It’s unfair to blame Europe’s crisis on lazy Greeks, argues Alan Shipman. Industrious Germans are equally to blame.

Rightly concerned that a crisis in the Eurozone could stifle any British economic recovery, David Cameron has been telling continental colleagues how to rebuild their economies. But his prescription – public spending cuts, pay freezes, less regulation and tougher welfare eligibility tests – has only worked in Europe’s smallest economies, with one notable exception.

Austerity’s greatest successes have been in the tiny Baltic Republics (Estonia, Latvia and Lithuania, which have a combined population of only 7 million). They reduced their wages and tightened their budgets during a deep 2009-10 recession, and were rewarded by bounding back to growth in 2011. Even so, the belt-tightening exemplar Estonia is now moving its budget into deficit, to help it keep growing as other Euro economies grind to a halt.

The notable exception is Germany, which since unification has trimmed its traditionally generous welfare state, reduced its labour protections to create one of Europe’s most flexible labour markets, and driven up efficiency so that it can still build machines and computers that compete with the Chinese.

But even if the UK could match this (and it’s been trying and failing for more than a century), Europe does not have room for another Germany. Indeed, it cannot even accommodate the present one. While Greece, Spain and other ‘peripheral’ economies are constantly blamed for the Eurozone’s problems, the root cause of its failure is actually Germany’s success.

Germany’s productivity, growth and wage discipline have restored it to being the world’s largest exporter in relation to its national output. It could soon be the biggest in absolute terms, as China’s export surplus shrinks. Large current-account surpluses – when a big economy exports substantially more than it imports – have always destabilised the world economy.

The world recession of the 1970s was triggered by large Gulf state surpluses after the cartel raised the oil price. The slowdown of the late 1980s followed the relentless growth of Japan’s surplus. And China’s external surplus is now blamed for feeding the West’s boom and bust, by draining demand from Europe and America and only restoring it with unsustainable credit growth.

But the oil-exporting states learnt to curb prices in order to keep the industrial economies growing – a mutual interest once their surpluses were invested in those economies. The Japanese and Chinese surpluses were a transitional feature of developing economies. Japan’s has already been reduced as an ageing population expands its consumption; and China’s is similarly dwindling as rising incomes (and a rapidly ageing population) allow it to absorb the production it once had to sell abroad.

Germany’s export surplus, by contrast, is an anomaly among rich industrial countries. It results from the world’s most productive industrial workers also being among its most reluctant consumers. This frugality is set to increase as Germans – the first big nation to put Greens into government – take a lead in reducing their carbon and other chemical footprints.

'the world’s most productive workers are among its most reluctant consumers'

German output per person is higher even than the US (when shorter working-time is factored in). Yet whereas American households saved just 5% of their income last year, Germans put aside almost 12%. Because it produces so many goods and services it doesn’t consume, exports account for around half of Germany’s national output, and were the main source of its 0.5% first-quarter growth.

The resultant German surplus is the obverse side of the deficits that are sinking Greece and Portugal, and could soon drag down Spain and Italy. It builds a deflationary bias into the Eurozone, and is the reason that electorates all across Europe have now voted against the austerity measures Germany wants them to take.

The Confederation of German Employers protests that Germany’s exports mainly go outside Europe, and that its sales within the Eurozone are mainly of capital equipment that helps other countries boost their own production. But Germany still pre-empts the export sales now desperately needed by Italy, Spain and other growth-starved economies, and is pushing the Eurozone into an external surplus that’s a drag on world growth.

Voters don’t always choose options that are economically achievable, but this time the alarm they’ve sounded is entirely reasonable. The ‘fiscal pact’ to which Eurozone governments have signed up requires them to rein-in their budget deficits, at a time when falling real wages and rising unemployment risks are forcing households to do the same, and profitable businesses aren’t investing because there’s no demand for any extra production.

This solution, though warmly endorsed by David Cameron, can only work if it results in a strong rise in exports. But with the US now reducing its own current-account deficit by consuming less and exporting more, there is nowhere for a rising European export surplus to be sold.

The UK returned to growth in 2009-10 in part by letting the pound fall, and boosting its exports to the Eurozone. The Eurozone is too big to do the same, and can only revive by raising its own – which mainly means Germany’s – internal demand.

Forcing Germans to consume more would be neither feasible nor ethical; raising their wages might push them towards this, but employers have no reason to do it, and extra pay is likely to be saved rather than spent in the current despondent climate. Forcing Germany (and the comparably export-intensive Dutch) to leave the euro, and adopt a new currency that could appreciate against it, might make some economic sense but is a political non-starter.

