Some of you thought that I was making fun of Germans by scrutinizing one of the local newspapers, the Berliner Morgenpost. Quite the contrary, the paper is more sophisticated than its American equivalents and furthermore I enjoy reading it myself. What I am making fun of is people who have unrealistic expectations of how Germany can be slotted into this or that academic plan, without recognizing the realities of national and regional cultures.
Other people have suggested that Die Zeit or the FAZ are more representative of German opinion. Among elites for sure, but if you walk through Berlin for days you will see the Berliner Morgenpost for sale much more often, by an order of magnitude.
Anyway, I noticed a piece in the 12 June edition, entitled "Germany is driving European economic growth." What's most striking about thie article, and other sources, is how much Keynesianism has failed to influence either German policy or German public opinion. In the piece, there is no mention of international imbalances or aggregate demand issues, but rather Germany is lauded for exporting so much and for serving as the economic locomotive for European economic activity. Furthermore this is a news story, not an Op-Ed.
Germany, of course, is one of the most successful countries in the world since its postwar reconstruction. (You could make a good case for giving Germany the "best country award" for the last fifty or sixty years.) Yet German policymakers adhere reasonably consistently to the following views:
1. It is the long run which matters and we should be obsessed with the long run consequences of our choices.
2. Economic growth comes from high productivity, most of all in quality manufacturing.
3. Borrowing to finance consumption is a nicht-nicht. Savings is all-important.
4. If we need to make a big change, we'll all grit our teeth and do it. For instance Germany has done a good deal, on the real side, to restore its export competitiveness in the last ten years, not to mention unification and postwar recovery.
5. These strictures should be enforced by rigorous rules, to limit temptation, because indeed you will find cases where it appears to make sense to break the rules.
6. Values matter, as do norms of cooperation.
7. Don't obsess over the creation of too many low-wage jobs, because in the longer run it will be bad for your cultural capital. If need be, pay people to be unemployed, but hold high human capital. In the longer run, try to educate them up to higher productivity and thus employment.
8. Be obsessed with self-improvement, most of all at the personal level.
(If you're wondering, the recent talk about coalition collapse is not challenging these basic principles. There is talk about not cutting some kinds of government spending, or raising taxes on the wealthy, or whether the ruling coalition can get things done, or whether the draft should be abolished, or whether Germany has mishandled the Euro crisis. German politics produces a lot of government spending, and that is part of the above vision, but there is a great concern about whether it is paid for in the proper way.)
Most Keynesian economics makes good sense to me, especially at the methodological level. But when it comes to principles for guiding a country…? The numbered items above are not exactly my preferred list (especially not for the United States), but they have worked out very well for Germany. I would not so lightly toss them away. Might these principles be better, all things considered, than the Keynesian alternatives?
I'm a fan of the northern European social democracies, but in part they succeed because those countries don't follow all of the prescriptions you might hear coming from their boosters in the United States. For instance American liberals often admire the activist government in such countries, but it's built upon a very different set of cultural foundations. I hear or read liberals calling for the comparable interventions but usually remaining quite silent about the accompanying cultural foundations or in some cases actively opposing them.
The cultural elements of the current Keynesian debates remain underexplored in the United States, but they are fairly well understood in Germany.