New Left Review criticizes Lords of Finance

War, Crash, Slump by Tom Mertes

Keynes and the Macmillan committee by Simon Wren-Lewis

1926 United Kingdom general strike

Germany and population growth

A Rapidly Aging Population Is Not a Depression Problem by Dean Baker

Matt O'Brien had a good piece in Wonkblog pointing out that the current downturn in the euro zone has been worse for these countries than the Great Depression. However it does get part of the story wrong. 

At one point it outlines the troubles of the region: 

"The combination of zombie banks, a rapidly aging population and, most importantly, too-tight money have pushed it into a "lowflationary" trap that makes it hard to grow, and is even harder to escape from. That's what happened to Japan in the 1990s, and now, 20 years later, its nominal GDP is actually smaller than it was then. "

The aging of the population, and therefore a slow-growing or declining labor force, does not belong on the list of problems here. What matters for well-being is per capita growth. (That is not the only thing that matters, but insofar as GDP matters it is GDP per capita.) If the population is growing very slowly or even shrinking slowly, it will likely be associated with lower overall growth, but not necessarily with lower per capita GDP growth. 

Germany has managed to get its unemployment rate down to 5.1 percent, compared to 7.8 percent before the downturn, in spite of having considerably lower growth than the United States over this period. Its employment rate for prime age workers (ages 25-54) has risen by 3.0 percentage points, compared to a drop of 3.5 percentage points in the United States.

As a result of its slow population growth, few in Germany would see its slow economic growth as being a problem. In fact, most view the economy as being relatively prosperous right now. This is one of the reasons that the country is reluctant to support measures that would help its neighbors, since Germany is not really sharing in their pain at the moment. Similiarly, Japan's slow population growth meant that most people in the country were not suffering in the way that its weak GDP growth may have suggested.

Europe

MORNING MUST-READ: BARRY EICHENGREEN: THE ECB TRIES AGAIN by DeLong

Barry Eichengreen: The ECB Tries Again: "In June the European Central Bank announced a sers of new steps to counter deflation....

...Rather than bemoaning the failure of President Draghi & Co. to move earlier, it is more productive at this stage to ask: are the central bank's measures now up to the task?... The ECB's conventional measures, reducing its benchmark interest rate from 0.25 to 0.15 per cent and charging commercial banks 0.1 per cent on the money they deposit with the central bank, will make little difference.... Conventional monetary policy has run its course.... Thus, if policy is going to make a difference, policy will have to be unconventional. Here the ECB unveiled... one and a half... initiatives in June... 'Targeted Long-Term Refinancing Operation'... €400 billion, or some US$550 billion, cumulatively over four months. Recall that the Federal Reserve, under QE3, had been injecting $85 billion a month into U.S. financial markets before starting to taper in December. This makes TLTRO look like a substantial commitment.... The additional 'half an initiative' announced in June was that the ECB would study the possibility of security purchases.... These cautions should not be taken as a council of despair. If ECB officials conclude that the impact of TLTRO and securities purchase will be marginal, they should not give up hope; rather, they should strive to do more...

Emphasis added.

Bundesbank shifts stance and backs unions’ push for big pay rises

The Bundesbank has backed the push by Germany’s trade unions for inflation-busting wage settlements, in a remarkable shift in stance from a central bank famed for its tough approach to keeping prices in check. 

Jens Ulbrich, the Bundesbank’s chief economist, told Spiegel, a German weekly, that recently agreed pay rises of more than 3 per cent were welcome, despite being above the European Central Bank’s inflation target of below but close to 2 per cent.

In an article published on Sunday, Mr Ulbrich said that recent wage trends were “moderate” given Germany’s relative economic strength and low levels of unemployment. His comments echo the views of Jens Weidmann, Bundesbank president, according to a senior central bank official. 

The push for higher pay underlines the heightened concern among even the most hawkish members of the ECB’s governing council over the eurozone’s low inflation and signs that the region’s fledgling recovery is stalling. On Monday, the Bundesbank acknowledged the German economy was unlikely to have grown at all over the three months to June.

Bundesbank, helicopter drop and wage inflation

Bundesbank shifts stance and backs unions’ push for big pay rises

The Bundesbank has backed the push by Germany’s trade unions for inflation-busting wage settlements, in a remarkable shift in stance from a central bank famed for its tough approach to keeping prices in check. 

