Commentary: Angela Merkel Was Bad for Europe and the World

Angela Merkel’s tenure will be remembered as Germany’s, and Europe’s, cruelest paradox: On the one hand, she dominated the continent’s politics like no other peacetime leader — and is leaving the German chancellery considerably more powerful than she had found it. But the way she built up this power condemned Germany to secular decline and the European Union to stagnation, according to a commentary in Jacobin. There is no doubt that Germany is today stronger politically and economically than it was when Merkel became chancellor back in 2005. However, the very reasons Germany is stronger are the same reasons why her decline is assured within a stagnating Europe. Germany’s power is the result of three massive surpluses: its trade surplus, the structural surplus of its federal government, and the inflows of other people’s money into the Frankfurt banks as a result of the slow-burning, never-ending euro crisis. While Germany is swimming in cash, courtesy of these three surpluses, this cash is mostly wasted. Instead of being pumped into the infrastructure of the future, public or private, it is either exported (e.g., invested abroad) or used to buy unproductive assets within Germany (e.g., Berlin apartments or Siemens shares). Why can’t German companies, or the federal government, invest these rivers of money productively within Germany? Because — and here lies part of the cruel paradox — the reason these surpluses exist is that they are not invested. Put differently, under Merkel’s reign, Germany made a Faustian bargain: By restricting investments, it acquired surpluses from the rest of Europe, and the world, that it could then not invest without forfeiting its future capacity to extract more surpluses, according to the commentary. Read more.