Tug of War

It is a curious fact that Germany is leading structural reform in Europe and that China, a Communist country, consistently scores the highest GDP-growth in the world. In the third quarter of 2011, that growth rate has been 2.5 percent in Germany, 9.1 percent in China, and 1.5 percent in the United States. The U.S. prescription for the Euro Crisis is short term fixes. The Obama administration (having most recently achieved that 1.5 percent) is urging Germany to foster growth. Our economists want to print money and fix the problem by “temporary” inflation. Everybody wants to “calm,” to “reassure” the markets. The gods to appease appear to be “investors.” Meanwhile the Germans are trying to make long-term order and never mind those market fluctuations now.

All this is fascinating. The countries with the highest growth rates include China and Singapore (6.1% growth), both authoritarian regimes. They also include India (6.9%)—but I for one would not bet on Indian policies in the longer stretch. In the recent summit, Poland (4.2% — and the one country that has not had a recession) strongly backed Germany. Denmark (-0.2%) and Hungary (1.5%) initially sided with the United Kingdom (0.5%) in favoring “market” fixes before, wisely, joining the majority. Interesting. The worse they do the less inclined they are to make the big, painful changes. (In all of the above I am citing 3Q 2011 GDP growth rates taken from here.)

What I hope is that in the endless cycling between freedom and order (or to put it negatively, chaos and tyranny), we may be in a period where order is in the ascendant and freedom, read Market Capitalism, is in decline. That seems to be the case. But the genuinely adult position is to be, always, against excess. What the last few decades have shown is that we have been abusing freedom (by deregulation) and letting disorder gain footing. Therefore I am now on the side of more order. And if I were not, as it were, close to departure, I know that eventually the time would come when I would, again, side with freedom against too much restraint.