Jens Ulbrich, the Bundesbank’s chief economist, told Spiegel, a German weekly, that recently agreed pay rises of more than 3 per cent were welcome, despite being above the European Central Bank’s inflation target of below but close to 2 per cent. 

In an article published on Sunday, Mr Ulbrich said that recent wage trends were “moderate” given Germany’s relative economic strength and low levels of unemployment. His comments echo the views of Jens Weidmann, Bundesbank president, according to a senior central bank official. 

The push for higher pay underlines the heightened concern among even the most hawkish members of the ECB’s governing council over the eurozone’s low inflation and signs that the region’s fledgling recovery is stalling. On Monday, the Bundesbank acknowledged the German economy was unlikely to have grown at all over the three months to June. 

The calls for higher wages by Germany’s central bank highlight one of the most puzzling conundrums to befall the eurozone’s economic powerhouse: why, despite record low unemployment, the average German worker’s wage has hardly risen over the past decade. The problem is important for the region as a whole, as economists view a pick-up in spending by Germans as a prerequisite of the eurozone’s economy returning to full strength. 

Ursula Engelen-Kefer, a lecturer at Hochschule der Bundesagentur für Arbeit university and former deputy chair of DGB, Germany’s confederation of trade unions, said she was “flabbergasted” by Mr Ulbrich’s remarks. 

“It goes to prove that even the central bank recognises that we can’t improve internal economic growth without wages,” she added. 

Stefan Körzell, a member of the DGB’s board said, while the confederation was “pleased” by the Bundesbank’s move, trade unions had done well without the central bank’s advice in the past and would continue to do so in the future. 

While German wage settlements this year were encouragingly strong, the central bank signalled the trend must continue if consumers in the eurozone’s largest economy are to provide the lift to demand that is so desperately needed. 

Until now, the German central bank has backed only the most modest rises in pay, and has often objected to measures to improve workers’ rights, including the planned introduction of a minimum wage and proposals to lower the retirement age for employees with more than 45 years in the labour market. 

The Bundesbank’s support for faster wage growth in Germany is also the latest in a series of moves towards the mainstream of ECB thinking. Mr Weidmann has in the past found himself in a minority of one on the governing council, including when the ECB pledged to buy government bonds of troubled countries. In June, however, the Bundesbank president backed the package of exceptional measures which the ECB unveiled to stave off the threat of deflation. 

At 0.5 per cent, inflation remains little more than a quarter of the ECB’s target. 

The weakness in price pressures in the eurozone is partly a positive development: it reflects an improvement in the competitiveness of workers in the bloc’s periphery, where productivity has traditionally lagged behind levels seen in economies such as Germany’s. However, even in the region’s strongest economies inflation is below target, with German prices rising by just 1 per cent in the year to June. 

Guntram Wolff, director of Bruegel, a Brussels-based think-tank and a former Bundesbank economist, said: “It’s a very good, very important sign from the Bundesbank. Not just of pragmatism, but of understanding that they are setting monetary policy for the entire eurozone. With that, comes the recognition that German wages have to rise at a faster pace.”

--

Germany

Germany is Weltmeister by Roger Cohen

Perhaps German success is the result of the immensity of past German failure. I think that has something to do with it, even a lot. Whatever its roots, German success is important and instructive. 

If you talk to business leaders of the German Mittelstand, the small and medium-sized companies at the heart of the country’s economy, you are transported to another world. You sit in stark boardrooms, so devoid of indulgence they resemble classrooms, with unassuming people leading billion-dollar companies, and they speak of loyalty, 10-year plans, prudence and quality. If one word induces a look of horror, it is debt. The notion of making money with money, of financial engineering rather than engineering itself, is alien. 

Joachim Löw, the German coach, spoke before the final of the careful building of his youthful side: “We can play on top of the world for a good few years yet, with some young players coming in to reinforce the team.” Inevitably, the idea of Germany “on top of the world” for a long time conjured up images the phrase would not evoke for another country. Even a victory dance by members of the German team turned into a national debate because it was seen by some as unseemly mocking of the gaucho Argentine. The president of the DFB apologized. 

Germany is now soccer’s “Weltmeister,” a composite word composed of “world” and “master.” It deserves the honor. Its society has much to teach others. But restraint will be its watchword.

 

Trade

Coppola agrees on the problem with Baker.

