Michael Lewis continues his Euro-crisis tour, this time popping up in Germany. Like previous installments in Iceland and Ireland, Lewis has found a curious (and probably grossly exaggerated) cultural trait that -- whaddyaknow? -- has surprising relevance for the crisis. In Iceland it was fear of underground elves; in Ireland it was fairies. In Germany? The duality of scheisse. (I'll let those of you that have forgotten your foreign curse words from middle school look it up.) Also Hitler.
As always with Lewis it's a very interesting piece. Also as always, I'm not sure he gets to the true center of his subject. Actually, that's not true. He does, but usually very briefly and with a key component left out. He mentions Germany's willingness to accept the eurozone as a sort of penance for the Holocaust, but not that it was related to European reticence over reunification. He mentions that other countries used Germany's credit rating to borrow more than they should, but chalks up Germany's frugality to some inherent character trait, perhaps related to long memories of the 1920s hyperinflation. Humorously, he allows his translator/chauffeur to blow apart his thesis midway through -- "How do you generalize about 80 million people? You can say they are all the same, but why would they be this way? -- but then continues on with it anyway.
But a few things come out from the article anyway. First is the unsophistication of German bankers, at least relative to their American counterparts. This, too, is a common thread running through Lewis' discussions of Iceland and Ireland. Second is the fact that German bankers took AAA ratings at face value. Of course so did lots of other investors, including American bankers, which undercuts his "German unsophistication" argument, but whatever. Third is the politics, which he barely touches on but which is obviously the most important aspect of the creation of the crisis and the responses to it.
In Lewis' story, Germans are austere and hard-working while Greeks are lavish and lazy. Of course this view is common, but it is also highly questionable. For example, did you know that on average Greeks work later in life than Germans, French, or Italians? Or that a substantial amount of Greek's debt was accumulated by borrowing from France to buy French weapons to deter Turkey? Greece has a major problem with tax collection and productivity, but many of these concerns are caused by or exacerbated by the German dominance of the ECB and Euro economy. Lewis writes that Germany has become Europe's daddy, but don't the parents get some blame when the children misbehave?
Lewis also presents contradictory views of the German political environment. On the one hand, Germans are portrayed as docile and demure, eager to demonstrate their commitment to Europe and the international community, willing to sacrifice quite a lot to those ends, shamed by displays of nationalism, and almost masochistic in the "memorialization" of their own ugly past. On the other hand, they are PISSED OFF at the rest of Europe and aren't going to take any more of this scheisse from the rest of the continent. Well, which is it?
Lewis' essay is fun reading, but I'm not really sure how much can be learned from it. As always there is a bit of financial mechanics for the uninitiated, and some interesting characters that tell interesting stories -- look for the one about Commerzbank, Deutsche Bank, and the urinals in the men's bathroom -- but give no clear sense of why things happened, much less what's going to happen. Lewis is interested in narrative not analysis, and his sense of politics has always been immature. He's much more interested in culture, and especially the culture of Wall Street and the ways in which it differs from other cultures. Which is all fine and good, I guess, but it limits the importance of what Lewis can say.
PS: I now see that Kevin Drum and Felix Salmon had a similar reaction, except more revolted.
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IPE@UNC is a group blog maintained by faculty and graduate students in the Department of Political Science at the University of North Carolina at Chapel Hill. The opinions expressed on these pages are our own, and have nothing to do with UNC.
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Sunday, August 14, 2011
On Michael Lewis on Germany
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