So last week’s G8 summit pushed Germany to invest more, and to put additional capital into institutions like the European Investment Bank that can do so, especially in Europe’s poorer and more indebted regions. In an ideal monetary union, this would be done through a central federal budget, and financed by genuine ‘euro bonds’ issued jointly by the 17 member states.

Ironically, that’s just what George Osborne and his Treasury team have started to advocate, for the Eurozone – and there are belated signs that, faced with a double-dip recession, they may be contemplating comparable fiscal relaxation for the UK (see this Daily Telegraph story. But any additional funds they assign to investment will be ruthlessly chopped from welfare and other government consumption. If excessive austerity does indeed destroy the Eurozone’s recovery prospects, that will only increase the Coalition’s appetite for it at home.

 Alan Shipman 23 May 2012

Alan Shipman is a lecturer in Economics at the Open University. He is responsible for the modules You and your money:personal finance in context and Personal investment in an uncertain world, part of the foundation degree in Financial Services.

The views expressed in this post, as in all posts on Society Matters, are the views of the author, not The Open University.

Cartoon by Catherine Pain
 

 

Meg Barker asks: should we open our minds to all emotional states, not just happiness, in order to have fulfilled lives?

On Tuesday (22 May) the magazine DIVA and the mental health charity PACE are holding an evening event called The H-word. The H-word in question is happiness, and the plan is to have a discussion about happiness, health and well-being and about how people can support each other towards 'happier, more meaningful lives', with a particular focus on lesbian, bisexual and queer women.

The focus on these groups is appropriate because both women, and lesbian, bisexual and queer people, are particularly highly diagnosed with mental health problems such as depression and anxiety (when compared with men, on the one hand, and heterosexual people on the other). They also self-report higher levels of distress and lower levels of happiness and well-being than other groups. 

My brief presentation at the event will focus on the social aspects of such suffering. Women's experiences of depression have been linked, for example, to the ways in which women are socially expected to demonstrate distress (sadness and fear, rather than anger), and to aspects of conventional femininity such as having identities which are strongly bound up with other people's well-being and feeling a lack of agency over their own lives. Lesbian, gay, bisexual and trans (LGBT) people have higher rates of such problems because of the challenges of living within a heteronormative world and related experiences of homophobia, biphobia and transphobia. Recent research has found that rates of depression, self-harm and suicide are particularly high amongst bisexual and queer people, which is likely linked to their lack of visibility in wider culture. It is difficult indeed to have one's identity questioned, ridiculed, and/or disregarded by heterosexual and lesbian and gay communities alike.

Suffering is often exacerbated when distress which has such a strong social component is regarded as being something which is internal to the individual themselves. Currently there is a powerful cultural tendency to see all distress as being internally caused. Many people believe that when they are depressed or anxious there are only two possible ways of understanding this: Either they are ill, and they need help, but at least this means that it is not their fault. Or they are not ill, and therefore don't need help, but this means that they are to blame for their own suffering (the 'pull your socks up' attitude). 

Both of these understandings are internal: either there is something physically wrong, or there is some kind of personal deficiency on the part of the individual. Such understandings can prevent us from seeing – and addressing – any social element to our suffering. They also catch us in a double bind whereby we have to accept that there is something wrong with us or that we are blameworthy, neither of which is a great outcome, and both of which continue to haunt the other even if we dismiss them. 

 

'there is a powerful cultural tendency to see all distress as being internally caused'

An alternative to this internal perspective is to see all forms of human distress as complexly biopsychosocial. Of course there are some physical vulnerabilities which we have to experience distress in certain ways, and social experiences like being the victim of prejudice write themselves on our psychology and biology in various ways (affecting brain chemistry, thought patterns, and the way neurons wire up, for example). However, our biology is intrinsically interwoven with the ways in which we experience the world, and the ways in which in which it treats us. The statistics on mental health problems in women and LGBT people alert us to just how important these social aspects can be, and may leave us asking whether 'depression' or 'oppression' is the more useful word to apply. Opening up the possible role of social forces also opens up potential for other ways of addressing struggles than the common individual modes of drugs or therapy. Both community involvement and activism because important possibilities to consider.

This finally leads us to the H-word and why I find it somewhat troubling. We hear a lot at the moment about the importance of individuals achieving happiness through positive psychology. However, there is a real danger that this throws us back into an internal understanding of such things: 'Everyone should be happy and here are some techniques you can use to achieve it. If you can't achieve it then there is something wrong with you'.

In her book, The Promise of Happiness, Sara Ahmed talks about the ways in which happiness may be more available to some rather than others (often those who can more easily conform to the 'norm'). She suggests that we require 'feminist killjoys' and 'unhappy queers' if we are to reach a more equal society where pleasure isn’t always found at the expense of others, or by conforming to problematic power hierarchies.