"The US trade deficit is pretty intractable largely because the two major surplus countries - China and Germany - do not have currencies that float with respect to the USD. Germany uses the Euro, which does float, but the Euro is persistently undervalued relative to fundamentals in Germany because of the presence of weaker countries in the union. If the currency cannot adjust, then neither the trade deficit nor the capital surplus can correct unless unit labour costs fall, which means very significant falls in wages and employment costs. This is what is happening in the Eurozone periphery: it has not happened in the US thus far because of the US's willingness to borrow and the world's willingness to lend to it. 

However, there is a cost. As Philip Booth points out, China will not be able to suppress inflation forever if its currency is under-valued. Germany, too, faces high inflation relative to others in the Eurozone if its economy is  out of equilibrium: the ECB's tight money policies keep German inflation below 2%, but this forces weaker countries into outright deflation. "

Makes sense as ruling class policy: keep the labor market loose and increase the capital share and incentivize Germany to ally with us against Russia and to pay off China.

And yet she sees Baker's solution as unlikely: "This is why devaluing the dollar would not necessarily reduce the US's trade deficit, as Dean Baker thinks: China would simply adjust the yuan to maintain its desired exchange value, and Germany would tighten fiscal policy to stop a fiscal deficit developing as a consequence of a falling trade surplus in a low-demand economy. The only way to resolve the currency problem is for China to allow the yuan to float and Germany to abandon austerity. Hell might freeze over first. "

Inflation should be building in Germany and China.

secstags or policy-induced paralysis

When It Comes to Generating Jobs It Pays Not to Listen to the Experts by Dean Baker

It is remarkable that no country has outlawed economics as a dangerous occupation on a par with drug dealing or murder for hire. The damage done to the world over the last seven years based on policies designed by economists has been incredible. 

Floyd Norris documents this fact in a nice piece comparing the change in employment rates (the percentage of the population employed) in rich countries since 2007. The only two countries with higher employment to population ratios today than at the start of the downturn are Germany and Japan. Both countries have broken with the economic orthodoxy in important ways. 

In Germany, the government has adopted policies that encourage employers to keep workers on the payroll by cutting back hours rather than laying them off. As a result, their unemployment rate is almost three percentage points below its pre-recession level even though its growth has actually been somewhat slower than in the United States. 

Japan has adopted a policy of aggressive deficit spending even though its debt to GDP ratio is already more than twice that of the United States. It also has deliberately targeted a higher rate of inflation as a way of lowering real interest rates and reducing debt burden. As a result, it has created a number of jobs that would be the equivalent of more than 4 million in the United States. 

In short, ignoring the economic orthodoxy works. Listening to orthodox economists brings destruction to the economy and devastates peoples' lives.

Germany and debt ceiling clown show

The Myth of the German Boom Persists in Roger Cohen's Columns by Dean Baker

House Republicans Make Saddest Hostage Threat Ever by Jonathan Chait

GOP Preparing New Farcical Debt Ceiling Standoff by Yglesias

Germany

German Rivals Reach Pact for Coalition Government

BERLIN — After five weeks of negotiations, Chancellor Angela Merkel’s conservatives reached an agreement on Wednesday with their Social Democratic rivals on a program for a new coalition government, with concessions to the left that pleased labor leaders and almost immediately drew criticism from business interests.
...
The 185-page document calls for establishing a national minimum wage — a first for the country — as well as increased pensions for some recipients and early retirement eligibility for others. It would offer dual citizenship to Turks and other foreigners who are born and raised in Germany, and it promises a new law by next summer to revitalize plans for renewable energy.

More broadly, though, it reaffirms Germany’s current course in Europe, much criticized by southern Europeans as burdening them with austerity. And the plans for improving Germany’s ailing infrastructure seemed likely to fall far short of the extra 7 billion euros, or $9.5 billion, a year in spending that a commission of government experts said was needed.
...
Germany’s important business lobby echoed fears expressed by the government’s Council of Economic Advisers this month that Ms. Merkel and her partners were moving away from the labor and welfare overhaul policies of the last Social Democratic chancellor, Gerhard Schröder. Those policies [sic] are widely seen as a foundation for the country’s success in overcoming the 2008 financial crisis and weathering the euro zone’s troubles since.
...

