One can just wonder at Mr. Ozment’s myopia as he proclaims that Merkel, and by definition some very important members of Germany’s political class, express a fiscal probity that dates back to the stern Protestantism of Martin Luther. Does Mr. Ozment not read the popular press? He missed the very revelatory report by The Financial Times’ Gillian Tett dated January 16, 2015 and titled ‘A debt to history’ and sub-titled ‘To some, Germany faces a moral duty to help Greece, given the aid that it has previously enjoyed’.
In her essay Ms. Tett reports on an after dinner address by economic historian Benjamin Friedman, for the full text of this speech:
Ms. Tett summarizes some very important sections of Mr. Friedman’s address:
The mandarins settled comfortably into their chairs, expecting a soothing intellectual discourse on esoteric monetary policy. But Friedman lobbed a grenade.
“We meet at an unsettled time in the economic and political trajectory of many parts of the world, Europe certainly included,” he began in a strikingly flat monotone (I quote from the version of his speech that is now posted online, since I wasn’t allowed to take notes then.) Carefully, he explained that he intended to read his speech from a script, verbatim, to ensure that he got every single word correct. Uneasily, the audience sat up.
For a couple of minutes Friedman then offered a brief review of western financial history, highlighting the unprecedented nature of Europe’s single currency experiment, and offering a description of sovereign and local government defaults in the 20th century. Then, with an edge to his voice, Friedman pointed out that one of the great beneficiaries of debt forgiveness throughout the last century was Germany: on multiple occasions (1924, 1929, 1932 and 1953), the western allies had restructured German debt.
So why couldn’t Germany do the same for others? “There is ample precedent within Europe for both debt relief and debt restructuring . . . There is no economic ground for Germany to be the only European country in modern times to be granted official debt relief on a massive scale and certainly no moral ground either.
Where might the idea of German fiscal probity, as the expression of the Protestant Virtue of Martin Luther, stand in the light four instances of Germany’s debt restructuring in the 20th Century ? Such a record puts Merkel’s and the European Central Bank’s treatment of the Greeks into its proper perspective, and with it Mr. Ozment’s potted history of the Myth of German moral/fiscal virtue as somehow exemplary. A debt to history?