In the end, the G-20 summit made some progress. But faced with the opposition of France and Germany, the United States could not persuade its partners to commit to more stimulus. Given the state of elite opinion in Europe today, it’s no surprise that President Obama came up short.
The fact is that Old Europe is in a good mood. Unemployment is up, exports are down, industrial production has collapsed–but it doesn’t matter. As Victor Hugo wrote, imagining the atmosphere in revolutionary Paris, “Everything was frightening, and no one was frightened.”
In place of fear, there’s triumphalism. No one likes recessions, but they’re easier to swallow when they seem to vindicate your fundamental concept of political economy. And the big meaning of the crisis for Europeans is the vindication of their ideas about how to run an economy.
“I remember the days when American economists came to Germany and told us we had to privatize our community banks, that our small, family-owned industrial companies were not a strength, that we had to move closer to the Anglo-Saxon way of doing business,” Jens van Scherpenberg, an economist at the University of Munich who for several years led the Americas unit at the quasi-governmental German Institute of International and Security Affairs, told me. “If someone came here and said that today, the response would be laughter–sarcastic laughter.”
Andrea Nahles, vice chair of the German Social Democrats, was asked by a journalist about the US criticism of Germany’s reluctance to spend more. “Ach, the USA!” she said. “How many times have I had to listen to our labor-market policies compared with those of Denmark, of Britain, of other countries! And who looks good now? Germany!” Nahles, an important figure on her party’s left wing, went on to argue that the United States was simply forced to spend money to save its growing army of unemployed, whereas Germany was putting in place better policies to ensure lifelong training, even for those with jobs. “Simply increasing transfer payments doesn’t provide people with opportunity,” she sniffed.
In France, Jean-Pierre Jouyet, director of the country’s SEC equivalent, told Le Monde this week that the crisis represents “the revenge of Colbert”–referring not to Comedy Central’s Stephen but to Jean-Baptiste, Louis XIV’s mercantilist finance minister and the apostle of dirigisme. Jouyet was quoted in an article praising France’s system for training the country’s elite technocrats–a state-centered approach that has been widely questioned over the past few years, but whose virtues suddenly seem more relevant. “In other countries, people of this quality are in the private sector,” explained WTO director (and French Socialist) Pascal Lamy.
Werner Abelshauser, an economic historian at the University of Bielefeld in Germany and a leading expert on differences in transatlantic economic cultures, told me that the crisis gives Europeans “a chance to think about our strengths, to appreciate again the European way of running the economy, which is fundamentally about a banking system based on patient capital and firms that emphasize high-quality products and long-term relationships between suppliers and customers.”