Do liberals realize that most bankrupts are liberals

Where we liberals make mistakes - an examination of conscience

The market economy is in the dock and statism rises its head. This is also due to the fact that liberal positions are not perceived with the necessary sophistication. Three examples.

One of the questionable aspects of combating the corona pandemic is the quick resignation with which the populations of democratic states accepted the emergency measures of the governments. Not that many of these restrictions weren't necessary or right. But one got the feeling that many people not only endured all the restrictions on basic rights, but actually indulged in obedient good behavior. Even before that, freedom was not very popular in the affluent states; it seemed too natural. After the terrorist attacks of September 11, 2001, it was restricted in favor of security. It has now been sacrificed for health without much qualms - and it is to be feared that some of these restrictions will remain.

If the market economy is in the dock and statism rises its head, this also has to do with the fact that liberal positions are not perceived with the necessary sophistication. And when messages are misunderstood, the senders usually bear part of the blame. Here are three examples that stem from the regulatory conviction that the state should never intervene on a case-by-case basis, but that it is needed to create the same framework for everyone.

The liberals have always been against protectionism and thus for globalization. That belongs to the core of market economy thinking. But have we liberals stressed enough that we mean undistorted exchange? And that not only tariffs, non-tariff barriers or other sand in the gears (such as a transaction tax) have a distorting effect, but also distorted energy and transport prices as well as the general lack of internalization of external costs? This goes without saying for every liberal, but the commitment to these causes was not always very clearly visible.

Furthermore, for liberals, the counterpart to the emphasis on private property is the principle of liability. But have we liberals fought enough to ensure that this liability is possible and practiced? This required that the state not discriminate against equity capital compared to debt capital, favor the build-up of equity capital, prevent bankruptcies only in exceptional cases and require an equity base that allows companies to survive longer dry spells. State aid, no matter how much it can now be understood as an emergency nail, creates false incentives in this regard. Those who have armed themselves with a thick equity base instead of Ā«optimizingĀ» the balance sheet like the competition are duped.

After all, liberals think long-term. They do not represent bazaar capitalism. Orientation towards shareholder value is correct for them because it can only be increased in the long term if the interests of employees, customers, suppliers and the general public are taken into account. But we Liberals have committed ourselves to the long-term, for example that the strengthening of resilience is rewarded by maintaining excess capacities, building up reserves and stocks and diversifying supply chains, or that anchor shareholders are better off than those who are because of their long-term orientation looking for a quick profit on the stock market?

Liberal positions are particularly important today, given the overwhelming state presence. However, we liberals have to make it clear that our advocacy of true costs, the principle of liability and the long-term approach are not lip service.

You can find all of Gerhard Schwarz's previously published columns on our overview page.