Isabella M. Weber
@IsabellaMWeber
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EconProf @UMass | Publisher @surplusmagazin | Robinson, Keynes, Meiksins Wood, Rothschild & Matthöfer Prize | Harvard Associate in Research | 2023 TIME100 Next
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Joined March 2014
NEW PAPER: The 2022 fossil fuel price jumps caused an oil and gas profit explosion. We show the US reaped the largest profit increase (USD 275bn) of any country. Big Oil claims this benefits the American people. In fact, 51% went to the richest 1%, only 1% to the bottom 50%. A 🧵
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And so it begins… The German conservatives have given up on their pledge not to collaborate with the AfD and are now joining forces on anti-migration policies. This is a very dark moment, just weeks before the election.
Die Brandmauer ist gefallen! CDU und CSU haben mein Angebot angenommen, in der Schicksalsfrage der Migration im Bundestag gemeinsam mit der AfD zu stimmen. Das ist eine gute Nachricht für unser Land! Wir haben geliefert, nun muss die Union auch liefern.
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Far right Alternative for Germany #2 in the polls ahead of all three governing parties. This should be a wake-up call. For economic policy this means: Ending austerity, ending the decline in living standards of the many, starting an ambitious public investment agenda.
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Can we now finally have a serious conversation about an anti-fascist economics?.
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How can we have internationally coordinated economic sanctions on a very large scale without equally internationally coordinated measures to stabilize global food, energy and commodity markets? Asking for the world.
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Germans have experienced the most dramatic decline in real wages since 1950 as a result of inflation. This is painful for most people and devastating for those who had low incomes to begin with. 33% of Germans with low living standards have voted for the far right AfD today.
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BREAKING: Sellers’ Inflation is now an IMF take.
Rising corporate profits were the largest contributor to Europe’s inflation over the past two years as companies increased prices by more than the spiking costs of imported energy.
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It turns out that the *expectation* of price caps and windfall profit taxes alone is already bringing down power prices.
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Corporate concentration is a possible explanation of price and profit hikes driving inflation. But concentration was high before inflation. So, why can firms hike prices in an emergency? We explore this question in a new working paper. A 🧵
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Now UBS chief economist also finds profit-led inflation. Who is next?
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Shock therapy once more doing what shock therapy does. After Milei abolished price controls & slashed government spending, inflation shot up to ~300%. 3.4 million Argentinians pushed into poverty. Poverty rate highest level in two decades. At least 136,000 jobs wiped out.
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Germans have experienced a dramatic decline in real wages. The government just added an austerity program in response to the budget crisis. The country is on track for a deep recession while the far right AfD has overtaken all governing parties in the polls.
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BREAKING: Profit-driven inflation has made it into The Wall Street Journal.
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How it started:.CDU and FDP recommend Greece to sell islands to address their fiscal crises in 2010. How it’s going:.Former Greek minister recommends Germany to sell islands to address their fiscal crisis in 2023.
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I have been awarded tenure at UMass. The odds were stacked against me in getting a PhD in economics. At every stage there was at least one 'guardian angel' who believed in me, mentored me, went out of their way for me to succeed. You know who you are. Thank you.
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Angus Deaton, Nobel Memorial Laureate, on the state of economics: .“The time has come, Deaton argues, for economists to get back to serving society. ‘The discipline has become unmoored from its proper basis, which is the study of human welfare’” .
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This is what I wrote in 2021. I was ridiculed and worse. I am from Nuremberg. I stuck my head out and called for strategic price controls because I had studied the history of inflation and inflation control for years and was worried inflation would bring Trump back.
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The President of Colombia @petrogustavo just endorsed my inflation take! 🤩 Thank you, Mr President!.
Lo que está demostrando la economía de los EEUU es que la inflación no ha sido contenida a partir de disminuir la demanda sino de aumentar la oferta.
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I couldn’t even tweet yesterday when I saw the results in Thuringia and Sachsen. This was so predictable. Germany is sleep walking into the abyss, while insisting on a balanced budget in the middle of the worst economic crisis since the 1990s.
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Economics when every bit of common sense has been erased
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Last year Spain had a higher inflation rate than the European average. Now it is the first country to undershoot the inflation target thanks to mobilizing an arsenal of tools from strategic price caps, windfall profit taxes to free public transport. Good luck with the election!
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Yes, inflation decided this election (as many progressive economists have warned since 2021). No, inflation was not due to too much government spending. It was induced by global shocks.
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Can we now please stop the paternalistic Vibecession talk, as if people don’t understand their own pocket books, their own existential worries and instead try to understand how an anti-fascist economic policy for the working majority can look like?.
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Unemployment weakens governments, inflation kills. It’s an old saying. It’s true again. The fight to protect people against price shocks in essentials was lost in the trenches of economics.
