December 01, 2011

David Brooks' rose-colored fiscal morality

Brooks, in comparing the U.S. and Germany (wo bist du, Herr Bobo?) says this nuttery:
Why are nations like Germany and the U.S. rich?...
It’s because many people in these countries, as Arthur Brooks of the American Enterprise Institute has noted, believe in a simple moral formula: effort should lead to reward as often as possible.
People who work hard and play by the rules should have a fair shot at prosperity. Money should go to people on the basis of merit and enterprise. Self-control should be rewarded while laziness and self-indulgence should not. Community institutions should nurture responsibility and fairness. 
Well, lemme see, the 1 percenters believe exactly nothing of that, David! And, to be honest, a certain amount of non-1 percenters probably have the same unbelief.

Beyond that, long before the meltdown, America's economy, more than Germany's, was built NOT on "self-control" but self-indulgence.

That said, while Brooks is right about Greece, and somewhat right about Italy, Krugman has a more nuanced picture of the whole Eurozone. And, labor retrenching of the last decade aside, Germany in general still rewards regular old labor better than the U.S. in many ways.

And, neither one of them has totally tackled this issue: Many Germans' lingering fears of 90-year-ago hyperinflation means that Germany is not liable to go too far in working with even non-Greek parts of the eurozone. Booting Greece from the zone might work. But, the rest of the eurozone would be hugely weakened without Germany.

And, all the fractions of blame that lay out there, it's clear both on this side of the pond and inside Europe that the whole eurozone is in trouble. Most economic pundits are saying if Italy caves, that's it; that's too much burden for the eurozone.

That said, I'm not a professional economist, and I don't play one on TV. But, I don't think a eurozone collapse is as bad as the 2008 global financial turmoil. Now, coming on top of a slow recovery from that, it could extend a "lost decade" in fair parts of both Europe and the U.S.

On the other side, China has said it wants to invest sovereign wealth fund money in both areas, in infrastructure improvements. One hundred and fifty years ago, their labor built our railroads; now, their money might rebuild them.

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