12 Responses to Der Todd des Euro

  1. Pingback: The “Anthropology” of Financial Crises | Pseudoerasmus

  2. Very amusing title. A few reactions in general:
    * I do think Todd tends to over-generalize from his work on family systems and essentialize.
    * I am looking for corroborating evidence to Todd’s family work (admittedly I haven’t read La Diversité du monde or L’Origine des systèmes familiaux) to put his findings in a wider context. For example, where is the work on politics and contemporary family structures (e.g. consanguinity in Islamic world, single motherhood in Africa, emerging postmodern European family)?
    * Where I think Todd is essential is in beginning to think about national character and its relationship with the dynamic, temporal (I can’t think of a better word) process of modernity. That is where L’Invention de l’Europe shines, in rehabilitating national character, which globalists, Europeanists and blank-slatists said didn’t exist and so we’d all converge. Nations’ differing reactions to the eurozone and to global capitalism show however that, indeed, there deep-rooted internal dynamics at work in each country.
    * I for one am not necessarily against “anthropological determinism,” but anthropology is not limited to family systems, but rather goes more deeply to a population’s cultural, social and other characteristics. It seems to me one has to go further than Todd and take the full spectrum of human diversity into account.
    * The question with regard to Germany and the eurozone is then one on Germany’s national character. This is a very difficult, “big leagues” question and I don’t claim to be informed enough to know the answer. Clearly Todd does not deal with the topic with as much nuance and sensitivity as one might like, but I also understand his frustration when arguing in front of ninnies who deny the very existence of a German national character.
    * On a technical level, the problems of the eurozone stem in part from a difference in macroeconomic culture between Germany and the rest. Germans are ordoliberal, they defer to their central bank, they promote self-discipline (Stabilitätskultur) and wage restraint rather than quick fixes. In contrast, labor costs rise through the natural process of wage/labor bargaining in France/Southern Europe which means devaluations are necessary to maintain competitiveness and the Anglo-Americans are notorious in their resorting to “Keynesian” money-printing and deficit spending (Pumpkapitalismus) to maintain consumption levels. The question is whether these differences in macroeconomic policy culture stem from national character. I would tend to think they must in part.
    * My impressions: I would not be surprised if there were some truth to the claim that Germans on average have more spontaneous deference to authority. Germans are less selfish than Anglos and less narcissistic than French. They tend to “penser collectif” (have team spirit). (Compare for example, the career German MEPs happy to work discretely out of the limelight, and many French or Italian MEPs who see the European Parliament as a temporary hardship posting or are merely there for the monies). Or consider the particularly rigorous and indeed authoritarian way the Federal Republic enforces political correctness and marginalizes nationalists, meticulous illiberalism in the name of liberal democracy, which strikes me as very much in line with German history. Equally there is a curious elitism in German politics, of deference to “the expert,” whether incarnated by the Bundesbank, the Constitutional Court, the government or whatever. French politics is of course notoriously presidentialized, but the people are equally-famously rebellious, and prone to throw away regime and Constitution when it suits their fancy. I am also struck that German ruling elites have almost always rejected the idea of the sovereignty of the German people, whether we are talking about the feudal monarchies, the Kaiserreich, the Third Reich, the GDR, the Federal Republic or the Europeanized reunified Germany (“I had to act like a dictator” to impose the euro (thus eliminating German sovereignty), Chancellor Helmut Kohl has said).
    * So it does seem to me that the willingness of the Germans to meet the rigors and self-discipline of ordoliberalism and hard money may well stem from national character, which in turn may arise from the stem family (among other things).
    * So in short, for Todd: National character matters and therefore we shouldn’t be jamming two or three dozen nations according to one model and expect everything to be fine.

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  3. thanks for the excellent comments, you read part 2 i assume ? just to be clear i do NOT have a problem with “anthropological determinism” but i don’t think german economic behaviour originates in its family structure and i would be much more reductive than calling it “national character”, i also prefer explanations that apply to the continental germanic-speaking countries plus finland as a whole because of their macro- and microeconomic similarities. will post more later.

