Across Europe, the word “austerity” immediately brings to mind its chief proponent, Berlin. But the term is almost unknown to Germans.
The election in Greece of a left-wing government radically opposed to austerity has set the stage for a new showdown with Germany, Europe’s chief guardian of budgetary orthodoxy. After a first, tense meeting between the two countries’ finance ministers in Berlin on Thursday, Germany’s Wolfgang Schaeuble said he and his Greek counterpart agreed on at least one thing: “to disagree”. Analysts had expected no more.
When discussing the belt-tightening measures imposed on European governments since 2010, the German government and its critics often seem lost in translation. Indeed Europe’s protracted debt crisis has produced a whole new vocabulary that varies from country to country. France has opted for the more palatable “rigueur” (rigour) when referring to budget cuts. Its former finance minister and current IMF chief, Christine Lagarde, even coined the bizarre neologism “ri-lance” – fudging together “rigueur” and “relance” (economic boost) – to describe elusive attempts to kick-start the economy through a mild dose of belt-tightening.
Meanwhile, Greece has been awash with talk of austerity. Yanis Varoufakis, the new finance minister, has described it as “fiscal waterboarding”, referring to a form of torture used by CIA agents when interrogating terrorism suspects. Greeks pummeled by savage budget cuts, shrinking wages and spiraling unemployment have become familiar with a whole host of other words, including “troika” and “memorandum”. The first refers to the cohort of foreign technocrats tasked with dictating policy to Greece’s democratically elected governments; the second, to the measures imposed in return for Greece’s bailout by the EU and IMF.
In Germany, the crisis rocking the country’s EU partners has produced the ugly term “austerität”, but few use it, least of all Chancellor Angela Merkel. She has made no secret of her distaste for the word, prefering to speak of “sparpolitik” – which translates as “the politics of saving money”, or of spending it “sparingly” – and “sparsamkeit” (frugality). Both terms have positive meanings and refer to very reasonable policies. Conversely, anyone opposing “sparpolitik”, like Greece’s government, is necessarily unreasonable.
Debt relief and Germany's economic miracle
To some extent, the language used reflects genuine disagreements on economic policy. Merkel’s government believes in supply-side economics, whereas the new government in Athens says it must boost demand to revive the country’s moribund economy. In other words, Berlin wants more belt-tightening to make Greek companies more "competitive", while Athens says it needs less belt-tightening to give those companies someone to sell to. Above all, Greece is begging for more time to repay its €310 billion debt, without which it has no chance of delivering on its campaign pledges.
Greece’s new leaders point out that six years of depression and five years of austerity have wiped out a third of the country’s industry and slashed GDP by a quarter, pushing millions into poverty. Meanwhile, the country’s debt burden has actually increased as a percentage of GDP because of the shrinking economy. Brown University’s Mark Blyth, a professor of political economy and author of “Austerity: The History of a Dangerous Idea”, says it is no surprise German leaders fail to mention this. “Germany simply refuses to address the fact that Greece’s debt has shot up since the budget cuts, because it doesn’t fit its dogmatic insistence on the merits of austerity,” he told FRANCE 24.
When debt means guilt
The contrast between “austerity” and “sparpolitik” reflects deep-seated cultural differences between European countries, shaped by history and religious belief. Germany’s hallowed fiscal prudence is the legacy of a half-century of political and economic turbulence, when the country experienced multiple crises and secured the kind of generous debt write-off it is now denying Greece. As the BBC’s Chris Bowlby has written, the infamous hyperinflation of 1920s Weimar Germany, which still traumatizes Germans, resembled a real-life version of the economic crisis sparked by the demonic Mephistopheles in Goethe’s Faust, one of the most famous works in German literature.
Some have pointed to the legacy of Europe’s religious divide between a Catholic south and a Protestant north, with talk of thrift and responsible budgets coming instinctively to Merkel, the daughter of a Protestant pastor, while Catholics are supposedly more open to debt “forgiveness”. The idea of forgiving debt is anathema to Berlin. “Schuld”, the German word for debt, also means “guilt”. It has a moral quality that doesn’t translate into other European languages. For Keynesian economists, spending one’s way out of crisis, at the risk of temporarily increasing the debt load, is eminently sensible – particularly at a time of low interest rates, as is presently the case in Europe. But to many Germans it is sinful.
Professor Blyth says this moral aversion to debt and deficit spending prevents Germany from recognizing their necessity. “What they’re criticizing is actually what makes their exports thrive,” he says. “Somebody simply has to run a deficit for Germany to enjoy a surplus”. Mindful of his counterpart’s stance on debt, Varoufakis said he had steered clear of the “D-word” during his meeting with Schaeuble on Thursday. He did not say whether he had mentioned the A-word.
Date created : 2015-02-05