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Absolutely amazed that Brazil’s Finance Minister @Haddad_Fernando read How China Escaped Shock Therapy cover-to-cover! He once wrote a book about the collapse of the Soviet Union. Thanks for the long exchange about global political economy, overlapping emergencies and inflation!
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Big lesson from both the U.S. and Germany: when economists tell you the economy is great (“Not Even a Recession” 🇩🇪, just a “Vibecession” 🇺🇸) but the people are saying this economy isn’t working for us, democrats have to listen instead of saying people just don’t get it.
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Polls: Inflation is #1 concern. Harris first economic policy proposal: Price gouging law for food. Most economists: This is price controls. (Me: No, it’s good policy.). Trump: This is Communist. Harris: Goes quiet. Trump: I promise to lower prices of essentials. Trump wins.
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BREAKING: James Galbraith nails what sellers’ inflation is in just two sentences.
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Unemployment weakens governments. Inflation kills. The politically destructive power of inflation had been forgotten. Standard policy tools left us unprepared and fueled inequality. The re-election of Trump should serve as a warning to all democrats. My first @nytopinion. 1/
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Natascha Strobl is one of the bravest social scientists I know, a crucial voice on right-wing extremism. She is incredibly courageous. She has been mobbed to the point where she had to leave this site. This is devastating, a major blow in the fight against the far-right.
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Beyond thrilled to be included in the 2023 #TIME100NEXT list. Thanks to Elizabeth Warren for a powerful write up. “Weber’s bold ideas are helping shift the economic paradigm." @SenWarren
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Inflation might be easing for now, but we are living in an age of overlapping emergencies. More shocks are likely to come. We need economic policy preparedness for micro stabilization. But which prices matter?. A new working paper 🧵.
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Germany is the world’s worst performing major economy. Popular anger and the AfD are rising in response to austerity. FT editorial board recommends softening the debt brake and public investment. And warns: “The rise of the far right ought to focus the minds.”
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“[T]he four companies that conservatively account for about 70 per cent of the global food market share registered a dramatic rise in profits during 2021–2022”. Meanwhile, the number of people who are food insecure in 2023 has more than doubled compared to 2020. @UNCTAD
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Lawn party in a college town: Professor in creative writing mansplains me for 10 minutes straight on why price gouging laws lead to collapse of the market economy (of course entirely ignorant of my work). The joys of being young and female in academia meets the free market myth.
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A moment of closure: It all started 1.5 years ago with my Guardian op-Ed which unleashed a sh*t storm of gigantic proportions. Now, the Guardian Editorial endorses my inflation take: "Neoliberals judged this to be an act of madness. But time has been on Dr Weber's side."
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When analysts at the world's leading investment bank start subscribing to what was labeled "unreal economics" not long ago. Kind of can't believe my eyes.
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.@TheEconomist is on a rant against the German debt brake: “a fetish”, an instrument for “self-harm”.
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Hard to see how the world can fight climate change, if rich countries like Germany have their hands bound by constitutional austerity rules. High time for Germany to put the debt brake on an emergency hold and prepare a reform.
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BREAKING: Sellers' inflation is now a Christine Lagarde take.
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Recommended reading for all economists and economic policy makers, who are calling for fiscal consolidation. Besides inducing a recession, slashing spending in Germany now is likely to further boost the AfD.
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You can’t defend democracy by talking about defending democracy without making clear how your policies improve the lives of the majority and prevent corporations from yielding record profits from disasters.
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A key difference between Made in China 2025 and Germany's Industrie 4.0 is that China aligned macro and industrial policy, Germany did not. That’s why I keep saying: Without a post-neoliberal macroeconomic paradigm, all the industrial policy hype is built on sand.
"Made in China 2025", an industrial policy plan announced by Xi Jinping in 2015, has largely been a success. China has achieved a global leadership position in five key technology categories and is catching up fast in many others.
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“Our merchants & master-manufacturers complain much of the bad effects of high wages in raising the price. They say nothing concerning the bad effects of high profits. They are silent with regard to the pernicious effects of their own gains.”. Adam Smith, 1776.
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Best of times, worst of times: Our graph on the profit margin explosion today on the front page of the @FT, just next to falling life expectancy.
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This would not have happened if China hadn’t escaped shock therapy.
In 2000, China accounted for 6% of global manufacturing. In 2030, China is projected to account for almost half of all global manufacturing. This kind of shift is unprecedented in the modern world economy.
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What really drives me nuts about neoliberals who ridicule my work is that they have no answer to the polycrisis. Fine, you don’t like what I’m trying to contribute to help navigate the storms. Than, what’s your response? More of the same is calling the far-right into power.
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Actually existing Chicago Economics in 2024.