German current account balance & Euro

NYT Reinvents History of Euro Crisis by Dean Baker
15 November 2013 06:09

The Money Trap by Krugman
Nov. 14, 2013


latest German current account balance linklist

German current account balance updated linklist

One list to rule them all! (updated)

German Trade Balance Isn't About Hard Work by Yglesias
Nov. 14, 2013

Europe’s (Low) Inflation Problem by Krugman
Nov. 13, 2013 9:15 p.m.

German Economists Exist to Make Economists Elsewhere Look Good by Dean Baker
Nov. 13, 2013 14:59

In a Good World, Would We Have to Deal with “Global Imbalances”? by DeLong
Nov. 13, 2013  7:45 a.m.

Germany’s Neighbors Admonish It Over Surplus
Nov. 13, 2013

Pressure Is on Germany to Narrow Its Trade Gap
Nov. 12, 2013

Germany’s Lack of Reciprocity by Krugman
Nov. 12, 2013 1:26 a.m.

Europe’s Macro Muddle (Wonkish) by Krugman
Nov. 11, 2013

Sadowski on sterilization
Nov. 4 at 1:34 pm

How Do Those Germans Do It and What Does it Mean for the US? by Jared Bernstein
Nov 04, 2013 at 12:12 pm

China and the EU: Beggaring Neighbors by Dean Baker
Sunday, 03 November 2013 16:26

Eureka! Paul Krugman Discovers the Bank of France by David Glasner
November 3, 2013

The real problem with German macroeconomic policy by Simon Wren-Lewis
Sunday, 3 November 2013

Blame Germany, or Frankfurt? by Ryan Avent
Nov 3rd 2013, 21:41

Europe’s Inflation Problem by Krugman
November 4, 2013, 10:20 am 

The Changing Geography of Beggar-thy-Neighbor by Krugman
November 3, 2013, 3:16 pm

German Surpluses: This Time Is Different by Krugman
November 3, 2013, 6:41 am

Those Depressing Germans by Krugman
November 3, 2013

Is the Paradox of Thrift Actually a Paradox? by Henry Farrell
Nov. 2, 2013

France 1930, Germany 2013 by Krugman
November 2, 2013, 6:00 pm

Sin and Unsinn by Krugman
November 2, 2013, 4:35 pm 

Germany's Export Obsession Is Dooming Europe to a Depression by Matt O'Brien
Nov 2 2013, 9:30 am

Defending Germany by Krugman
November 2, 2013, 9:23 am

Fawlty Europe: Will the European Commission dare to utter the unmentionable to the Germans? by Charlemagne (The Economist)
Novemeber 2, 2013

More Notes On Germany by Krugman
November 1, 2013, 4:54 pm

The Harm Germany Does by Krugman
November 1, 2013, 11:41 am

Germany’s Blind Spot by New York Times Editorial Board
October 31, 2013

Raw Nerve: Germany Seethes at US Economic Criticism  By Christopher Alessi (Spiegel Online)
October 31, 2013 – 06:26 PM 

U.S. Accuses Germany of Causing Instability by Sarah Wheaton
October 30, 2013

Semiannual Report on International Economic and Exchange Rate Policies by U.S. Treasury
October 30, 2013

Germany and global imbalances

German Economists Exist to Make Economists Elsewhere Look Good by Dean Baker
Nov. 13, 2013

Europe’s (Low) Inflation Problem by Krugman
Nov. 13, 2013

Germany current account balance linklist

Part of why this is coming up is that Merkel and the Christian Democrats are in negotiations to form a coalition government with the Social Democrats who are demanding concessons.

global imbalances

In a Good World, Would We Have to Deal with “Global Imbalances”? by Brad DeLong

German Economists Join Country’s Chorus of Critics

Pressure Is on Germany to Narrow Its Trade Gap


other links

Germany-Eurozone link list

Germany’s Lack of Reciprocity by Krugman
Nov. 12, 2013

updated linklist

Europe/Germany

Europe’s Macro Muddle (Wonkish) by Krugman

One last point: the Germans are very proud of their own adjustment between the late 1990s and 2007, during which they emerged from economic doldrums and became very competitive. But that adjustment, from a European point of view, looked like my first figure: German belt-tightening was accompanied by what amounted to a highly expansionary monetary policy, which led to fairly high inflation in Southern Europe. So when Germany asks why other countries can’t do what it did, it isn’t just forgetting that we can’t all run trade surpluses; it’s also insisting that other countries replicate its success while denying them the kind of external environment that made its success possible.

