It seems appropriate now and then to remind everyone that the leaders of Germany-- land of the gentle, caring social state (g)! protectress of human rights (g)! denouncer (g) of 'anglo-american' style turbo-capitalism! -- continues to demand policies that have led to mass human suffering in countries in Southern Europe:
The Greek economy is in free fall, having shrunk by 20 percent in the past five years. The unemployment rate is more than 27 percent, the highest in Europe, and 6 of 10 job seekers say they have not worked in more than a year. Those dry statistics are reshaping the lives of Greek families with children, more of whom are arriving at schools hungry or underfed, even malnourished, according to private groups and the government itself.
Last year, an estimated 10 percent of Greek elementary and middle school students suffered from what public health professionals call “food insecurity,” meaning they faced hunger or the risk of it, said Dr. Athena Linos, a professor at the University of Athens Medical School who also heads a food assistance program at Prolepsis, a nongovernmental public health group that has studied the situation. “When it comes to food insecurity, Greece has now fallen to the level of some African countries,” she said.Oh, and the economic theory that German policymakers conveniently invoked as a fig leaf for their pursuit of Germany's economic interests cited as intellectual support has been largely debunked:
To see their enormous influence on the European debate, it is worth quoting an extract from a speech by Olli Rehn, the European Commission’s economic chief, to the Council on Foreign Relations in June 2011. “Carmen Reinhart and Kenneth Rogoff have coined the ‘90 per cent rule’,” he said. “That is, countries with public debt exceeding 90 per cent of annual economic output grow more slowly. High debt levels can crowd out economic activity and entrepreneurial dynamism, and thus hamper growth. This conclusion is particularly relevant at a time when debt levels in Europe are now approaching the 90 per cent threshold, which the US has already passed.”
Mr Rehn presumably did not read the original papers, which were more ambivalent in their conclusions, as academic papers tend to be. Policy makers, such as Mr Rehn, are always on the lookout for economic theories that seem plausible and accord with their deep beliefs. In Europe, most of them have little exposure to macroeconomists who think out of the box. Clearly, most policy makers find it counter-intuitive that governments should spend money in a recession. It is against their own experience, especially if they come from northern European countries. They may have read the history of the Great Depression, and yet they find that a Keynesian response is less plausible than pro-cyclical austerity. If two of the world’s most respected economists then come along and tell them that their gut instincts have been right all along, this is the conservative policy maker’s equivalent of birthday and Christmas coinciding. At last, the message they always wanted to hear.
And, of course, is not even resulting in significantly lower debts, since austerity-driven economic contraction increases sovereign debt:
Though the cumulative level of government deficits fell last year, mainly because of Germany swinging into a budget surplus, many countries have continued to reel from the costs associated with recession.
Spending cuts and tax increases have helped to reduce deficits across the 17 EU countries that use the euro, but the region's debt burden rose after economic growth flatlined and fewer companies and households paid taxes.
Of the four countries that accepted financial assistance, Portugal and Spain saw their deficits swell in value terms and in proportion to the size of their economies. Portugal's deficit increased to 6.4% of GDP in 2012, from 4.4% the year before; Spain's jumped to 10.6% from 9.4%.
Greece managed to make further inroads in cutting its borrowings, but the deficit rose to 10% of its annual GDP from 9.5% as the country remained mired in a deep recession. Only Ireland, widely viewed as the poster child of austerity, saw its deficit fall under both criteria – it stood at 7.6% of GDP against 13.4% the year before.
Of course, only those ranting, irresponsible...populists* (pronounce with scorn) feel the need to continuously draw attention to these facts.
History is not going to be kind to Angela Merkel. Wait, let me qualify that: Non-German historians are not going to be kind to Angela Merkel. But then again, hypocrisy is only human:
A Moral Principle met a Material Interest on a bridge wide enough for but one.
‘Down, you base thing!’ thundered the Moral Principle, ‘and let me pass over you!’
The Material Interest merely looked in the other’s eyes without saying anything.
‘Ah,’ said the Moral Principle, hesitatingly, ‘let us draw lots to see which shall retire till the other has crossed.’
The Material Interest maintained an unbroken silence and an unwavering stare.
‘In order to avoid a conflict,’ the Moral Principle resumed, somewhat uneasily, ‘I shall myself lie down and let you walk over me.’
Then the Material Interest found a tongue, and by a strange coincidence it was its own tongue. ‘I don’t think you are very good walking,’ it said. ‘I am a little particular about what I have underfoot. Suppose you get off into the water.’
It occurred that way.
— Ambrose Bierce, Fantastic Fables, 1898
(Via Futility Closet.)