Austerity Is Not Enough: A Different German Recipe To Save The Euro Zone

Op-Ed: To save the euro, the struggling southern countries must tighten their belts and modernize their economies. But the northern euro zone must change too. If Germany jacked up salaries rather than sitting on its export success, it might just set off a

A German worker (giopuo)
A German worker (giopuo)

MUNICH – It is ever more clear that the monetary union requires some kind of political union: without common policies, the states simply drift apart. A single currency can only survive when all governments decide on major issues together. In other words, the monetary union must also be an economic union.

That was a basic fact that, in the euro's first decade, governments ignored. While the Germans were focusing on low salaries and strong exports, the southern Europeans went in for high salaries and kissed goodbye to international competitiveness. The economic models were so different, in fact, that the euro is now in jeopardy of failing altogether. Indeed, both sides have to change their thinking.

Once again, Europe's government leaders met this week in an attempt to rescue the euro. Rightly, German Chancellor Angela Merkel pushed for automatic sanctions against over-indebted countries. Parallel to that, other governments are looking at ways the new bailout fund and the European Central Bank could mobilize more money for the crisis states.

All of that is necessary to keep the euro stable. But it's not enough. When the emergency measures (hopefully) start working, there is still the matter of the different economic models to deal with. The euro is not going to make it if Germany keeps having high trade surpluses and the southern Europeans continue with the gigantic trade deficits that come when you buy more abroad than you can afford.

Risk of recession spiral

Just one example. Trade deficits automatically mean new debt, and that has to be financed, which only increases the problems of over-indebted countries. Former German Chancellor Helmut Schmidt recently made exactly that point, echoing an idea favored by several prominent American economists. The imbalances have to be redressed, or the euro dies.

What that means is this: saving is necessary, but it's not enough. Austerity means that Greeks and Italians will be buying fewer German goods. By the logic of existing economic models, Germans would then have to react by lowering salaries. In the extreme case, the result of that would mean a recession spiral with millions of people out of work, something not altogether different from what Germany experienced under Chancellor Heinrich Brüning – and which accounted in part for Hitler's rise. Before the euro came along, weak states could devalue their currency to help balance the situation, but this path is now barred.

The only possible solution is that both camps change their policies. The southern Europeans need to modernize their economic model, eliminate monopolies, carefully monitor salaries, and invest in export firms. Germany, meanwhile, can't keep using its strength as an excuse to mismanage an economy. At the same time, the Germans have to devote some thought to what an economic model suited to a functioning monetary union actually looks like.

The answer to that is certainly not easy, as Germany isn't only competing with its euro partners, but with Asian boom nations as well. But what the Germans ought to do is raise salaries massively, even more than in the past years. That will help the rest of the euro zone. Millions of Germans, whose incomes have been stagnating for a long time, will reward the move with more consumption.

If Germans were to create more courageous service companies less hindered by bureaucracy they would further diminish the fixation on exports. Right now, ideas like that may seem not only unusual, but even a little provocative. And yet it is crucial that Germany change its way of thinking and develop new economic solutions. For if it persists in reveling in its status as world champion for exports, Germany will bury the monetary union under its own weight.

Read the original story in German

Photo - giopuo

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How Low Trust In Government Fuels Violence Against Politicians

The deadly stabbing of UK MP David Amess confirms this researcher's ongoing study on trust and governance in democracies around the world: It's bad.

Tribute to slain UK MP David Amess in Leigh-on-Sea on Oct. 15

James Weinberg

The killing of British Conservative MP David Amess, who was stabbed to death in his constituency on October 15, is a tragic moment for democracy. What makes it even more devastating is that such a catastrophic failure is not without precedent or predictability. Labour MP Jo Cox was shot at her constituency surgery in 2016. Before her, another Labour MP, Stephen Timms, survived a stabbing in 2010. And Andrew Pennington, a Gloucestershire county councillor, died in a frenzied attack in 2001 while trying to protect local Liberal Democrat MP Nigel Jones.

This is to say nothing of the 2018 attack on the Palace of Westminster that left police officer Keith Palmer dead and MPs in a state of shock.

Beyond these critical junctures in the public debate about politicians' safety, elected representatives must live with an increasingly insidious level of popular cynicism that threatens violence on an almost daily basis.

Between the divisive politics of Brexit and the growing polarization of British party politics, MPs currently work in a low-trust, high-blame environment. Even before the existential angst and subsequent politicking of the COVID-19 pandemic, a recent Hansard Society audit of political engagement concluded that “opinions of the systems of governing are at their lowest point in the 15-year Audit series – worse now than in the aftermath of the MPs' expenses scandal."

