

Analyse the author's stance on social inequality in Great Britain.

[30 Punkte]

2. b)

Explain, with reference to two passages from the text, in what way the author addresses vertical inequalities.

[16 Punkte]

3.

Taking the author's position as your starting point, discuss whether Germany should increase public spending in order to reduce social inequality in view of the Covid crisis. Consider both the economic and the social perspective.

[30 Punkte]

1. Outline three objectives of the United Nations (UN) as set out in the UN Charter and describe how two of the UN's principal organs are made up and what tasks they have.

(24 Punkte)

Topic: International cooperation – at the crossroads?

Heiko Maas

Speech by Federal Foreign Minister Heiko Maas at the 75th General Assembly of the United Nations

“The survivors were immune, the others dead.”

This is the rather pithy 1 description of the end of the Spanish flu 2 one hundred years ago by a German medical historian.

5 So pithy in fact that we recoil when we consider the pandemic that has a firm grip on our world today.

Thirty million people have already been infected by coronavirus.

Almost one million people have died.

And its longer-term impacts – hunger, poverty, displacement and conflicts – are beginning to reach us only now.

10 And yet 2020 isn’t 1920.

History doesn’t repeat itself – at least, if we don’t allow it to.

We have a choice, ladies and gentlemen, and few things illustrate this more clearly than the experiences that we have made during the COVID-19 pandemic.

On the one hand, they show that a lack of transparency, coupled with disinformation and 15 conspiracy theories, can kill.

On the other, they point to a path out of the crisis.

It is the path of reason that is founded on scientific expertise.

The path of cooperation that is based on common rules.

Rules all of us have to abide by. And that is why I’m speaking to you today from quarantine 20 at home, having come into contact a few days ago with someone who tested positive for the virus. […]

Ladies and gentlemen,

This crisis also shows that international cooperation is neither an ideology nor an end in itself.

On the contrary, it delivers results.

25 Far beyond the actual pandemic.

Such as in Ukraine, where the negotiations between Russia, Ukraine, France and Germany have helped to bring about the longest ceasefire since the beginning of the conflict.

[…] This is grounds for hope for a genuinely permanent solution to the conflict.

30 We will take this hope as the basis for intensive engagement in the Normandy format 3 in the coming months, including at high-ranking political level.

In Libya, too, we are focusing on cooperation with the United Nations in order to implement the decisions of the January Berlin Conference 4 to the letter. 5

The rapprochement 6 between the government in Tripoli and the forces in the east of 35 the country that has taken place in recent weeks is a major step forward. […]

Ladies and gentlemen,

Despite all the progress made in recent weeks, we’re still a very long way from a new global attitude. The Secretary-General’s call for a global ceasefire, which was adopted in the Security Council under Germany’s Presidency in July, is falling on deaf ears in many places.

40 This is not only a problem as far as credibility of the Security Council is concerned.

It is, first and foremost, a disaster for millions of people in war and crisis areas who are utterly defenceless in the face of the pandemic. […]

There’s another thing that is necessary for lasting peace, namely justice.

This is why we will continue to ensure that those responsible for the worst crimes against 45 humanity – for murder, torture and rape – are held to account before German courts and why we will support the UN mechanisms for investigating these crimes with all our might.

This is by no means just about Syria, however. Those who don’t clearly distinguish between perpetrators and victims, who blur the line between right and wrong, shake the very foundations of our rules-based order. Such people jeopardise our peaceful coexistence itself.

50 This applies to those who stand in the way of the work of institutions such as the International Criminal Court.

This applies to those who block the Security Council with one veto after another and who prevent its urgently needed reform with constantly new delay tactics.

And this especially applies to those who contravene international law, although, as 55 permanent members of the Security Council, they bear particular responsibility for upholding it. […]

Ladies and gentlemen,

We can watch human rights being hollowed out and trampled underfoot, even though all of us have committed to uphold them.

60 Or we can stand by the side of those who are suppressed, abused and persecuted – such as the peaceful protesters in Belarus.

We have called on Lukashenko 7 time and again to support a national dialogue, mediated by the OSCE 8. However, he has rejected all offers and is continuing to tread the path of violence and suppression.

65 And this must also have consequences if we are serious about our values and our international agreements. We’re discussing this in the European Union.

Ladies and gentlemen,

Courageous decisions are needed especially in times of crisis. […]

Today, in the midst of the pandemic, it is our generation that faces a choice.

70 Either we go it alone, without taking others into consideration, and throw this multilateral legacy to the winds.

Or we renew this legacy and show that the right response to the crises of our age is “more solidarity” – “more cooperation” and “more justice”.

Germany is prepared to do just this.

75 Together with you – as genuinely united nations.

Thank you very much – and stay healthy!

About the speaker:

Heiko Maas, born 1966, is a German politician (SPD) and was the Federal Minister of Foreign Affairs of Germany from 2018 to 2021.

1 pithy: concise

2 Spanish flu: influenza pandemic, lasting from 1918 to 1920, which infected 500 million people

3 Normandy format: regular meeting of leaders and ministers from France, Germany, Russia and Ukraine

4 Berlin Conference: peace summit in Berlin in January 2020 concerning the conflict in Libya

5 to the letter: giving great attention to every detail

6 rapprochement: re-establishment of relations

7 Lukashenko: president of Belarus since 1994

8 OSCE (Organization for Security and Co-operation in Europe): The OSCE is the world’s largest security-oriented intergovernmental organization. Its 57 participating countries are located in Europe, northern and central Asia, and North America.

2. a)

Analyse the speaker's stance on both the effectiveness and the difficulties of international cooperation. (36 Punkte)

2. b)

Explain what the speaker means when he claims that “those who block the Security Council with one veto after another and who prevent its urgently needed reform with constantly new delay tactics” (ll. 52 – 53) “jeopardise our peaceful coexistence itself” (l. 49). (10 Punkte)

3.

Discuss, with reference to two global challenges, whether the European Union (EU) ought to advocate stronger international cooperation. (30 Punkte)