Ending the Creditor’s Paradise


Mark Blyth in Jacobin:

As 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.

Clearly, despite the impression we get in the US, there was movement away from the “austerity is the only way” approach to thinking about the eurozone crisis in Berlin, at least among the social democrats — but how much movement?

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.

True, as German (and French) politicians know only too well, there are no votes in talking about Europe, only costs, so not speaking up is locally rational. 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.

So I was awarded the prize at a ceremony in Berlin for “thinking differently” about economics. Martin Schultz, the head of the European Parliament, gave the introduction. Peter Bofinger, the voice of macroeconomic reason on the German equivalent to the US Council of Economic Advisors, gave a speech praising the book. I had ten minutes to say something useful at the end of the event. But what should I say that would be of use to the six hundred social democrats gathered in the room?

More here.