Indeed. Advocating for equity is advocating for communism. So, either Kamala Harris is a communist or she doesn’t know she is advocating for communism. The latter may be worse.
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More than 30 years after unification, Germany ist still divided but the whole country has moved to the right. Far right AfD is the strongest party in the East and the Christian conservative CDU/CSU in the West. Some green and red urban islands remain.
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German Finance Minister @c_lindner, the mastermind of austerity while real wages have collapsed, while the IMF projects -0.5 percent real GDP decline in 2023 and while the far right AfD is #2 in the polls: “I can definitely think of more areas to cut spending”
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When Trump calls you a ‘communist,’ you know he is getting scared and you stick with sound economics and good politics.
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There was an alternative to landing on the graveyard of incumbent governments in the wake of inflation. Mexico and Spain have demonstrated to the world how stabilizing the prices of essentials can pay back - economically and politically. My first @ForeignAffairs
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Some might think the increase in returns from the division of labor was Adam Smith’s pathbreaking insight. Here is Ibn Khaldun four centuries earlier:
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One year ago: Summers calling an increase in unemployment necessary to contain inflation. Today: Inflation is down, job growth is higher than expected while unemployment is below 4%. This was never a wage-price spiral but Sellers’ Inflation triggered by shocks and bottlenecks.
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AfD once more by far the strongest party among those who consider their economic situation as bad in Brandenburg vote. Feels like Germany is running a nation-wide experiment to rigorously demonstrate that austerity really does fuel the extreme right.
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History of economic thought is overwhelmingly Eurocentric & very rarely comparative. In this new volume leading Chinese and European economists engage in a dialogue on foundational questions. This is the first of its kind to my knowledge. TOC below. @Societies_HET @diversityhet
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This is in Rio Grande do Sul (Brazil) now. Friends sending messages as they are escaping the flood. River raised by 5.3 meters. People had to be moved standing in trucks. Families torn apart. Hundreds of thousands evacuated in ~300 cities lacking basics like clean water & food.
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Germany is the worst performing major economy while having one of the lowest debt to GDP ratios. Infrastructure & economic model need updating. But the government adheres to medieval debt rules instead: federal (red) & state level (blue) investments are down compared to 2019.
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4 real women economists in the woods. Such a tremendous inspiration to spend time with you. 🦄🦄🦄🦄 .@MazzucatoM @Jayati1609 @lauraabcarvalho
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Economists: Let’s assume everyone is a homo economicus, always rational, maximizing utility knowing their budget constraint and prices. Majority in every poll: we are worse off due to inflation. Economists: People don’t get it, it’s just vibes.
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Sometimes it is you against them all. The big authorities, the big names. After a storm of naysayers, times have changed: We are having a real conversation about inflation and profits.
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Adam Smith on the rate of profit:“it is naturally low in rich and high in poor countries, and it is always highest in the countries which are going fastest to ruin.”. Thanks @BrankoMilan for reminding us of this passage in “Visions of Inequality”!
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What has been parading as exponential growth in global renewable capacity is really only a China story, argues Christophers. It’s basically a story of the capacity of China’s state to mobilize markets and investments that goes back to the escape from shock therapy.
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“If you can understand Weber’s once forbidden theories, you can understand just how dramatically Washington’s economic assumptions changed during the past two years”. Thanks to @zachdcarter for this New Yorker profile, to @StephanieKelton and J. Galbraith for standing up for me.
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Qualitative, conceptual papers with descriptive statistics have fallen out of fashion in economics. We did just that to make sense of inflation. The response has been overwhelming. Sellers’ Inflation, Profits and Conflict is now published open access: 1/2
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When the German government was formed, @JosephEStiglitz & @adam_tooze warned of appointing Lindner as Finance Minister. Today he stands for austerity in Europe & Germany despite the polycrisis. @DIEZEIT I debate Lindner’s personal economic advisor @Lars_Feld.
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“In modern medicine, a specific diagnosis leads to a specific treatment. But that is not the case in modern economics. …the treatment is always the same. Medieval doctors drew blood; modern central bankers raise interest rates.” . James Galbraith @ProSyn
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The irony is that not too long ago ago, Chinese car companies were keen to partner with Western brands on EVs but Western companies were worried the Chinese would steal their technology.
BYD unveiling a vehicle with ASTONISHING 2000 km range for the price of . drum roll . 100,000 yuan ($13,800). This, ladies and gentleman, is true 21st century Fordism!.
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Es ist kurz vor zwölf: Wir brauchen eine Wirtschaftspolitik, die dem Aufstieg der extremen Rechten verhindert und den Menschen eine Alternative zum bedrückenden Status quo bietet, anstatt ihre Sorgen herunter zu spielen.
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BREAKING: Profit-driven inflation is now the majority take of Americans. Here is how they think it should be cured.
