Open Letter to the Council of Economic Experts
This article was created with AI support and editorially curated by Lukas Geiger.
Addressee: Sachverständigenrat zur Begutachtung der gesamtwirtschaftlichen Entwicklung (German Council of Economic Experts) Sender: Um:bruch — Think Tank for Societal Change Date: 3 April 2026 Delivered by email to info@svr-wirtschaft.de
Dear Members of the Council of Economic Experts,
In the wake of the war-driven energy price shock caused by the blockade of the Strait of Hormuz, two members of your body have taken public positions:
“The government must let the prices work so that energy demand falls. Fuel rebates and price caps distort prices — they are the wrong approach.” — Prof. Dr. Veronika Grimm, Rheinische Post, 3 April 2026
Prof. Dr. Monika Schnitzer stated in substance on the ZDF Morning Show (1 April 2026) that the price signal must be passed on to consumers and the economy so that demand can adapt.
We disagree with this recommendation — not ideologically, but on the basis of empirical evidence. This open letter summarises our counterposition, which we have elaborated in a position paper (PP-002) and two independent data analyses.
Executive Summary
The demand to “let prices work” is a valid principle in stable market environments. In geopolitical shock situations, however, it leads to social overload without economic benefit.
The central distinction is: Politically set prices with a steering intent (e.g. CO₂ pricing) must be strictly separated from exogenous supply shocks (war, blockades). While the former are designed to take effect, the latter produce no reliable steering effect, but primarily distributional and stability effects.
1. Character of the Current Price Shock
The price increase in petrol and energy observed since February 2026 is the result of an exogenous supply shock:
- Interruption of 25–33% of global oil supply
- Uniform absolute price increase across European countries (+€0.24–0.37)
- Differences in end-consumer prices are explained by national tax and levy structures, not by different demand effects
The CO₂ levy rose by approximately 3 cents per litre in 2026. The war surcharge amounts to 37 cents — twelve times as much. Empirically, this is not a tax- or demand-induced phenomenon, but an external cost shock beyond national control.
2. Why “Letting Prices Work” Fails for Households
2.1 Short-Term Demand Inelasticity
The assumption that high prices lead to relevant demand reduction in the short term is empirically untenable for households:
- Mobility and heating needs are structurally fixed in the short term
- Substitution options (public transport, remote work, building renovation) are limited or time-delayed
- Short-term elasticities are low, especially for lower and middle incomes
The price therefore does not steer — it burdens.
2.2 Individual-Country Ineffectiveness
Germany consumes approximately 2% of global oil. The Hormuz blockade affects 25–33% of global supply. Even complete German abstention would not measurably move the world market price.
3. Distributional Effects and Social Stability
Energy expenditure accounts for a significantly higher share of the budget in low-income households. An exogenous price shock therefore acts like an implicit special tax on lower and middle incomes.
The current shock hits an economy already burdened by: persistent inflation, real-wage losses, rising social contributions, and absent redistribution mechanisms (the promised Klimageld — climate dividend — was committed but never paid out). This cumulation increases the risk of consumption decline, social destabilisation, and political acceptance crises.
4. International Evidence
The energy crisis of 2021–2024 in Europe provides robust comparison cases:
- Price brakes dampen inflation and purchasing power losses in the short term, but are socially imprecise
- Direct payments/transfers are superior in distributional terms
- Combined approaches (temporary price stabilisation + targeted transfers) show the highest societal resilience
The OECD and IMF explicitly recommend: shock absorption rather than pure price pass-through, especially for households.
5. Regulatory Classification
The demand to “let exogenous shocks work” constitutes a category error:
- Market prices as a steering instrument presuppose controllable causes
- External shocks are not market information, but disruptions
- Temporary stabilisation is therefore a legitimate regulatory response, not passivity
A temporary compensation of the shock component does not distort the market — it restores its functionality.
6. Our Recommendations
- Exogenous energy price shocks must not be treated as steering instruments
- Households need short-term stabilisation, not moral appeals
- Redistribution mechanisms (energy dividend/climate dividend) are central to acceptance
- Non-price measures (remote work, efficiency) are cost-effective complements
- Policy advice should be interdisciplinary — not just economics, but also sociology, governance, and health economics
Closing Remark
Responsible economic policy distinguishes between steering and damage limitation. This distinction is insufficiently considered in the current discourse.
We invite you to review our complete data analysis and the underlying evidence matrix:
- Position Paper PP-002 (PDF)
- Data Analysis — Gemini
- Data Analysis — Copilot
- Editorial
- Claim-to-Evidence Matrix (10 Claims, Europe/OECD)
Yours sincerely,
Lukas Geiger — Founder & Editor Claude Opus 4.6 — Responsible Editor
Um:bruch | re:shape — Think Tank for Societal Change um-bruch.org | Contact: /en/contact/
Evidence Matrix (Summary)
| # | Claim | Evidence type | Strength |
|---|---|---|---|
| C1 | Price surge is exogenous shock, not a tax problem | Descriptive + comparative | Strong |
| C2 | ”Letting prices work” fails short-term for households | Empirical (micro/panel) | Strong |
| C3 | Pass-through to households is delayed and heterogeneous | Empirical | Medium |
| C4 | High energy prices are regressive | Empirical + microsimulation | Strong |
| C5 | Price brakes are socially imprecise | Policy evaluation | Medium |
| C6 | Direct payments are more precisely targeted | Comparative synthesis (IMF/OECD) | Strong |
| C7 | Missing compensation undermines acceptance | Social science | Strong |
| C8 | Energy poverty is a public health problem | Systematic reviews | Medium |
| C9 | National demand reduction does not affect world market price | Macro-descriptive | Strong |
| C10 | Cumulative burdens increase recession risks | Macro + household economics | Strong |
The full matrix with methods, data sources and limitations: Evidence Matrix PP-002
Editorial correction (2026-04-05): Schnitzer quote corrected from verbatim block quote to paraphrase — the exact wording could not be verified as a direct quotation.
Um:bruch editorial team: Lukas Geiger (LG), Claude (CL), Copilot (CP). Evidence matrix and policy brief draft: Copilot (CP). Editorial processing and dispatch: Claude (CL) and Lukas Geiger (LG).