The Corner

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I have a vision of the future, chum


There’s an article in the Frankfurter Allgemeine Zeitung (helpfully translated into English here) to which my reaction this morning was: this can’t possibly be true. It’s title “Germany: Europe’s Poor Relation” will give you the gist, and it’s based on some figures just released by the European Central Bank on the average household net worth of citizens in the different countries across the Euro-zone.

As its author, Holger Steltzner, very plausibly speculates, the release of the figures was delayed until the rescue of Cyprus was agreed. Here’s why the speculation is plausible:”With average household assets of €51,000, Germans turn out to be poorer than Slovaks, only half as rich as Greeks (€102,000) and almost needy in comparison with Luxembourg (€398,000) or Cypriots (€267,000).”And unless there’s some flaw in the “methodologically comparable” studies that has so far escaped the notice of the brainy statisticians working for the ECB–which is unlikely–the broad conclusion that Steltzner reaches is indeed true.

On the face of it that looks suspiciously odd. Steltzner gives some reasons for it–only 44 per cent of Germans are homeowners compared to figures in the eighties for Central Europeans; Germans keep their savings in low-interest local banks that in an inflationary age means they get poorer every year; and much German wealth was wiped out by the two world wars that Germany started–and these explanations seem correct but short of adequate. Germany has enjoyed almost seventy years of low-inflationary growth. Even taking the financial costs of reunification into account, that record ought to have translated into greater average net household worth than these figures indicate.

Whatever the reason, however, the figures mean that in terms of financial assets Europe’s relatively poor nations are being asked to subsidize Europe’s relatively rich nations. And that’s true in other terms too. For if employed Germans are being fleeced, so are unemployed and low-paid Spaniards, Italians, Greeks, Portuguese and the Irish. Indeed, their distress is harsher even if the net worth of their emplor and/or wealthy fellow-citizens is higher. About a quarter of them are out of work, others who are retired or on low fixed incomes are living on reduced social benefits (subsidized by financially poor Germans), and there is literally no end to “austerity” in sight. So the poor both within nations and between nations will be subsidizing the rich for the indefinite future, and this is the result of government policy across the Eurozone seeking to make the idealistic dream of a single currency inevitable. It all looks very like the financial equivalent of Orwell’s vision of a totalitarian future: a boot stamping on a human face forever. 

Remind me why we’re doing this exactly.