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Imagine there is a paradox named after you that every economics student has to study but this doesn’t make it into your obituary because you have done such momentous things that changed history. Rest in Power Daniel Ellsberg.
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After FT and WSJ now a very thorough analysis in @BusinessInsider why it's not wages and also no longer supply bottlenecks that is driving inflation but the decisions of price-making corporations.
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Inflation decided this election. In our age of overlapping emergencies we urgently need a new inflation fighting toolbox. If the only way to fight inflation is to hike interest rates with the goal of throwing people out of work, we push voters into the arms of the far right.
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“The average cost of shipping a 40ft container from eastern China to the US west coast at short notice rose from less than $2,000 to a peak of $9,699 . In the 3 years from 2020 to 2022, the industry generated as much profit as it had during the previous 6 decades combined”
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Endlich traut sich jemand dem neuen Kriegsenthusiasmus etwas entgegenzusetzen! Glückwunsch @nymoen_ole!.
Im März werfe ich mich noch einmal in den publizistischen Schützengraben: Dann erscheint nämlich mein Buch WARUM ICH NIEMALS FÜR MEIN LAND KÄMPFEN WÜRDE.
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“Who is afraid of Isabella Weber?” 🕵️. Great article by @SimonGrothe on my journey in the inflation debate. Does a great job in getting at the core of sellers’ inflation as a dynamic theory and addressing some of the common misunderstandings.
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Looking forward to testifying in German parliament on inflation. Funny that two PhDs and a US professorship apparently don’t pass as academic titles in Germany 😅.But who wants to be called Prof. Dr. Dr. anyway 😂.
Zwar sind Ulrike Herrmann und Frank Thelen nicht geladen, Theo Koll auch nicht, aber die öff. Anhörung im @Bundestag Finanzausschuss zum Thema "Schutzschirm gegen die Inflation" verspricht trotzdem ganz munter zu werden🤠. Um diesen Antrag @cducsubt geht's.
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Germany’s growth outlook is worst of all OECD countries except for Milei’s Argentina. The energy shock has been downplayed by prominent economists. It is now eroding the industrial core. Add fiscal tightening and you have the perfect storm.
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There is a clear supply-demand mismatch: demand for alternative economic perspectives huge, supply minuscule. Result: I’m overrun with requests. We need more unreal economists. I hope the market will deliver on this one.
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Once upon a time, a young female economist dared to make the connection between a profit explosion and inflation. She was greeted with outrage. What if she was right!?.Two great reads.
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It’s been 9 months to the day since I had my personal “don’t look up moment”. I warned that we had to start thinking about strategic price caps. This moment German chancellor Scholz announced a national gas price cap. @SDullien and I introduced this proposal in February.
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It’s a sticky myth that Germany is still a great welfare state. A new study shows that 21.2% of Germans live below the poverty line when accounting for housing costs.
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So many reasons why rich countries have to shoulder the costs of climate change mitigation for the world, one we don’t talk about enough: borrowing costs.
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Deutsche Bank is warning of German deindustrialization as a result of the gas crisis. Unlike in the US or UK, there is no world leading financial, service or digital sector to fall back on. The gas question is the question of the future of this economy.
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The polycrisis is prefigured in Arrighi’s theory of hegemonic transition. Systemic cycles of accumulation culminate in chaos as conflict escalates & new & old rules compete. Our new open access paper links the accumulation process & chaos using a logistic map. 🧶 .@GGalanis82
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President Sheinbaum is doing what the Democrats shied away from: stabilizing prices of essentials in a big anti-inflation package to protect Mexicans.
Firmamos el Paquete contra la Inflación y la Carestía (Pacic) 2024-2025 con empresas productoras y comercializadoras de los 24 productos de la canasta básica. El compromiso es fijar el precio máximo en 910 pesos; esto representa 129 pesos de reducción respecto al acuerdo
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Wow. My book was just recommended by @martinwolf_ in the @FT economics summer reading list. Incredible to see my work next to @MazzucatoM, @rortybomb, @kahneman_daniel and other world class economists.
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No, Bidenomics did not cause this inflation. Also, we should stop pretending that we can do large scale industrial policy without macroeconomic management and price policy. It’s like planting crops without taking care of irrigation.
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Biden's plan for an internationally coordinated control on the price of oil endorsed by the editorial Board of the @nytimes. Not so long ago, in a galaxy not so far away, this would have been "unreal economics".
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Adam Smith, commonly acknowledged as founding father of modern economics, on the role of wages and profits for price increases.
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The best of times, the worst of times. Brilliant brilliant text by @AntheaERoberts and @nicolas_lamp, brilliant charts by @yusuf_i_k and all of it in the brilliant @polycrisis!
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