The stupidity of Northern European nations with regard to debt has hit Italy again and is provoking even more radical “solutions”. When will people ever learn?
Heiner Flassbeck is an economist, as well as publisher and editor of “Makroskop” and “flassbeck economics international”
Originally posted in German at Makroskop
Translated and edited by BRAVE NEW EUROPE
Whether Petra Gerster knew what she was doing yesterday when she introduced a piece concerning Italy on German state television ZDF with the sentence (here) that Italian debt is currently at 2,300 billion euros and the new populists, who recently came to power in Rome, want to carry out expensive reforms. A little later, her colleague Claus Kleber, in his incomparable mixture of ignorance and arrogance, even said that the Italians now had to be “brought to heel” by Brussels if the euro zone was to survive.
These days, macroeconomic stupidity is regressing to its happy origin. Calling it stupidity is not an exaggeration but rather an understatement. Of course, it is still the stupidity of the Swabian housewife who simply does not want to understand that there can be no improvement in an economic situation anywhere without investment and the resulting increase in debt. In particular, she does not want to understand that the economic situation in Germany will only improve if debt rises. In the German case, however, it is an increase in the foreign debt that is currently necessary. But we Germans don’t care about foreign debt, we only get upset about it when – oh horror – when we suddenly realize that other nations have even higher debts than before.
It’s really getting dangerous
So far this has been a reason for enlightened people to complain about political and social ignorance on economic issues, but now the importance of this debate is changing fundamentally. The current collective stupidity in Northern Europe, massively intensified by the media, is degenerating into a political controversy that will massively damage, if not ultimately destroy, Europe, but presumably democracy on the continent as well.
The nonsense of the “highly moral” and “law-abiding” countries of the north that is trumpeted daily in the media, is not engaging this time with a naive and ultimately compliant small government as was the case with Greece. This time it comes up against a government in a large country that was clearly elected by its citizens to revise the process of Italy’s European integration and also to explicitly change course in the event that no policy change with regard to integration can be negotiated with Brussels. And it meets – at least on the side of the Lega – a party that has the economic competence to compete intellectually with traditional Europe, which means nothing else but being able to openly identify northern stupidity for what it is: stupidity.
When “right-wing radicals” are driven to radicalism
Even more importantly, with Matteo Salvini, the Lega has a president who has the chutzpah and brutality not to be intimidated by Brussels bureaucrats and diplomats from other countries. For Salvini, resistance from northern Europe can only mean betting on the next opportunity, namely new elections, in order to become so strong that northern attributes such as “xenophobic” and “right-wing radical” no longer need to interest him at all.
I will not repeat what I said elsewhere about the economic situation in Italy and its prospects (here and here about the political and economic situation, especially here). However, the refusal in the North to even consider legitimate concerns of the South has brought the situation to where it is today. That was clearly predictable. On December 5, 2016, I wrote:
“Because Germany’s insistence on the absurd rules of the Stability and Growth Pact for purely ideological reasons is also blocking the way out of the crisis via the demand side, there is simply no way out of this crisis….
If we do not find a way out of the European crisis, this will lead directly to nationalism. It is therefore no exaggeration to say that Germany is directly responsible for the rise of nationalism in the South. It is indirectly answerable for the rise of nationalism in Northern Europe, because the denial by Germans (and Austrians) concerning their responsibility for creating this situation opens the door for the right-wing parties to cheekily claim that the lazy Southern Europeans only want to steal the hard earned wealth of the North.
Now we only have to look at how self-righteously German politicians and the German media deal with the European question and German responsibility for this mess. Then one can understand how great the Babylonian linguistic and factual confusion is throughout Europe. Bringing the factual connections into a form that allows politics to take at least a few steps in the right direction is a task of Herculean proportions. The Italian political earthquake and the rise of Austrian nationalism could have been prevented with a little foresight and insight. But far-sightedness and insight is not what the political-medial-academic complex can provide in Germany and Europe”.
That is exactly what happened. But there is still no sign of insight in the north. Instead we have the same hubristic attitude, insisting on the (objectively wrong) rules and the ignoring every rule that Germany egregiously breaks. The way in which Germany, together with its “free press” and “free science”, is overriding the legal requirements regarding the limitation of current account surpluses can hardly be summed up in words.
We Germans are the model of wisdom and solidity and therefore avoid even entering into dialogue with the others concerning our possible errors and mistakes of the past. But anyone who today denies a democratically newly elected government – be it centre, left, or right – a dialogue with an open outcome, despite them having perfectly justified economic concerns, will reap a nationalist-fascist storm in comparison to which what we are now experiencing is only a mild breeze.
Also see Larry Elliot: Italy’s policies make sense – it’s eurozone rules that are absurd (here)