Controversial Economic Cultures in Europe: Italy and Germany
E-Book, Englisch, 248 Seiten
ISBN: 978-3-98551-840-1
Verlag: Villa Vigoni Editore | Verlag
Format: EPUB
Kopierschutz: 6 - ePub Watermark
Thomas Mayer (Gründungsdirektor, Flossbach von Storch Forschungsinstitut)Francesco Papadia (Fellow, Bruegel; Vorsitzender des Auswahlgremiums des Hellenic Financial Stability Fund und Vorsitzender von Prime Collateralised Securities) Christiane Liermann Traniello (Generalsekretärin, Villa Vigoni)Matteo Scotto (Research Fellow, Villa Vigoni)
Autoren/Hrsg.
Weitere Infos & Material
Preface Jean-Claude Trichet The Value of Money. Controversial Economic Cultures in Europe: Italy and Germany is a remarkable collective book. It permits to understand better the unique historic euro monetary endeavour for three reasons. First, it integrates the multiple angles of vision on monetary union offered by eminent academics and remarkable personalities having been active in making it. Second, it explores with great pertinence the layers of the historic project, whether monetary, economic, cultural or political. Last, but not least, in organizing a dialogue between Germany and Italy, it explores two major components in the fabric of the Euro area. In many simplified visions, Germany and Italy are presented respectively as the North and South Poles of the single currency area. The emblematic protestant sanctuary of monetary stability and sound ordoliberalism management on the one hand, the catholic chapel where monetary laxism, fiscal and macroeconomic “laissez-faire” would find refuge on the other hand. From that bipolar presentation, it is frequently argued that such oppositions are deeply rooted in the history of the two countries, in their underlying values, in their cultural DNA. A great value of the book is to show that such narratives make no justice to many facts that are known but forgotten, little known or not known at all. For instance, that the lira was more stable than the German currency during some long periods of times. That the lira never experienced hyperinflation. That Italy invented the double entry system of accounting and largely created financial capitalism. Also, that the independence of the Bundesbank was designed by the Allies after World War II and that Chancellor Konrad Adenauer was profoundly irritated by this independence. Equally, that the success of Germany and the Deutschemark after World War II was not only remarkable but a powerful emblematic symbol of political turnaround. That the successive leaders of the Bundesbank proved from the inception of the Institution a great degree of lucidity and political courage. Or that a high degree of frankness in the German public debate, with pros and cons being exposed openly, should not be confused with unilateral aggressivity vis-à-vis countries in need: after all the heated debates, when help was needed, successive governments and the German Bundestag were always on board to participate. Let me mention personal memories: I had the privilege to negotiate the Maastricht Treaty with Horst Köhler and Mario Draghi. The three of us were “Staatssekretäre” and director generals of our respective Treasuries. The three of us were representing our governments and bringing our ways of thinking, our values. The three of us were profoundly dedicated Europeans. Another great privilege when I came to the European central bank was to work with Otmar Issing and Tommaso Padoa-Schioppa, eminent members of the Executive Board of the ECB, responsible respectively for economics and international affairs. They were eminent professionals, deeply cultivated, bringing Goethe and Dante in the conversation and as dedicated as courageous Europeans. And it is a pleasure to have yet another occasion of a professional interaction with Francesco Papadia, one of the editors of the book, who carried out standard and non-standard monetary policy measures during my tenure as ECB President. In the heat of the great financial crisis, when I had to explain and defend the new unseen (at the time) non-standard measures, I referred several times to Max Weber’s famous distinction between ethic of conviction and ethic of responsibility. I am quoting what I said in August 2010 at Jackson Hole: “The ethic of conviction makes the decision-maker find his essence in the constancy of his inner relation to certain ultimate value. There must be therefore a full integrity between intention and action. […] According to the ethic of responsibility, actions have to be analysed in terms of their consequences, taking account of their causal relationship to the empirical world. The stress is put therefore on the integrity between action and consequences”.1 At the time, I presented standard policy measures as associated with ethic of conviction and non-standard measures with ethic of responsibility. From that standpoint, Max Weber is luminous in my eyes when he says: “The ethic of conviction and the ethic of responsibility are no absolute opposites. They are complementary to one another”. Needless to say, in this extraordinary demanding period of