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  4. The question is whether these differences in macroeconomic policy culture stem from national character. I would tend to think they must in part.

    but the longue durée ! before the great war the idea that the state should actively manage aggregate demand, whether through fiscal or monetary channels, simply did not exist anywhere in the world. the anglosphere may NOW be known for active demand management, but it definitely was NOT before the 1930s. a major populist movement for currency devaluation before the 20th century, the free silver agitation of the american populists, failed. i’m sure you know britain was the guardian of the international gold standard. in the interwar period the anglosphere practised deflation, britain returned to gold in 1925 at some preposterously high parity. and i thought milton friedman had convinced everybody of this ? — fed policy in 1930-32 was tighter than the gold standard required. and as you know germany ultimately resorted to inflationary finance of the first world war reparations because the reichstag could not agree on the taxes to meet the obligations. under enough stress even the germans buckle. but perhaps it’s possible to say the threshold for “buckling” to the easy fix is lower for some countries.

    why did france devalue the franc several times in the 1950s for example ? well you had slow export growth, middling productivity growth, high expenditure from colonial wars and militant unions demanding double-digit wage increases. easier for a government of a very divided country to let wages rise and devalue the franc as the official rate became overvalued relative to black market rates. for me “national character” is too vague and loose. i see (1) lower productivity growth (relative to germany) which made the wage demands more problematic than otherwise and (2) a much more divided society in which political conflicts raged over taxation, redistribution and wage demands ; and (3) a less patient society.

    there’s a framework to think about this — macroeconomic populism. at its worst (in latin america in the 1960s and 1970s) you have a toxic combination of a low capacity to tax, populations with expectations in wages and consumption rising faster than productivity growth, and governments attempting to maintain popularity through income transfers ; at first all that might be financed through state control of commodity exports but as those were volatile many countries ultimately resorted to foreign borrowing and/or inflationary finance.

    france is far far above that level because it has high productivity, a sense of limits on inflationary finance, and strong institutions, but compared with germany along all dimensions it is a bit closer to the argentina end of the spectrum.

    this is the reductionism i’m moving toward : low productivity (relatively speaking), social conflict, rising egalitarian expectations => macroeconomic populism.

    but why i am mincing words ? i think the deepest level explanation is that the germanic-speaking countries have a higher level of social trust & cohesion than france, britain and southern europe and the populations of the germanic-speaking countries have a lower discount rate / time preference than southern europe (definitely) and france & britain (possibly).

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  5. Bug says:

    Should we regard (very) high IQ North Italy as part of southern Europe? It is south of anything Germany. Average IQ in the UK, most of Spain, and in large parts of France is not really lower than in Germany (as far as I know). The Finns are the smarter of the lot of course (cold climates make you smarter, specially if you are not a hunter gatherer). We need other factors, like personality (big 5!) and culture (we shouldn’t become genetic determinists just because of the hype!).

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  6. We need other factors, like personality (big 5!) and culture

    instead of asserting that can you tie it back to the issue at hand, which is economic policy ?

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  7. Bug says:

    Also, Murray’s map of origins of significant European figures and the “blue banana” urban corridor are very similar. They are not exactly North Europe, but “core Europe”.

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  8. Does that really matter ? the blue banana is not an independent economic zone, it exists as part of a larger policy area.

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  9. “but why i am mincing words ? i think the deepest level explanation is that the germanic-speaking countries have a higher level of social trust & cohesion than france, britain and southern europe and the populations of the germanic-speaking countries have a lower discount rate / time preference than southern europe (definitely) and france & britain (possibly).”
    Data on this would definitely be worthwhile. Probably Todd’s stem families should ceteris paribus correlate with higher cohesion and lower time preference.

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  10. the social capital literature is vast but truly…bordélique, every single paper seems to come up with unique and incommensurable metrics based on social surveys. but a paper i like with lots of national-level data that you can google is eve parts (author) “indicators of social capital in the european union”… my biggest data wish is a large cross-country dataset of individual-level measurements of time preference based on representative national samples and not samples of university students that showed up when behavioural econ labs placed adverts for volunteers. (google wang reiger time preferences across countries) short of that there are inferences from savings rates and interest rates but those are crude metrics.

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  11. “Indicators of Social Capital in the European Union” http://www.iareg.org/fileadmin/iareg/media/papers/WP2_02.pdf

    “How Time Preferences Differ: Evidence from 45 Countries”

    http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1481443

    “we evaluate the results from the \wait-or-not” question ($3400 this month or $3800 next month). Figure 2 shows the percentage of the participants in each country who chose to wait for $3800 next month…Note that the implicit interest rate in this question is as high as 11.8% per month (i.e., an annual discount rate of 280%), which is far higher than the market interest rate and inflation rates in any of these countries at the time of the survey.”

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