In These New Times

Christoph Schennicke

Spiegel

18th January, 2011

Part 2- part 1 here

Why is Germany, the supposedly fallen superstar, in such good shape in the biggest economic crisis of the postwar era? Because it has maintained a more resilient industrial mix and prepared itself more effectively for the future than the Anglo-Saxon model, which had established the fashion trends of the last 30 years and had looked down on Germany with a mixture of pity and arrogance. Because smokestacks continue to belch smoke and assembly lines continue to run in Germany, and because Germany makes real products instead of packaging financial products until they are no longer recognizable.

Fortunately, Germany has succumbed only partially to the political trend of neoliberalism, and it has not been completely transformed the way Great Britain, once such an important role model, was. It is now becoming clear that a new statism is needed, and that nothing is as sturdy as a strong and solvent government.

Even though it has weaknesses and is better off not playing the investment banker, as in the case of the ill-fated state-owned banks, only a government and not a consortium of investors, no matter how large, ultimately has the strength and the endurance to overcome the sort or crisis we have experienced since the 2008 crash. Even more importantly, only the state acts with democratic legitimacy. Finally, and most importantly, only the state has the ability to ascend above particular interests and keep an eye on the common good.

The state-bashing for self-serving and economic reasons was successful and cannot be undone. Now two things are needed: the courage to admit to having succumbed to a trend, and the strength to resist the next trend, which is taking shape at a higher level. This trend consists in wearing down the euro and talking down Europe. This is nonsense. Despite its crisis-shaken members, Europe’s fundamental data are far better than those of the United States. The euro has become progressively stronger and has outpaced the dollar in terms of the exchange rate. And the time will come, once again, when “the markets” will attempt to bet against the dollar instead of the euro, and to make a killing at its expense.

The Right Investment

The lesson to be drawn from the current experience should be not less Europe, but more Europe, a more integrated Europe, with weatherproof institutions like a European monetary fund, a common economic and social policy and — if need be — common bonds. Europe has more to offer and more to lose than just a common currency. It is more than a large trading zone. Continental Europe is a cultural zone with the world’s most exemplary political value system. Anyone who attacks it or derides it is pursuing an interest, one that is economic or hegemonic. We should be aware of this. Even if Germany always supposedly pays more than everyone else, it’s the right investment.

It isn’t Europe’s fault if Greece is ailing or Ireland is faltering. Philip Stephens, always worth reading, writes in the Financial Times that it is not the right time for the Anglo-Saxon model to elevate itself above the continental European model. According to Stephens, “Ireland’s property-boom-turned-banking-bust” has little to do with its membership of the euro zone. Stephens writes that there are far more parallels with Iceland and Great Britain, two non-euro countries and members of the Anglo-Saxon boom-bust system. Iceland has already failed, and Great Britain could also fail. Stephens’ article attracted less attention in Germany than the sensationalist piece on the same page, in which Gideon Rachman reasoned on how Germany is ruining the euro.

Rachman’s piece was trendy and flamboyant, while Stephens’ piece was clever and self-critical. The political debate needs more people like Stephens and fewer like Rachman. It needs people with the confidence to buck the trend and say: hold on a minute. This vigilance is urgently needed, following the experiences with the “completely misunderstood concept of freedom,” which Angela Merkel, in her speech to commemorate Norbert Blüm’s 75th birthday, recently identified as the cause of the global crash.

At Merkel’s reformist party convention in Leipzig in 2003, Blüm was greeted with icy silence for voicing precisely the same thought.

Translated from the German by Christopher Sultan