The ramifications of governing in such an age of distrust are significant for the mental health and wellbeing of politicians. With colleagues, I've argued that such visceral and endemic distrust is a key stressor in political life. People are not simply wary or skeptical of politicians, they now routinely criticize their personalities and dismiss their good intentions. At its most severe, this “distrust stressor" manifests in the growing threat of physical violence faced by politicians.

Unfortunately, the distrust stressor is commonplace in the febrile climate of post-millennial UK politics. Serious cases of stalking and harassment have become a “common experience" for MPs. In the UK general election of 2017, for example, 56% of surveyed parliamentary candidates expressed concern about the levels of abuse and intimidation they had received and 31% said they had felt “fearful" during the campaign. Misuse of anonymous social media accounts has intensified these problems and created a toxic environment for elected politicians that regularly exposes them to online rape and murder threats.

Governing under threat

As part of an ongoing study of trust and governance in five democracies around the world, I recently carried out more than 50 in-depth interviews with junior and senior politicians in national legislatures, including questions on the stresses and strains of political life.

Reflecting on the ramifications of simply doing their job, one Conservative MP commented:

There have been votes that have been controversial, and you can then get a lot of abuse as a result of picking a side. My office has been vandalized, I've had stuff sent to me in the post, I've received death threats. And you do build up a very thick skin doing this job, there's no shadow of a doubt. Because one week in it, if you're not able to roll with the punches, you won't see through a whole term.

Almost 40% of interviewees were able to cite more than one instance of serious abuse or threats of physical violence. Not only are these experiences felt across both sides of the political aisle in the UK, but they also appear to be growing more common in other democratic contexts where the climate of politics has been presumed to be both calmer and more volatile. As one MP in New Zealand told me:

I've had some pretty horrible death threats and I've had a lot of abuse, particularly through social media. But also, funnily enough, in writing and phone calls. Unfortunately it's becoming more part of our political life.

Another, this time in South Africa, said:

What [this group of constituents] were saying is that if the water supply was not fixed by a certain time, they were going to kill me. And what they did is they took a tyre and said that this tyre was going to go around my neck and they're going to light it and that was going to be my demise. Listen, when you see your life flash before your eyes… you start to question whether it's worth it.

In the UK, analysis of data from the Representative Audit of Britain (a survey of all parliamentary candidates who stood in general elections between 2015 and 2019) suggests that the harassment, abuse and intimidation of elected and aspiring politicians is also highly gendered. Women politicians, and black and minority ethnic women in particular, experience a disproportionate share of sexualized abuse online. They also receive more aggressive and sexualized threats offline.

Contact between politicians and the public is at the very heart of effective democratic representation.

It is relatively easy to understand why all this would be detrimental to politicians' professional competence and their sense of personal worth and wellbeing, but it is harder to find solutions to this crisis.

Home Secretary Priti Patel has called for increased security measures in the wake of Amess's death. This is welcome but it's an instrumental response which might not be easy to implement. Political contact between politicians and the public is at the very heart of effective democratic representation – and it is unlikely that most MPs will agree to suspend constituency surgeries or fill their offices with armed guards at a time when governor-governed relations are already so strained.

Photo of \u200bNew Zealand's parliament in Wellington

New Zealand's parliament in Wellington

Guo Lei/Xinhua/ZUMA

Compassion and education

While specific issues around MPs' security and training are grappled with, we also need a call for conscious restraint and compassion in political discourse. When some politicians themselves resort to dog-whistle populism, verbal abuse and infighting, it broadcasts an image of politics as an arena for incivility. At the same time, it perpetuates a binary worldview that crowds out the possibility of empathy and compromise.

Alongside this, we need to overhaul the media coverage of politics. Increasingly intent on personalizing the political and politicizing the personal, a 24-hour news media too often drip feeds blunt stereotypes about politicians' personalities and motives. In contrast to much news coverage of politicians, my own research with hundreds of elected MPs and councillors has shown that the majority enter politics with an extraordinary dedication to improving the lives of others that is rarely perceived or appreciated by those they govern.

A deficit in democratic education leads to inflated public expectations about what is possible.

Equally important, nations around the world must commit to fully funded and well-resourced programmes of democratic education. Politics is messy and full of contingencies, and a deficit in democratic education leads to inflated public expectations about what is possible or desirable. In turn, this breeds disappointment and lowered self-efficacy, which together disrupt the positive potential of deliberative participation.

Ultimately, there is no place for political violence, harassment or intimidation in a functioning democracy. At the very least, politicians are ordinary humans attempting to undertake an extraordinary job on behalf of everybody else. Whatever their political views, nobody who has the courage to "step into the arena", to paraphrase Theodore Roosevelt, deserves to fear for their life in the pursuit of public service. To say that we need to rediscover civility and respect in our politics is once again an understatement of a devastating truth.The Conversation


James Weinberg is a lecturer in Political Behavior at the University of Sheffield

This article is republished from The Conversation under a Creative Commons license. Read the original article.

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