Charlemagne: The laws of euro-nomics

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Leviathan of last resort

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German legalism is hampering rational crisis-management

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SOME say economics in Germany is treated as a branch of moral philosophy. More often it is the worst sort of contract law. Throughout the euro crisis legal pettifogging has hampered rational policy. The German finance ministry is filled with lawyers, not economists, starting with its boss, Wolfgang Schäuble. Big decisions have often ended up at the constitutional court in Karlsruhe. The euro zone wasted time tightening fiscal rules that treated mostly symptoms (budget deficits) not causes (a deficient structure and crippled banks) and led to excessive austerity. The European Central Bank’s action that saved the euro in 2012 has recently been undermined by the Karlsruhe court, which thinks that the never-used “outright monetary transactions” (OMT) programme to buy bonds of countries that agree to reforms is …

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