Europe?s Responsibility Trap

Across the continent, ?responsible? political parties are now defined by their fealty to the failed alchemy of bank bailouts, tax hikes, tight money, pension cuts, and aspirational labor market reforms. Some of these ideas make sense in isolation, but they add up to a pile of nonsense. The idea is for each country separately to imitate Germany?s success in the early aughts by improving productivity without increasing wages in order to boost exports. But exports to whom? During the time in question, German savings were plowed into lending to other European states where they financed consumption of, among other things, German-made export goods. To reverse the process would require symmetrical change, not simply other states imitating Germany. Yet German officials consistently deny the basic mathematical reality that exports require importers, and saving requires debtors.

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