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American Economist Asks Dying German Social Democratic Party Why They Destroyed Themselves

American economist Mark Blyth got an award from Germany's dying center-left Social Democratic Party for his writings on the failure of European austerity policies, and decided to explain to the German Social Democrats exactly how they managed kill their own political party for no reason:

I sat in my office at Brown University on December 16, 2014, an email popped into my inbox with the title “Herzlichen Glückwunsch – Sie sind der 1. Preisträger des Hans-Matthöfer-Preises für wirtschaftspublizistik.” This was the award given by the Friedrich Ebert Stiftung (FES), the research foundation closest to the German Social Democratic Party (SPD), and the Hans-Matthöfer Stiftung for the best economics publication in German in 2014. I was, to say the least, surprised.

My 2013 Oxford University Press book, Austerity: The History of a Dangerous Idea, had recently been translated into German by the publishing arm of the FES. Indeed, I had been there a month earlier, in Berlin, to do a book launch, which was very well attended. Since then the book has been reviewed, positively, in the German press, with Suddeutsche Zeitung giving it a rather glowing review. Something odd was going on.

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Consider that during the negotiations to form the current coalition with German Chancellor Angela Merkel’s Christian Democratic Union, the SPD could have made an issue out of how the policies designed to heal Europe were causing great harm, a fact acknowledged even by the International Monetary Fund by 2012. But they chose not to do so....But not speaking up when such inappropriate policies are being applied to Germany’s European partners is collectively disastrous. Indeed, what is so tragic in this crisis is how the center-left throughout Europe have not just accepted, but in many cases actively supported, policies that have done nothing but hurt their supposed core constituencies.

[Following excerpts are from the prize acceptance speech. I've put the really juicy bits in my own added italics:] There can be no doubt that the debtor countries of Europe need major reforms in taxation systems, labor markets, business regulation, and a host of other areas.

But…

    1. When we say “structural reform” we really have no idea what those words actually mean, and we often fall back on them as a back-handed acknowledgment that austerity has failed, or
    2. We misunderstand what we did when we refer to prior episodes of structural reform, and thereby miss that it is impossible for anyone else to do what we once did.

Let me explain. “Structural reform” used to be called “structural adjustment.” And European lefties like us used to condemn it as absurd, ridiculous, “neoliberalism gone mad” — and yet we seem quite happy to unleash these policies, despite the damage that they have done in the developing world, upon our European partners.

When you ask for the content of what structural reform means, it seems to be a checklist of lower taxes, deregulate everything in sight, privatize anything not nailed down, and hope for the best. But are these policies not disturbingly American, if not Thatcherite? Indeed, isn’t this everything that the SPD is supposed to be against, and much of which the German public would never put up with?

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Today it is a profound irony that European social democrats worry deeply, as they should, about the investor protection clauses embedded in the proposed Transatlantic Investment Treaty with the US, and yet they demand enforcement of exactly the same creditor protections on their fellow Europeans without pausing for breath for the money they “lent” to them to bail out their own banking systems’ errant lending decisions.

Something has gone badly wrong when social democracy thinks this is OK. It is not. Because it begs the fundamental question, “what are you for — if you are for this?” The German Social Democrats, for we are all the heirs of Rosa Luxemburg, today stand as the joint enforcers of a creditor’s paradise. Is that who you really want to be? Modern European history has turned many times on the choices of the SPD. This is one of those moments.

It’s great that my book has helped remind you of the poverty of these ideas. But the point is to recover your voice, not just your historical memory. Your vote share isn’t going down because you are not shadowing the CDU enough. Its going down because if all you do is that, why should anyone vote for you at all?

I hope that reading my book reminds the SPD of one thing: that the reason they exist is to do more than simply to enforce a creditor’s paradise in Europe.

I recall writing a few years ago: "Yet in Germany, coverage of the Greek healthcare collapse virtually always attributes it vaguely to 'the crisis' in general, not to the austerity measures forced on Greece by the troika, which are anything but inevitable (or alternativlos in Merkel's infamous phrase) and to which there are plenty of reasonable alternatives that would not impose massive suffering on ordinary citizens." But Blythe has much more credibility than I do. As is often the case, it takes an outsider to point out the hypocrisy of another country's elites. Or, as Orwell once put it, to see what is in front of one's face requires a constant effort.

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