Upcoming Events for Spring 2017
Thursday, April 20, 2017, 12:00 - 2:00 p.m.
Faculty Club Lounge
"Is Wolfgang Schäuble, Germany's Finance Minister, as Dangerous to the EU as Donald Trump?"
with Andrew Martin, a political scientist with the Center for European Studies and a research associate at Harvard University
Thursday, April 27, 2017 12:00 - 2:00 p.m.
Faculty Club Lounge
The defining feature of German economic policy is a rule that government budgets must be balanced on an annual basis within very narrow limits. This balanced budget objective is captured in the expression "schwarze Null," or black zero. It is not only inscribed in Germany's constitution but also, at Germany's insistence, in the rules governing fiscal policy in the European Union's member states. It has been increasingly criticized not only by international economic bodies like the IMF and OECD but also European institutions like the European Central Bank and European Commission, and even some German politicians and economists, albeit a minority. According to these critics, its operation in both Germany and throughout the EU has severely retarded Europe's recovery from the financial crisis and inflicted great economic and social costs on large portions of Europe's population.
I think these critics are right. But if so, why does Germany continue to insist on adherence to the rule? I'll explore the two most widely advanced answers to the question after briefly describing the rule and how it operates in the context of the euro area's unique institutional structure. One of the answers points to the dominance of ordoliberal ideas in German economic thought. The other points to the importance of the export manufacturing sector's interests in German policy. A third answer stresses the moral virtue assigned to parsimony in German culture, where Schuld is the German word for both debt and guilt. While this is a staple of German political discourse, it does not seem as plausible an explanation of German economic policy as economic ideas or economic interests, or both, so I'll focus on those two explanations.
Andrew Martin is an Affiliate of the Center for European Studies and Faculty of Arts and Sciences Research Associate at Harvard University. A political scientist, he specializes in the comparative politics of economic policy, with a focus on macroeconomic policy, social policy, and labor. Much of his work has been on Sweden and more recently the European Union, including volumes co-edited with Brandeis Emeritus Professor George Ross. His most recent publication is European Social Models from Crisis to Crisis: Employment and Inequality in the Era of Moneary Integration, co-edited with Jon Erik Dølvik. Among his contributions to the book are a chapter on "Eurozone Economic Governance" and a co-authored chapter on the "Transformation of the German Social Model." He received his Ph.D at Columbia and taught there before holding research and teaching positions at the Joint Economic Committee of the US Congress, MIT, UMass (Amherst), Boston, Brandeis, Carleton (Ottawa) and Harvard Universities.