12 Questions
What was the main criticism of the German Historical School by the Austrian School?
Neglect of theoretical rigor and universal economic principles
What was the main concern of the younger Historical School?
Social reform through state action
What was the term used to describe the German Historical School's approach to economics?
Inductive methodology
What was the main difference between the German Historical School and the Austrian School?
Methodological approaches
What was the name given to the German Historical School economists due to their interest in social reform?
Socialists of the chair
What was the focus of institutional economics in the United States during the 1920-1930s?
Understanding how institutions influence economic behavior
What is the primary goal of the Biden administration's subsidy architecture, according to the text?
To reorient the economy towards greener growth
What is the French president's view on the Inflation Reduction Act (IRA)?
It's a killer for our industry
What is the characteristic of the second generation of the German historical school, led by Gustav von Schmoller?
They were interested in social reform through state action
What is the potential outcome of the American subsidies, according to the text?
A global subsidy race
What is the estimated amount of money that the government will provide for chips and climate technology?
$465bn
What was the nickname given to the members of the German historical school, led by Gustav von Schmoller?
The socialists of the chair
Study Notes
America's Protectionist Turn
- The Biden administration is focusing on building a subsidy architecture through policies like the Inflation Reduction Act (IRA) and the Chips Act, providing $465 billion for chips and climate technology.
- The goal is to protect America's industrial base, fend off the challenge from a rising China, and reorient the economy towards greener growth.
Global Subsidy Race
- The IRA has sparked concerns of a global subsidy race, with some countries feeling pressured to respond with their own subsidies.
- European countries, in particular, are worried about losing investment, with French President Emmanuel Macron calling the IRA a "killer for our industry".
German Historical School
- Gustav von Schmoller was a key figure in the German Historical School, which attacked classical economic theory, particularly the idea that it is universally applicable.
- The School preferred inductive methods, gathering empirical evidence before developing theories, and was interested in social reform through state action, earning them the label "socialists of the chair".
Methodenstreit (Battle of Methods)
- The Methodenstreit was a controversy between the German Historical School and the Austrian School of Economics over methodology in economic analysis.
- The Austrian School criticized the historicists for lacking theoretical rigor, while the Historical School accused the Austrians of excessive abstraction and detachment from real-world phenomena.
Institutional Economics
- Institutional economics emerged in the United States in the 1920s-1930s, emphasizing the importance of government intervention and institutions in shaping economic behavior.
- The approach focuses on understanding how evolutionary processes and institutions influence economic decisions, assuming that people's choices are shaped by changing customs and institutions rather than relying on current data.
This quiz assesses your understanding of the Biden administration's protectionist policies, including the Inflation Reduction Act and the Chips Act, and their potential impact on the global economy. It covers the motivations behind these policies, including the threat from a rising China, and the potential consequences of a global subsidy race.
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