updated German current account surplus link list

original link

Edit: added
Europe’s Macro Muddle (Wonkish) by Krugman
Nov. 11, 2013

Sadowski on sterilization
Nov. 4 at 1:34 pm

How Do Those Germans Do It and What Does it Mean for the US? by Jared Bernstein
Nov 04, 2013 at 12:12 pm

China and the EU: Beggaring Neighbors by Dean Baker
Sunday, 03 November 2013 16:26

Eureka! Paul Krugman Discovers the Bank of France by David Glasner
Published November 3, 2013

The real problem with German macroeconomic policy by Simon Wren-Lewis
Sunday, 3 November 2013

Blame Germany, or Frankfurt? by Ryan Avent
Nov 3rd 2013, 21:41

Europe’s Inflation Problem by Krugman
November 4, 2013, 10:20 am 

The Changing Geography of Beggar-thy-Neighbor by Krugman
November 3, 2013, 3:16 pm

German Surpluses: This Time Is Different by Krugman
November 3, 2013, 6:41 am

Those Depressing Germans by Krugman
Published: November 3, 2013

Is the Paradox of Thrift Actually a Paradox? by Henry Farrell
Nov. 2, 2013

France 1930, Germany 2013 by Krugman
November 2, 2013, 6:00 pm

Sin and Unsinn by Krugman
November 2, 2013, 4:35 pm 

Germany's Export Obsession Is Dooming Europe to a Depression by Matt O'Brien
Nov 2 2013, 9:30 am

Defending Germany by Krugman
November 2, 2013, 9:23 am

Fawlty Europe: Will the European Commission dare to utter the unmentionable to the Germans? by Charlemagne (The Economist)
Novemeber 2, 2013

More Notes On Germany by Krugman
November 1, 2013, 4:54 pm

The Harm Germany Does by Krugman
November 1, 2013, 11:41 am

Germany’s Blind Spot by New York Times Editorial Board
October 31, 2013

Raw Nerve: Germany Seethes at US Economic Criticism  By Christopher Alessi (Spiegel Online)
October 31, 2013 – 06:26 PM 

U.S. Accuses Germany of Causing Instability by Sarah Wheaton
October 30, 2013

Semiannual Report on International Economic and Exchange Rate Policies by U.S. Treasury
October 30, 2013

German current account surplus link list

Edit: added
Europe’s Macro Muddle (Wonkish) by Krugman

Nov. 11, 2013

Sadowski on sterilization
Nov. 4 at 1:34 pm

How Do Those Germans Do It and What Does it Mean for the US? by Jared Bernstein
Nov 04, 2013 at 12:12 pm

China and the EU: Beggaring Neighbors by Dean Baker
Sunday, 03 November 2013 16:26

Eureka! Paul Krugman Discovers the Bank of France by David Glasner
Published November 3, 2013

The real problem with German macroeconomic policy by Simon Wren-Lewis
Sunday, 3 November 2013

Blame Germany, or Frankfurt? by Ryan Avent
Nov 3rd 2013, 21:41

Europe’s Inflation Problem by Krugman
November 4, 2013, 10:20 am 

The Changing Geography of Beggar-thy-Neighbor by Krugman
November 3, 2013, 3:16 pm

German Surpluses: This Time Is Different by Krugman
November 3, 2013, 6:41 am

Those Depressing Germans by Krugman
Published: November 3, 2013



Is the Paradox of Thrift Actually a Paradox? by Henry Farrell
Nov. 2, 2013

France 1930, Germany 2013 by Krugman
November 2, 2013, 6:00 pm

Sin and Unsinn by Krugman
November 2, 2013, 4:35 pm 

Germany's Export Obsession Is Dooming Europe to a Depression by Matt O'Brien
Nov 2 2013, 9:30 am

Defending Germany by Krugman
November 2, 2013, 9:23 am

Fawlty Europe: Will the European Commission dare to utter the unmentionable to the Germans? by Charlemagne (The Economist)
Novemeber 2, 2013

More Notes On Germany by Krugman
November 1, 2013, 4:54 pm

The Harm Germany Does by Krugman
November 1, 2013, 11:41 am

Germany’s Blind Spot by New York Times Editorial Board
October 31, 2013

Raw Nerve: Germany Seethes at US Economic Criticism  By Christopher Alessi (Spiegel Online)
October 31, 2013 – 06:26 PM 

