Invest Instead of Saving: Why Germany Needs to Take on More Debt

In a world that is changing ever more rapidly, economic foresight is essential. Germany faces the challenge of not only focusing on short-term stability but also setting the course for sustainable and future-oriented development. International debt ratios make it clear that a higher level of government debt is not an obstacle but, in many cases, a driving force for economic dynamism and progress. A comparison shows: While Japan has a debt-to-GDP ratio of 248% and the USA 124%, Germany is at the lower end with 62%. France (115%), the United Kingdom, and Canada (each 103%) also have significantly higher debt levels. These countries use their financial resources to invest strategically in the future.

Germany has the economic stability and the trust of capital markets to learn from these examples. Instead of focusing solely on fiscal discipline and austerity measures, the German government should pursue a strategic investment agenda. Areas such as artificial intelligence, digital infrastructure, renewable energies, Industry 4.0, and strengthening the middle class are key components to keeping Germany competitive.

A common concern is that debt poses a burden for future generations. However, this perspective falls short. Investments that boost economic growth lay the foundation for prosperity and stability. By investing today in education, research, technology, and infrastructure, we lay the groundwork for a strong economy capable of meeting tomorrow's challenges. Without these investments, a backlog threatens to cost future generations much more—economically, socially, and ecologically.

Arguments against debt often rely on an outdated understanding of fiscal policy that underestimates growth potential and the long-term benefits of investments. A progressive debt policy should aim not only to close existing gaps but also to create new opportunities. This requires courage and a clear vision, as well as an awareness that passive stagnation is not an option.

A current example of a successful investment strategy in the USA is the Inflation Reduction Act (IRA), enacted by President Joe Biden in 2022. This legislation aimed not only to combat inflation but also to address important economic and ecological challenges. Through targeted investments, central problems in the US economy were addressed.

Exemplary Measures from Biden's Policies:

1. Promoting Renewable Energy: The Inflation Reduction Act allocated billions of dollars to expand renewable energy sources such as solar and wind power. These investments are intended to reduce the USA's long-term dependence on fossil fuels while creating thousands of jobs.

2. Modernizing Infrastructure: With the Infrastructure Investment and Jobs Act of 2021, Biden massively invested in roads, bridges, broadband internet, and public transportation. These investments aim not only to modernize infrastructure but also to enhance the economic competitiveness of the USA.

3. Supporting Industry and Innovation: The Inflation Reduction Act includes tax incentives for companies investing in green technologies, such as battery factories, electric vehicles, and hydrogen production. This promotes the industry to take a leading role in future technologies over the long term.

4. Combating Inflation Through Job Creation: An important aspect of the investments was the creation of well-paying jobs, particularly in the renewable energy and infrastructure sectors. These measures strengthen the purchasing power of the population and simultaneously stabilize the economy.