In only one of 28 countries within the EU has the recent monetary policy of low interest rates been strongly and settled criticized. That would be a little problem for the President of the ECB, but this country has the strongest economy in the EU and is one of the most important actors in political processes. So despite the affirmation, the ECB makes no politics which is very important for the ECB as a political player.
Mario Draghi, located in Frankfurt, visits Berlin quit often. Once he went to the Parliament Bundestag, had dinner with economic attachés, and went to a lecture in the German Scientific Institute of Economics (DIW Berlin). Last week was my chance to listen to Mr. Draghi live.
My reflections have two sides: rational and cultural. The graphs and the figures easily assured there are advantages of the monetary policy not only for „southern“ economies, but for the German economy and German households („For Germany, we can see that the government and non-financial corporations have made large windfall gains. The household sector, often thought to have lost out the most in Germany due to its large net saver position, has in fact only recorded a mild loss in net interest income, since the household borrowing rate has fallen more than the lending rate. And if one runs the same exercise from mid-2014, when our credit easing began, the household sector actually accrues a slight gain“). The stabilization of the labor market is also positive for the German economy as well as for households and – you could hear it between the lines – a merit of Mr. Draghi rather than of Mr. Gabriel.
To persuade Germans with facts is a good idea, but Mario Draghi did not avoid arguments from a cultural point of view. Without mentioning „German angst,“ he emphasized (and it was the only emotional point in his speech) that in 2014 the worse option was not acting at all. The reluctance of German politics to act in an unsure way would cause more significant problems compared to the semi-optimal action plan of Mr. Draghi (which, by the way, is not „trial and error”— another extreme like the „American style“ which is not suitable for the EU).
But cultures are inert. One speech, or even two or three, could not change the feeling of losses for the German population. The intervention on savings is emotionally more grave than gains from the rising economy because they are a part of the mentality measured by cultural dimensions like Long-Term-Orientation (www.geerthofstede.nl) and even anchored in many German proverbs.
In the unconscious part of cultural programming, the patterns of thinking are inert. And this is the real dilemma for Mr. Draghi— and the challenge for his cultural advisers. I hope he has some…