Economist Lars Feld advocates for an extra payment to recipients of the basic income benefit, arguing it would help ease the burden created by high energy prices. Speaking to the “Rheinische Post” on Saturday, he suggested that if the war drags on, the federal government could consider giving a one-time subsidy to those with low incomes before the regular increase in the basic income benefit is implemented. Feld stressed that no action would be necessary for pensioners, as the recent increases had been sufficiently high.
However, Feld rejected the idea of an artificial cap on gasoline prices, which the SPD has proposed. He explained that price caps and fuel discounts distort the signals that prices send to consumers, which should suggest that oil and petrol are becoming scarcer. He argued that these signals are necessary so that demand can decrease and adjust to the lower supply. Furthermore, he noted that price caps and fuel discounts disadvantageously affect everyone, leading to costly unintended consequences.
The Freeburg economist served as the head of the economic advisors’ unit until 2021 and previously advised the Finance Minister, Christian Lindner (FDP).