Wednesday, October 15, 2014

Angie-nomics versus arithmetic

"The idea that Germany is a useful role model depends on Ordoarithmetic — the view that what we need is for everyone to run enormous trade surpluses at the same time." - Paul Krugman, German Weakness 10/12/2014

Everyone running trade surpluses is a great idea. Or would be if those annoying laws of arithmetic didn't get in the way!

"Ordoarithmetic" is Krugman's mocking phrase about Merkel's hard-right "ordoliberalism," which I typically refer to as Herbert Hoover/Heinrich Brüning economics, because that's basically what it is in practice.

I discussed ordoliberalism here in Angela Merkel and "ordoliberalism" 12/06/2011.

I quoted there from an article on the original incarnation of ordoliberalism, also known as the Freiburg School, by Carl Friedrich, "The Political Thought of Neo-Liberalism" The American Political Science Review 49/2 (Jun. 1955). Discussing the book Ortsbestimmung der Gegenwart by one of a leading ordoliberal of the day, Alexander Ristow, Friedrich commented on the anti-democratic bias of the theory:

There is a good deal of elitist thinking among these neo-liberals, with little appreciation of the role of the common man. Many of them - although not Ristow - confuse the common man with the mass man, in the manner of Ortega y Gasset. Although their idea of the constitution as the creative act of instituting the free market economy requires an elaboration of their image of man along democratic lines, showing that he is capable of much "common sense," they do not see democracy in this perspective. There is a general tendency to confuse constitutional democracy with the anarchic majoritarian democracy that the Jacobins read into Rousseau, and to see totalitarian dictatorship as its inescapable fruit. [my emphasis]
Krugman cites Wolfgang Münchau's Germany’s weak point is its reliance on exports Financial Times 10/12/2014. Short version of Münchau's piece: Angela Merkel and her SPD toadies luu-uuve them some Lesser Depression. And that plan to keep it going as long as Heinrich Brüning would have. For Brüning, other political events intervened.

Also from the Shrill One: "We are by no means out of the Lesser Depression." (Krugman, 1937 10/15/2014)

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