U.S. Accuses Germany of Causing Instability by Sarah Wheaton
October 30, 2013

Semiannual Report on International Economic and Exchange Rate Policies by U.S. Treasury
October 30, 2013

industrial policy, ULC and macro/accounting

How Do Those Germans Do It and What Does it Mean for the US? by Jared Bernstein

Baker on Germany

China and the EU: Beggaring Neighbors  by Dean Baker

Paul Krugman is wrongly beating up on the EU for its current account surplus, showing that it is now larger than China's. The problem with the comparison is that China is an extremely fast growing developing country. This is the sort of place that in the good old days we expected to run trade deficits.

The EU on the other hand is a bloc of slow growing rich countries. We would expect them to be running trade surpluses. This does not negate the fact that the EU could and should be doing much more to stimulate its economy with larger budget deficits and more aggressive monetary policy, but that fact that it has a larger trade surplus with the rest of the world than China really doesn't tell us much of anything.

Addendum:

I'm not gratuitously beating up on Krugman here, there is a real point. If a country is growing rapidly, like China, we would expect it would have a high return on capital. On the other hand, the return on capital is likely to be lower in low in the slow growing rich countries. This means that we should see a flow of capital from rich countries to developing countries. That would imply a trade surplus for the rich countries and a trade deficit for developing countries.

Another way to think about this is that the developing countries need to both build up their capital stocks at the same time that they continue to feed and house their people. By running trade deficits with rich countries, they can get the extra goods and services that allows them to do both simultaneously.

In reality, the capital flows from rich to poor countries have been at best uneven. This is a case where the real world has stubbornly resisted the textbook story. To my mind this is an indictment of the international financial system which has not generally accommodated this flow of capital from rich countries to poor countries. This is quite evident in the most recent reversal, which followed the botched bailout by the IMF-U.S. Treasury form the East Asian financial crisis in 1997.

But if we could somehow get things right and create a mechanism whereby excess capital in the EU and other rich countries helped finance investment in the developing world, that would be a good thing. This is why showing that the EU has a larger trade surplus than China does not necessarily mean that the EU is a bad actor in the world (although it is).

Baker says normally China would be running trade deficits since it should have a high return on capital. Slow growing rich economies like those of the U.S. and the E.U. would have trade surpluses because of a low return on capital. "To my mind this is an indictment of the international financial system which has not generally accommodated this flow of capital from rich countries to poor countries. This is quite evident in the most recent reversal, which followed the botched bailout by the IMF-U.S. Treasury form the East Asian financial crisis in 1997."

4% / 6%

from the German link list in the post below:

Fawlty Europe: Will the European Commission dare to utter the unmentionable to the Germans?

Many urge Germany to stimulate its economy to help its crisis-hit partners. On October 30th America’s Treasury Department criticised Germany’s export-led growth model, in unusually sharp language, as a reason for the weakness of the euro zone’s recovery. But in an open trading area the connection between one country’s surplus and another’s deficit is complex. Boosting demand in Germany may suck imports from America, China or eastern Europe, more than from the Mediterranean. Even so, say Eurocrats, that would help indirectly. Buying more imports could help arrest the rise of the euro, which is making it harder for southern countries to rebalance their economies.

The euro zone’s toughened rules of “economic governance” are lopsided. Under the so-called macroeconomic imbalances procedure, a current-account deficit greater than 4% of GDP can trigger an alert, possibly followed by “in-depth analysis” carried out by the European Commission, policy recommendations and, ultimately, the threat of sanctions. Yet a country’s surplus must rise above 6% of GDP before Eurocrats start to take notice. Germany was let off last year because its surplus (averaged over three years) was a shade below the warning threshold and was expected to shrink. Now statisticians have revised that figure to 6.1%, and it has grown since then. It stood at 7% in 2012.

So will the EU dare to mention the surplus? The test will come later this month, when the commission issues its latest economic forecasts and launches the “European semester”, an annual cycle of economic and budgetary assessments that culminate in the spring with “country-specific recommendations”. These edicts from Brussels have already irritated France, which told the commission not to “dictate” reforms. But given France’s slow progress in pension and labour reforms, more criticism is inevitable. Now that America’s Treasury has blazed a trail, can the commission afford not to speak out if it wants to be seen as independent?

 And yet the commission is wrong about France.