Why the Germans are NOT right about economics

In his article “Why the Germans are right about economics” in the Financial Times Gideon Rachman considers economics as part of ethics. He refers to Smith, Marx and Hayek to illustrate this view. Until the crisis of 2008 mainstream economics defended the globalization of the economy in moral terms. Then they advocated a huge rescue operation to save the bank system, without putting its top in jail. Many Americans were upset, and voted for Trump (“The system is unfair”). Also many Europeans reacted negatively; a strong rise of populist parties was the consequence. In the Greek case the US and South-Europe pled for a restructuring of the Greek debts. Rachman: Fortunately Merkel stand her ground, and did justice to the opinions of the hard working Germans, who did not ‘appreciate’ debt relieve for the Greek spenders.

Keizer: moral judgments are not the same as moral resentments, which is a term of Smith. Populists don’t make this distinction – they are the voice of these resentments. Keynes and Sen discuss the meaning of the term reasonable judgment in line with the German philosopher Kant. Moral judgment is influenced by rational judgment, which refers to judgment on the basis of a realistic analysis, in this case of the economy. So, Merkel’s refusal to restructure the Greek debts, so as to do justice to the resentments of the hard working Germans, is not a moral but a populist action.

Piet Keizer, Utrecht, The Netherlands, 29 December 2017.

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