Innate qualities and disciplined economic management earned Germany a solid position, the envy of most of the eurozone, and accusations of selfishness for not sharing her good fortune more readily with others, notably with the Southern tier of Europe that is having a hard time under the overload of its excessive debt.

Few people pretend to be wholly unselfish—the really unselfish probably least of all. Selfishness in oneself is not really shameful where good reasons to pardon it are easy to find. It is in others that it is blame worthy and a source of deep indignation. This indignation is one part in the mixture that fuels our demand for social justice and solidarity on the part of the better off.

Envy works differently, though it works to the same end. It is one of the instincts most people have and yet very few will confess it even to themselves, let alone out in the political arena. As it is shameful to admit it, it finds expression in some more noble disguise, such as the rejection of inequalities. This sentiment, joined to the condemnation of the selfishness of others, saves the notion of social justice from running on empty. Coveting the money and goods of the more fortunate explains the persistent claim for redistribution between classes in a country and lately also between richer and poorer countries .

It does so even without supposing hypothetical social contracts or agreements on a norm of equality. Covetousness completes the amalgam that suffices to give meaning to social justice that would otherwise have to seek it in contestable metaphysical speculations.

In his classic book Envy,1 the Austrian sociologist Helmuth Schoeck makes the somewhat unexpected point that envy is rather a good thing because it makes for social stability. The envious represent a threat to the person they envy. The latter is therefore well advised to avoid provoking them and not flaunt his accomplishments, his superior talents, and his wealth. Ostentatious consumption will breed hostility, while measure, taste, discretion, and the other hallmarks of breeding and self-discipline will blunt it. Thus envy leads to better behaviour and less strife.

Schoeck’s interesting claim seems to apply well in a distant past, but is not a good fit for the democratic present. In the “state of nature” before the emergence of conventional rules of behaviour, and in particular before the organisation of a central state with specialised law enforcement, the envious may beat up their victim, burn his house, and drive off his cattle. Their threat is altogether tangible. With the state policing their behaviour most of them have to content themselves with hating the envied person, who may shrug it of with the standard consolation that “sticks and stones break no bones”. However, he is now under a graver threat. His talents, success, and superior income will now be noticed and punished by the fiscal apparatus of the state. The fisc is not appeased by good breeding and discreet behaviour, hence for the tax payer there is no material incentive to behave with good taste.

Since fiscal policies always have some effect upon the electoral chances of a democratic government, they will always contain some more or less substantial component that panders to the envious by hitting the enviable. France’s freshly installed socialist government has made blundering attempts, including a 75 per cent marginal rate of income tax, to cheer up the envious at great cost to the investment climate and with little prospective gain to the public finances. Efforts are now made to backpedal and partly to undo these rather silly measures, but the harm to confidence has been done.

But the money is there…

Such pandering may well be a recurrent feature of democratic public finance, but at present it is dwarfed in importance by the greater and graver questions of economic stagnation and mass unemployment, the persistent budget deficits of the Southern tier of European states, and the medium-term threat of their actual insolvency, all closely tangled up with the future role of Germany as the saviour, and the survival or eventual liquidation of the eurozone.

All strata of the societies concerned feel the pressure of these malfunctions, the lowest suffering the most. Greek pensioners, the unemployed youth of Spain and France, and the small businessmen hanging on by their fingertips all over Europe are looking at a bleak present and quite likely a still bleaker future. Higher strata suffer no material hardship, but are profoundly discouraged.

For some years past, sporadic explanations of this “crisis” have been launched, mostly from the conservative and liberal Right. It has been said that Europe’s welfare apparatus has been expanded way beyond what the societies concerned could afford. Governments had chosen to look the other way as the cost of welfare entitlements and public goods ran ahead of revenues, deficits accumulated, and the national debt mounted to an ever higher proportion of GDP. The Public is now been asked kindly to agree that even benevolent government cannot spend the money that just isn’t there.

However, for the economically illiterate part of the public, this message was and remains intrinsically false. It is a forked-tongue attempt to do them out of their rights. Clearly and obviously, the money is there. The government is spending it by the billions every working day. It is on tap. Instead of turning the tap off on a complicated pretext having to do with primary deficits, service charges, bunched maturities, and rating agency judgments, the government must simply honour its commitments to those who most need it, and keep the money flowing from the giant tap that is the state.

The economically less illiterate strata sees matters in a more complicated, but not necessarily more valid, terms. They can figure out that if the budget deficit is 5 per cent of GDP year-in, year-out and GDP grows by 1 per cent a year, the national debt will rise by 4 percentage points of GDP year-in, year-out, and the higher it gets, the more of GDP is eaten up by the service charge and the greater the load the younger generation will have to carry during its lifetime. The process must stop sometime in the near future.

