Prof. Peter Bofinger vs. Prof. Hans-Werner Sinn

Prof. Peter Bofinger is the antagonist of Prof. Hans-Werner Sinn. Where one could describe Sinn as an ordoliberal, Bofinger is a Keynesian. Bofinger is a member of Germany's Council of Economic Experts. Sinn is not. Bofinger has been very outspoken in his criticism of the Greek programs for being too recessionary. Yesterday, both were in the same TV discussion of Maybrit Illner.

Bofinger brought back to memory one of the most important laws of post-WW2 Germany, the Lastenausgleichsgesetz of 1961. Here is what he said about it:

"I, for one, have proposed to the Greek government that they should introduce a “Lastenausgleich” (“balancing out of burdens”) like the one we had in Germany after WW2. Under that system, those who had the luck of having preserved property had to pay a 50% tax on property. However, payment was not at one time but, instead, spread over 30 years. That meant instalments of 1,6% per year which was quite acceptable (it could be paid out of earnings on the property instead of out of the substance). I was in Greece and spoke with the Deputy Prime Minister Dragasakis. I told him that this would be good solution because it would be a signal that one is prepared to ask of those who have wealth to participate in the balancing out of the burden. Regrettably, I have not seen anything that would suggest that this proposal was being pursued."

The legacy of the Lastenausgleich, or "balancing out of burdens," lies in the basic practices and principles generated in the process: the values of compromise, pragmatism, social justice, and private property. In short, this was a compound fiscal, political, and social settlement that was critical to the foundation of a liberal and democratic Federal Republic. Put simply: many Germans had lost everything due to WW2 and some came away unscathed. Since the war was a project of all Germans, it was only natural that the have's would share with the have-not's. Solidarity in its truest form.

Since starting this blog, I have frequently written about what I perceive as an extreme unfairness in Greek society; and I can easily get emotional about that. It's the privileged vs. the non-privileged; the insiders vs. the outsiders; the clever operators vs. the decent citizens. In short: the suckers vs. the suckees. There has been an enormous increase in private wealth on the part of the suckers thanks to the Euro. And now there is misery for the suckees. It may be late to talk about a Lastenausgleich now that much of the suckers' wealth has left the country but, then, it's never too late to make an effort to balance out burdens. That a leftist government would not make something like a Lastenausgleich its top priority escapes my understanding.

Bofinger also made an assessment of the current Greek government. Since Bofinger is a clear opponent of excessive austerity in times of recession, I would have expected him to blow the horn for SYRIZA. Instead, he said:

"I think what we have witnessed was a game of chicken where nobody gave in and now we seem to have the collision. Regarding the Greek government, it’s fair for them to say I don’t want this measure or I don’t want that measure but what I have missed are constructive alternative proposals. And I think this is what one has to blame Mr. Tsipras for; for not saying from the Greek standpoint: ok, we don’t want those things which the Troika wants but we have an alternative program to achieve growth. 

I think the constructive element has been missing on the Greek side. One always knew what one was against. However, what the government is for remains a bit of a mystery. That would actually be a good reason for a referendum. The government says our concept is this and the Troika’s concept is that. Vote which of the two you prefer. I think the core of the problem is that this government, when it took over, did not push for compromise. Instead, it seemed to be looking for confrontation. I think that was the wrong approach. I think if one had approached the issue in a compromise mode, one might have received more support from other countries. Perhaps that would have made things easier even for Mrs. Merkel. If things come across as threats, it is very difficult for the politicians of other countries to ‘sell’ it to their voters. From that standpoint, I think this government did a disservice to its country."

Well, here is someone who could have been a friend of SYRIZA's and he no longer is. Now whose fault is that?