It’s not just Gordon Brown who wants the rest of europe to splash some cash to get us out of the mess we’re in. There are plenty of commentators on the American left – Paul Krugman for one – who also fret that unless european countries join the massive stimulus bandwagon they threaten to delay, or even cancel, everyone’s recovery. Enemy number one, obviously, is the Germans.
But as Tyler Cowen points out, the Germans might have some good reasons for their reluctance to go on a spending spree. They remember the costs of German unification and can recall how spending massive quantities of money wasn’t a magic cure-all then either:
The two countries united, lots of money was spent and lots of money was borrowed…The results were less than wonderful. The higher demand boosted measured gdp growth in the short run (bananas and porn, plus reconstruction) but Germany fell into economic stagnation.
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