crisis, the German intuition was inclining more to the ethic of conviction and the Italian preference was more on the side of the ethic of responsibility. We needed both: they were clearly complementary. This is not to deny that in the great financial crisis, Germany proved a superior degree of resilience and Italy a particular vulnerability. But in this respect, I would like to stress a peculiar cultural difference, which has in my opinion, very little to do with protestant ordoliberalism on the German side and of catholic laxism on the Italian side. It relates to the present dominant culture of social partners in the two countries. In Italy, the social partners playing a kind of role model are often enterprises that are in the public sector – or were in the public sector – and unions used to negotiations in the public sector, including the civil service. In such an environment, isolated from considerations relating to competition issues in the domestic and foreign markets, negotiations appear very much as a zero-sum game. It is perfectly legitimate for the unions and employees to get the maximum level of wages and salary increases. It is not for them to internalize the consequences of the negotiation for the overall competitiveness of the entity concerned. Any additional gains appear good not only for the employees but also for society as a whole. To the eyes of the employees, in a simplified approach, these additional gains will activate demand, foster growth and contribute to economic prosperity. It goes without saying that there are also many remarkable corporate businesses in Italy that are plunged in tough competition in their domestic markets and abroad. In such firms, entrepreneurs and employees are fully aware of the necessity to maintain appropriate cost competitiveness in order to preserve market share, consolidate jobs and create new jobs. But it does not seem that the influence of these social partners is able to challenge the dominant culture of social negotiations in the country as a whole. In Germany, two factors contribute to a different culture: First, the size of the competitive part of the economy, more particularly of the manufacturing sector in comparison with the rest of the economy; Second, the fact that the German economy is massively exporting and that a very large proportion of businesses have a direct experience of the fierce competition in foreign markets. As a consequence, it is not surprising that the culture of social partners in exporting private firms is the dominant culture of social partners in the society as a whole. This is not to say that there is no public sector in Germany or that there are no businesses that are protected from the heat of competition. But their culture is in a minority position. The dominant culture of social partners considers natural that a common goal of entrepreneurs, unions and employees is the competitiveness of the firm. In this culture, it is appropriate to accept cost moderation, including wage moderation, if it appears necessary to preserve and reinforce the market share of the firm and, therefore, to preserve today’s jobs and pave the way to create new jobs. If this analysis carries part of the truth, it explains why the dominant culture in Italy would push for more cost increases than would be required in terms of optimal cost competitiveness. In Germany, we observe the reverse. The influence of the dominant culture contributes to preserving and reinforcing cost competitiveness of corporate businesses and of the economy as a whole. Such a persistent structural difference between Italy and Germany helps explaining what has been observed both before the euro and in the time of the single currency. First, before the euro inception. We have part of the explanation why the lira had to depreciate or devalue (when in the exchange rate mechanism) frequently vis-à-vis the Deutschemark. Feeling the persistent push upward of its costs in lira, Italy would have to re-establish an appropriate level of cost competitiveness through successive downward realignments. By the virtue of its social partners culture, Germany was in a permanent excellent competitive position calling for periodic appreciation (or re-evaluation when in an exchange rate mechanism) of the Deutschemark. To sum up in a simplified but economically pertinent mode: the Deutschemark was nominally strong but competitive, i.e. weak, in real terms, most of the time; the lira was nominally weak but uncompetitive, i.e. strong in real terms, most of the time. These two paradoxes were often difficult to understand by public opinion. How can a strong currency give a high level of competitiveness to its economy despite frequent re-evaluation? How can a weak currency never fully catch up its previous losses of cost competitiveness despite devaluations? The key is to examine the evolution of all nominal costs in the economy: wages and salaries, unit labour costs, nominal costs, national inflation. If nominal costs are increasing slowly with a significant degree of moderation, we have the response to the first question. If they have a...