See the EconTalk podcast Reinhart on Financial Crises for an interview with Carmen Reinhart. For more on the topics in this article, see also “GDP Fetishism,” by David R. Henderson. March 1, 2010, Library of Economics and Liberty.

The justly famous Reinhart and Rogoff statistical study2 showed that once the national debt has passed the level of 90 per cent of GDP, stopping its further rise has proved very difficult in the past and is likely to be no less so in the future. Some doubt has now been cast on the methodology of this study and the opponents of fiscal austerity are now ready to shrug off the 90 percent red line, the more so as Britain, Belgium, France and Italy are now past that danger limit. It is obvious, though, that unless rapid inflation comes to the rescue and wipes out the debt, states are ultimately limited in their capacity to carry debt, and must reduce their deficit below their GDP growth (though not, as some politicians are airily promising to accomplish in the rosy future, “to reimburse the debt”).

It is all the fault of the Germans

With eurozone growth in the near term unlikely to be much above 1 per cent, deficits should be forced down to 1 per cent or less to stop the rise of national debt. This is simply not on the cards except for the sole country, Germany, which has not only kept its debt below the danger level but has already achieved a near-zero budget deficit it originally promised for 2016. The Southern tier eurozone and France are in deep trouble and need all their verbal virtuosity to show that a way out of it will be found.

The argument they unfold is that austerity smothers growth, growth is necessary to permit deficit reduction, therefore one must avoid austerity if one wishes to reduce deficits. Countries must allow government spending to go on rising if they want to get the national debt under control. Unfortunately, putative German short-sightedness is spoiling this blissful scenario. If anything goes awry before currently half-broke states regain the safe shore of solvency, Germany is the only possible pay master to bail them out. But Germans disapprove of laxity and stubbornly disbelieve that it could work. Selfishly, they obstruct the easy way to tomorrow’s solvency.

When Germany and France used jointly to run the common affairs of Europe they could pass for being equal partners in the eyes of public opinion. Since the steep decline of French potential in recent years, equal partnership can no longer be pretended even with the considerable tact and patience Berlin has been displaying. France could now at best be second fiddle.

France, being French, would not play second fiddle. She must be the leader of something or other. She has tried to recruit the Southern tier states under her flag, but neither Italy nor Spain would follow her. They agree that growth is nicer than fiscal rigour, but they do not see that growth can be conjured up by anti-German rhetoric.

Exasperated by failure, France’s socialist party has recently exploded a minor stink bomb in a draft working paper on Europe which contains a fairly ill-mannered personal attack against Germany’s chancellor Merkel. The final version, to be presented in mid-June, will be purged of the anti-Merkel attack, but the purpose of marking French panache will have been served. The diplomatic shock across Europe will leave a deep trace.

Germany, dominating the eurozone without being very keen to do so, is damned if she does and damned if she does not. If she is to remain strong she must maintain her fiscal discipline and try to bring round the weaker eurozone countries at least to a modicum of the same discipline. The weaker states of the eurozone, on the contrary, want Germany to become more relaxed, have a less robust balance of payments, and be a bit more like themselves. It is hard to see how the eurozone could look forward to an easy time and how this story could end as well as good stories ought to do. It is perhaps sufficient to be sure that it will end somehow.


Helmut Schoeck, Envy: A Theory of Social Behaviour. Translated from the German by Michael Glenny and Betty Ross. (New York, Harcourt, Brace & World 1969).

See Carmen M. Reinhart and Kenneth S. Rogoff, “Growth in a Time of Debt,”American Economic Review: Papers & Proceedings 100 (May 2010): 573-578. Also Reinhart, Carmen M., Vincent R. Reinhart, and Kenneth S. Rogoff. 2012. “Public Debt Overhangs: Advanced-Economy Episodes since 1800.”Journal of Economic Perspectives, 26(3): 69-86. Carmen M. Reinhart and Kenneth S. Rogoff, This Time Is Different: Eight Centuries of Financial Folly (Princeton, N.J.: Princeton University Press, 2009).


*Anthony de Jasay is an Anglo-Hungarian economist living in France. He is the author, a.o., of The State (Oxford, 1985), Social Contract, Free Ride (Oxford 1989), Against Politics (London, 1997), and Justice and Its Surroundings (Indianapolis, 2002). His most recent publications include Political Philosophy, Clearly (Indianapolis, 2010) and Political Economy, Concisely (Indianapolis, 2010). His next volume, Economic Sense and Nonsense: Reflections from Europe, 2007-?2012 (a volume in The Collected Papers of Anthony de Jasay), edited and with an introduction by Hartmut Kliemt, is forthcoming from Liberty Fund.

The State is also available online on this website.

For more articles by Anthony de Jasay, see the Archive.