John Bruton sticks up for the Germans

The Germans are a much misunderstood lot, according to former taoiseach John Bruton. It is a mistake to think that their adherance to the doctrine of fiscal reform – aka austerity – springs from some sort of racial memory of Weimar-era hyperinflation, he told attendees at the Institute of Chartered Accountants' annual dinner this week.

He also debunked another popular explanation: that current German economic thinking is framed by the ordoliberalism which underpinned its postwar economic revival. The good news is that you don’t have try and figure out what ordoliberalism is because it is not the explanation for why the Germans do what they do either.

The explanation is far more prosaic, he argued. It is good old-fashioned self-interest. Germany knows it is running out of workers and needs to keep a lid on costs.

Making this sort of sweeping statement about other nationalities is potentially risky as it is easy to offend. But Bruton seems have a powerful backer on this occasion, none other than the German chancellor, Angela Merkel. She expressed very similar sentiments at Davos recently when addressing the issue of why Germany was not undertaking fiscal stimulus to help Europe recover.

“People accuse us of being too tight with our money, as it were, but let me remind you Germany has a massive demographic challenge,” she explained. The German labour force will shrink by six million in the medium term, she said.

“If we are not solid in the way we do our business and try and keep our debts down then we will leave a very heavy burden to the next generation. They simply will not have the necessary breathing space and I think this will be irresponsible.”

So that is that: Germans are responsible parents, not self-righteous penny pinchers obsessed with their past.