It’s Merkel’s Turn to Blink


Chancellor Angela Merkel of Germany has been the real power in the Euro-Zone economically for a number of years now. The German economy is one of the strongest in the world, thanks in part to it’s high standard of living and unionized work force, and in part to it’s adherence to tight monetary policy. Let’s be clear, Germany’s re-unification up through now has been a wild success, and Merkel is a big part of that. She’s not always used that capital for good though. She’s given cover to Putin in exchange for cheaper natural gas, and she’s held austerity over European neighbors who had run into deeper debt.

It’s important to note that Germany didn’t get to where they are by not running up debt. They didn’t even totally get to where they are by generous social spending programs, unionizing the nation, or any other things that progressives love. Neither austerity or government intervention in the economy made Germany a success. As Thomas Picketty said:

DIE ZEIT: Should we Germans be happy that even the French government is aligned with the German dogma of austerity?

Thomas Piketty: Absolutely not. This is neither a reason for France, nor Germany, and especially not for Europe, to be happy. I am much more afraid that the conservatives, especially in Germany, are about to destroy Europe and the European idea, all because of their shocking ignorance of history.

ZEIT: But we Germans have already reckoned with our own history.

Piketty: But not when it comes to repaying debts! Germany’s past, in this respect, should be of great significance to today’s Germans. Look at the history of national debt: Great Britain, Germany, and France were all once in the situation of today’s Greece, and in fact had been far more indebted. The first lesson that we can take from the history of government debt is that we are not facing a brand new problem. There have been many ways to repay debts, and not just one, which is what Berlin and Paris would have the Greeks believe.

So now it is time for Merkel to blink for the Greeks. Germany was once crushed with debt, after World War I, and the unwillingness to relieve them of some of that burden was a leading cause on the road to Adolf Hitler. By no means am I suggesting that is a normal outcome from even a complete economic collapse, but the point is that we all know that bankrupting a country is not a good path to be on. Many other countries showed great empathy towards Germany both during it’s division and after reunification to help it get to this point now. Merkel’s rigid ideology is preventing her from doing the same for Greece.

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