German Journalist Groupthink

An American journalist in Germany, Nick Baumann, wonders at the groupthink he's encountered from German journalists:

For the journalists I spoke to—from outlets across the political spectrum—inflation hawkishness and hostility to eurobonds (centrally issued debt that Europe as a whole, including Germany and France, would have to pay back) were as accepted as, say, kissing babies is in American politics. These feelings went far beyond the left-right divide—people who were otherwise progressive seemed totally opposed to the idea that German taxpayers might have to pay to cover Spanish or Italian or Portuguese deficits.

Perhaps this isn't surprising. But what was shocking to me was the total absence of any recognition that there might be an alternate view. When I mentioned the idea that the euro's problems might not be entirely due to government irresponsibility on the periphery, but rather a balance-of-payments issue (see Matt Yglesias or our own Kevin Drum for more on that idea), people looked at me like I was from space. The fact that German and French banks are holding the bag for Spain and Italy's debt never came up, and no one seemed to have any doubts that the European Stability Mechanism, the fund the eurozone countries are setting up for emergencies, would be sufficiently large to deal with the situation.

....It's possible, of course, that my sample of journalists was oddly skewed and that German media are talking about this sort of stuff. But if Germans really are taking the "worry" side of the story seriously, it's a fringe thing. I spoke to reporters or editors from most of the country's largest papers and broadcasters, and they all seemed unconcerned. What's hard to convey remotely is the general mood: a kind of serenity, an almost utter confidence that everything will turn out fine. I hope they're right. But I'm not so sure.

Comments

[Zaungast]

Seems like I've missed something.
Quick, what is the official German opinion on burnout?

[Andrew]

@Noribori: Joseph Stiglitz is an American, not a German, thus proving my point.

As for Oskar Lafontaine, I read the Spiegel interview as well, and it was fascinating to see that his take on the situation largely corresponds to the mainstream among Anglo-Saxon economists, even though he is at the far left edge of the German political spectrum.

I don't think I have to point out to you how often representatives of Die Linke are castigated as 'irresponsible populists' putting forward 'unworkable solutions.' The right wing of the CSU would even like to ban the entire political party of Die Linke. The tone of the interview itself showed that the interviewer thought some of what Lafontaine was saying was ridiculous and/or irresponsible. Yet about 90% of what Lafontaine said would be immediately endorsed by centrist American economists such as Paul Krugman.

Food for thought, no?

[Andrew]

@Norbert: It's because of the phenomenon of journalistic groupthink, in which certain tropes or phobias spread across almost every part of the political spectrum represented among elite journalists, creating an atmosphere of groupthink uniformity that is immediately apparent to outside observers. Examples: nuclear energy, lessons of Fukushima, genetically-modified crops, George W. Bush, the dangers of inflation, burnout, etc.

[Mark]

I consider this hyperinflation-phobia a myth. The average German is not afraid his salary might by worth half by the evening. If anything, he's (understandably) afraid his savings might be worth only 50 percent by the end of the decade. A meager 7 percent inflation would do *that* trick.

[noribori]

Here's what Joseph E. Stiglitz writes about current-account deficits:

(...)But Ireland and Spain had budget surpluses and low debt before the crisis, which quickly turned into large deficits and high debt. So now European leaders say that it is the current-account deficits of the eurozone’s member countries that must be kept in check. (...) Preventing bad current-account deficits would require far greater intervention in the private sector than the neoliberal and single-market doctrines that were fashionable at the euro’s founding would imply.
In Spain, for example, money flowed into the private sector from private banks. Should such irrational exuberance force the government, willy-nilly, to curtail public investment? Does this mean that government must decide which capital flows – say into real-estate investment, for example – are bad, and so must be taxed or otherwise curbed? To me, this makes sense, but such policies should be anathema to the EU’s free-market advocates.

About Europe's leaders:

Public-sector cutbacks today do not solve the problem of yesterday’s profligacy; they simply push economies into deeper recessions. Europe’s leaders know this. They know that growth is needed.

In this Vanity Fair article he writes about America's job problems:

The fact is the economy in the years before the current crisis was fundamentally weak, with the bubble, and the unsustainable consumption to which it gave rise, acting as life support. (...) Monetary policy is not going to help us out of this mess. (...) What we need to do instead is embark on a massive investment program (...) The second conclusion is this: If we expect to maintain any semblance of “normality,” we must fix the financial system.

He writes this about the American economy, but I assume that fits for Europe, too.

Here's Oskar Lafontaine's interview in SPIEGEL-Online (g) from today.
His view is somewhat similar to that of Stiglitz, his conclusions:
- the Euro is anything but save
- we need higher wages in Germany and balanced wages in Europe
- higher taxes for large incomes
- investments to help weak economies
- fix the financial system (smaller banks, better rules, or better, nationalize them)
- austerity programs will destroy weak economies
- ECB as Lender of Last Resort, tied to stringent conditions e.g. not for military expenditure

I wouldn't agree to all of those points (which doesn't matter, I'm anything but an expert). I'm just quoting to show you: there are different opinions about the significance of current-account deficits and the possibilities to control them.
And yes, there are different points of view in Germany, some of them even resembling those of some US columnists.

However, I find it strange that Mr Baumann quotes a blogger from the "New Yorker" who says that the shared opinion of "newspaper columnists, financial bloggers, Wall Street analysts, [and] hedge-fund managers" represents the opinion of "practically everybody".

Really? And the title of this article is "German Journalist Groupthink"? Interesting.

[Norbert]

Why exactly did you file this post under the heading "German Customs and Manners"?

Is it because it just wouldn't fit under "German Glumness" or "German Angst"? Is it because especially the last paragraph defies the general consensus that all (yes, ALL of them) Germans are angst-laden eternal pessimists who sense doom around every corner?