The chorus calling out against Angela Merkel is beginning to sing off-key. Too many voices are singing the same song. The reasons are valid, but there is no common voice. The same phrases keep coming up, like a mantra: growth is better than austerity, Keynes knows better than Friedman, Washington is to the Left of Berlin. It is all true, but it is too easy, too obvious.
Angela Merkel is not the stubborn housewife that she is often made out to be, a stereotype of typical German inability to adapt to new situations. What she represents is a set of interests that are validated by the dignity of the ideas behind them. These ideas are most likely wrong, ineffective, and counterproductive; the Chancellor deserves her criticism. Her rigidity has left her isolated, among the minority even within her own country. It is not so much the fear of another Weimar Republic that inspires her; rather it is a case of moralism combined with a sense of mistrust. She is reasoning like an accountant at a time when the world needs someone with vision. A country so large should not reduce itself to touting its merits while blasting others who have not been so strong. The Kanzlerin seems to not comprehend that the good of Europe – Greece included – is the good of Germany, that not even a healthy nation can weather the storm without saving its sinking neighbors. Germany cannot barricade itself behind its differences, when its banks, corporations, and investors are in need of a global economy that not only abides by the rules, but can carry itself forward as well. Where else can they export their products and capital?
Nevertheless, Merkel’s politics are not just about austerity, and not all of the criticism leveled towards her is justified. First and foremost, having a healthy economy is a virtue, not a source of jealousy. While the global productive base shifts to China, Germany remains a strong manufacturing economy. China has become the world’s largest exporter, and yet German quality goods still go to Beijing. The Dragon invades the world with its products, but Germany boasts of an active commercial relationship with China; Volkswagen produces more cars in Shanghai than in Stuttgart today. The formula is simple: all you have to do is produce better than the Chinese, but behind this obvious statement are decades of industrial policy that allowed German companies to modernize and reap massive profits. Labor reforms were effective, involving businesses and labor unions under the supervision of a sober and efficient government. Essential were funds for research, the intelligent transfer of production to Eastern Europe, and the consolidation of a democratic regime. All of this, keep in mind, is thanks to Germany, not Angela Merkel.
Other countries in Europe have seen industrial policy erased, education penalized, and their accounts doctored. Their economies grew with public debt and housing bubbles, and populism grew to near-fascist levels. Should Germany help a Europe like this? Yes it should, failing to do so would be selfish and downright suicidal. Does this Europe have the right to ask Germany for help? Not always, and on certain conditions.
Germany proposes a tax on financial transfers, which strikes at the heart of Anglo-Saxon systems and a pillar of liberalism. The political world could make a bold move and take the omnipotence of the market head-on, to provide state coffers with a lifeline, and yet the measure languishes. Berlin also would like to see a strengthening of European institutions, to which certain elements of national sovereignty could be entrusted. “More Europe” could be a possible solution to the inconclusive summits that characterize the current system.
Greece has been left to its own devices by Merkel’s shortsighted policy, sacrificed at the urns during the German regional elections and by ineffective European institutions. Brussels could assume a more determinant role, freeing itself from the resistance posed by the various national interests. It is the latter that have held up any kind of advancement. A redistribution of power would be the answer, but all scenarios would see a shift towards Berlin, at the cost of London and Paris. Therein lies the true stumbling block: Anglo-French resistance to coming to terms with the fact that the conflict ended almost 70 years ago and that the interminable postwar period has finally come to an end. Germany is asked to take on greater responsibility, but without the power commensurate with its size. Europe needs Germany economically, but it still hasn’t been granted the political, institutional, and military instruments necessary to intervene.
Appeals to generosity are being made to escape the crisis, not to repair the flawed mechanisms that have caused it, and when considering these attitudes the Chancellor may find some justification. She digs in her heels and refuses to acknowledge that it is the premise, and not austerity itself, that is a challenge for development. Merkel has made it into central requirement, whereas it would have fared better as a starting point. Merkel’s austerity should be softened, but without looking back at inflation, public debt, and creative finance.