Blame the Germans
They’ve been muttering about them in Greece, and in Spain, in Portugal and in Italy. All the countries of Europe who are hopelessly over-extended in matters financial and whose economies are imploding are blaming it on the Germans. Not the fact that these countries all borrowed too much and were living beyond their means, but the fact that the Germans, who have been living within their means, aren’t too sympathetic about it. And Germany happens to have the strongest economy in Europe at the moment and can impose their view of European fiscal policy on their neighbors. Or try to.
So what is it the Germans want the Southern Europeans to do? Suck it up and stop moaning. Stop retiring at 55, stop avoiding taxes, stop taking pensions the state can’t afford to pay. And then suffer through the inevitable pain with a minimum of complaint.
After all, the Germans have had their problems, too. Back in 1989, when East and West Germany were reunited, the West Germans had to foot the bill for all the infrastructure improvement then needed in the East. The solidarity tax that helped fund this is still on paychecks. And the West Germans weren’t happy about it at the time, and they probably still aren’t that happy about it, but they made the necessary sacrifices and got on with it.
And frankly, they’d really like everyone to be more like them.
The Germans have always had a problem with that, actually.
Back in the 1930’s and 1940’s, they made a serious stab at making everyone in Europe either more like them or not like anyone. They had their successes. But the majority of Europeans didn’t want to be homogenized or exterminated. The majority of Europeans were willing to fight to preserve their disorganized and indulgent lifestyles from the crushing German steamroller of discipline and thrift.
These days, the only German steamroller is an economic one and the Germans, who didn’t used to give a damn what people thought of them, are now easily wounded by the mutterings of their neighbors. They so want to be liked. The problem is no one likes being forced to do something unpleasant, and they especially don’t like it when it’s Germany that’s doing the forcing.
Comments about the unfortunate past are inevitably made, comparisons of current leaders to former ones which really aren’t fair. Because Germany is a civilized and totally different country these days. It’s true, it is. But there’s just no way of getting around it. Everyone still remembers. They experienced what it was like being dictated to by Germany once, and they just aren’t that crazy about doing it again.
Well said. Here’s my take.
If the southern Europeans really want their bonds to be investible assets, they will have to follow what Merkel has prescribed: cut administrative costs and social welfare benefits. We’ve all heard about the price of credit default swaps on Greek bonds these days.
The ECB program has been interpreted on these shores (USA) as prescribing austerity. I think that’s the wrong interpretation. It’s not austerity, it’s fiscal responsibility. It’s foolish to spend what you don’t have, as even Keynes would concede.
That doesn’t mean that the Greek (or Spanish, Irish, Italian or Portuguese) government shouldn’t invest borrowed money (provided they can obtain it) into the system; it simply means that, going forward, the rules of social welfare have to adapt.
Thanks for your thoughts, Linda. You’ve made me reflect more deeply. Looking forward to reading your nest post.
Great article. The US should follow the Germans with regards to fiscal frugalness and taxes The US should get rid of the Bush tax cuts which were irresponsible from the start The top 1% should pay their fair share in taxes Hooray for the Germans