There is a related idea in the mindfulness approach which I find useful. Buddhists believe that it is actually the craving for happiness which is the cause of suffering. Our consumer culture constantly tells us what we need to be happy (more money, fame and success, the perfect partner, the ideal body, the product they are selling, etc.). As Sara Ahmed points out, such things are more accessible to some than others, but even for those who can get them, they are never enough. Mindfulness advocates an alternative approach of bringing our attention to the here-and-now, rather than constantly striving after whatever we think we need to be happy. It also advocates being with whatever emotions we're experiencing rather than privileging one (happiness) over all others.

I was interested that the H-word event description talked about finding 'happier, more meaningful lives' as if these two things necessarily go together. From another perspective we might regard constantly grasping after happiness as the very thing which will prevent us from achieving it. It might be that in order to have a meaningful life we need to let go of the quest for happiness. If we turn our focus to welcoming all emotional states and what they have to tell us, and to compassionately seeking to improve society through mutual support, perhaps we may find that happiness sneaks up on us after all.

Meg Barker 21 May 2012

Meg Barker is an Open University lecturer teaching mainly on counselling modules,  and is also a therapist specialising in relationships. Find details of her other blogs here. 

The views expressed in this post, as in all posts on Society Matters, are the views of the author, not The Open University.

 

Cartoon by Catherine Pain

 

 

 

Dr Donna Smith is dismayed by the Government’s vacillation over gay marriage in the face of mid-term electoral blues.

When the Coalition Government announced it would hold a consultation on opening up marriage to include gay civil marriage, it suggested that one half of the Coalition, the Conservative Party, had become much more socially liberal since the Party’s opposition to many of Labour’s gay rights policies in the late 1990s and early 2000s. The Conservative Prime Minister David Cameron made it clear that he supported gay marriage, with the Lib-Dem Equalities Minister, Lynne Featherstone, stating gay marriage was a “change for the better”.

But a lot changes in six months. Cameron’s Conservatives are on the ropes, after a dodgy budget and local election hammering. Some backbench Tory MPs have suggested that it’s support for gay marriage that has damaged the Conservative brand – a view shared by various right-leaning newspapers, who have deemed the change irrelevant and unimportant in the current economic climate. Post-local elections the Conservative Chancellor, George Osborne, said that the Government would take care to focus on the things "that really matter”, the suggestion being that this isn’t gay marriage.

But, hang on a minute. Who says gay marriage doesn’t matter? It certainly matters to many gay people, their friends and families. In fact, it could be said to matter to society as a whole, as an issue of equality and fairness. And don’t governments have a duty to focus on issues whether they affect the ‘majority’ or ‘minority’? If the Government doesn’t look out for people, who will?

Perhaps Government should just go ahead and legislate. That is, after all, what they have been elected to do. Doesn’t consultation give the wrong message on this one? If a government believes something is morally right, there is no need to consult. Especially as the consultation was not about whether gay civil marriage should be allowed, but rather the best way to go about it. Just make a decision and legislate! (By comparison, on the day of the Queen's Speech that failed to mention gay marriage in the Coalition's plans for the next year, President Barack Obama affirmed his support for same-sex marriages in a nation where 29 States oppose it).

The previous Labour Government faced huge opposition to some of its equality measures, but pushed on nevertheless, resulting in a fairer and kinder society. Of course, we have to accept that not everyone will be in favour of gay civil marriage. Their opinions should be heard, without the need for shouting by either ‘side’. But by consulting, the Government weakens its stated belief in gay marriage. It leaves room for the policy to be picked apart by the media, with opponents in the Conservative Party having room to blame it for the Government’s current woes.

It seems unlikely that the Coalition’s stance on gay marriage had that much of an impact at the polls; high unemployment, lack of consumer confidence, petrol prices and the perception (fair or unfair) that the Conservatives are a party for the rich, not poor, are higher on most people’s agendas, surely.

So, stand up for gay marriage, Cameron and Osborne, if it’s what you support. You’ll be stronger and more respected for it.
Donna Smith 8 May 2012
twitter: @Dr_DonnaSmith

Donna Smith is a tutor on the Open University modules Introducing the social sciences - part one (DD131) and Living political ideas (DD306), and is based in the East of England. She is the author of Sex, Lies and Politics: Gay Politicians in the Press and talks to Platform about gay politicians and the media here

The views expressed in this post, as in all posts on Society Matters, are the views of the author, not The Open University.

Cartoon by Catherine Pain