German hypocrisy

9 Apr, 2022 at 17:48 | Posted in Politics & Society | 2 Comments

On the eve of the Ukraine war, 55 percent of German gas came from Russia.

How Russia hooked Europe on its oil and gas – and overcame US efforts to prevent energy dependence on MoscowThere’s no question that quickly cutting off, or even greatly reducing, this gas flow would be painful. But multiple economic analyses … have found that the effects of drastically reducing gas imports from Russia would be far from catastrophic to Germany …

As some readers may remember, early last decade much of southern Europe faced a crisis as lending dried up, sending interest rates on government debt soaring. German officials were quick to blame these countries for their own plight, insisting, with much moralizing, that they were in trouble because they had been fiscally irresponsible and now needed to pay the price …

Germany took the lead in demanding that debtor nations impose extreme austerity measures, especially spending cuts, no matter how large the economic costs. And those costs were immense: Between 2009 and 2013 the Greek economy shrank by 21 percent while the unemployment rate rose to 27 percent.

But while Germany was willing to impose economic and social catastrophe on countries it claimed had been irresponsible in their borrowing, it has been unwilling to impose far smaller costs on itself despite the undeniable irresponsibility of its past energy policies.

I’m not sure how to quantify this, but my sense is that Germany received far more and clearer warning about its feckless reliance on Russian gas than Greece ever did about its pre-crisis borrowing. Yet it seems as if Germany’s famous eagerness to treat economic policy as a morality play applies only to other countries.

Paul Krugman

2 Comments

  1. Krugman’s understanding of morality is reflected in his constrained optimisation models – a very concerning basis for understanding morality indeed.

    The hypocrisy is also a bit much:

    “German officials were quick to blame these countries for their own plight, insisting, with much moralizing, that they were in trouble because they had been fiscally irresponsible and now needed to pay the price …”

    That is not the reason, and I suspect even Krugman himself knows it. It is also ironic coming from a man (together with others in his club such as Stanley Fischer) who was a cheerleader for the IMF imposed conditionality on the globalisation stricken east asian countries in 1997. Remember all that – the Asian predicament caused by fiscal profligacy and ‘corruption’?

    The rise of the hard right in Russia, as is the case in many other countries, is also largely fall out of uber-globalisation policies of which warnings were made by Hirsch, Angus Maddison and many others as far back as the 1980s and even before, but dismissed by Krugman as being ‘unsophisticated”. Where was Krugman when Jeffrey Sachs, MIT and the IMF pushed Gorbachev and the moderates to implement the shock therapy policies that dismantled the old Soviet command system?

    Very much in bed with them.

    Luckily for China, it ignored your advice.

    By the way what is Krugman’s understanding of ‘unsophisticated ‘? Basically not using neo-classical geometric and algebraic gimmicks whose crude and crass understanding of society and morality revolves around ‘unlimited wants’, constrained optimisation and basically greed.

    The showdown in Ukraine was foreseeable and foreseen. The way to end this tragedy now is through serious talks about reinstating the Minsk Accords. Pressure from Germany on Russia may indeed be part of a way of effecting that. But this dishonest hyperbole from Krugman is unhelpful.

    Comment by Nanikore— 12 Apr, 2022 #

  2. So, now Krugman thinks economics is a morality play?
    .
    Let’s revisit that sentiment in six months, as the world is racked by famine.

    Comment by Bruce Wilder— 11 Apr, 2022 #


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