After Germany’s 2002 elections, its government embarked on a series of economic reforms, mostly to the labour and welfare sectors. The German economy continued to stagnate until about 2005 but experienced a solid recovery, interrupted by the 2009 recession. These are the facts. But the story told across Europe is that the reforms have caused a new German economic miracle.
The argument is a logical fallacy of the post hoc ergo propter hoc variety: after this, therefore because of this. First the reforms, then growth, hence causality, hence universal applicability. Every European official seems to have bought into this chain of argument. And they are now applying their flawed logic to France.
Last week a report by Louis Gallois, former chairman of EADS, suggested measures to render France more competitive. The report and the debate that came with it reflect a wider intellectual muddle about the nature of reforms. I detect a triple misdiagnosis – about the effects of reforms in Germany; about the kind of reforms that are now needed in France, and in Italy and Spain; and about the focus on competitiveness.