You neglected to quote the lead sentence of the Economist article, which read:
<<All accross Europe, it appears, the powers that be were quietly delighted when Oskar Lafontaine resigned as Germany's finance minister.>>
Is this meant to disprove Chomsky's thesis that there was
<<euphoria' in 'jubilant' financial markets, editorial offices, and news rooms" in response to Oskar Lafontaine's resignation.>>
???
All this article proves is that many neoliberals also wanted lower interest rates in Europe. Wasn't that the premise of our disagreement?
Once again, I'll make an analogy. The Wall Street Journal editorial page wants lower interest rates and fixed currency values. Oskar wanted these things (more or less) too. Yet there is obviously a gaping chasm between the two positions, especially in their basic values. Clearly, the similarities in that case are merely superficial, or "transitory" or "tactical."
If you like, I'll abandon the "lower level of abstraction," which is jargon that I don't really understand anyway.
Seth
> -----Original Message-----
> From: Brad De Long [SMTP:delong at econ.Berkeley.EDU]
> Sent: Saturday, March 20, 1999 6:31 PM
> To: lbo-talk at lists.panix.com
> Subject: Re: Brad, Oskar, Noam
>
> <irony>Yet another example of the "'euphoria' in 'jubilant' financial
> markets, editorial offices, and news rooms" in response to Oskar
> Lafontaine's resignation.</irony>
>
> But then these are all "short-term, coincidental, tactical agreements"
> taking place at a "lower level of abstraction"...
>
>
> Brad DeLong
>
>
>
> ============================================
> From the most recent _The Economist_
>
> ...Of course, to appoint Mr Lafontaine as finance minister in a
> Schröder
> government was about as sensible as it would have been for Tony Blair
> to
> name Ken Livingstone as his chancellor of the exchequer, or Bill
> Clinton to
> appoint Ralph Nader as his Treasury secretary. By and large, it is
> better
> that governments should not be riven at the very top by fundamental
> ideological differences. And certainly, if one view is to prevail,
> better
> Neue Mitte than old left. And yet, and yet. There was much to be said
> for
> Red Oskar.
>
> On the issue where Mr Lafontaine's interventions caused the greatest
> dismay--his unsubtle efforts to talk the ECB into cutting interest
> rates--this old-left unreconstructed Keynesian was actually correct.
> Interest rates in Europe were too high, as the ECB may recognise by
> trimming them at the earliest opportunity after Oskar's departure. And
> Wim
> Duisenberg, the ECB's boss, was wrong to retort that rates are
> "historically low": that may be true of nominal rates, but not of real
> ones-the kind of mistake (or attempt to mislead) you might expect of a
> politician, not a central banker.
>
> True, the ECB's calculation is complicated, because some parts of the
> euro
> zone are doing a lot better than Germany, which is in a downturn.
> Overall,
> though, recent data for the euro-11 as a whole had tipped the balance
> in
> favour of an interest-rate cut. Yes, Mr Lafontaine was rash to risk
> compromising the ECB's independence in its early weeks. And in all
> likelihood, he made it harder for the bank (determined to establish a
> reputation for firmness) to cut rates. But none of this alters the
> fact
> that his assessment of European monetary policy was broadly right.
>
> The same goes for German fiscal policy, when judged in the aggregate
> (though certainly not at the micro-level: Mr Lafontaine appeared to
> think
> that punitive taxes on business were a fiscal free lunch). The
> minister
> evidently thought the constraint of the European Union's "stability
> and
> growth pact" was too severe. Again, he was correct. Europe's big
> economies
> have moved out of synch in recent months. With growth in Germany
> falling
> well below growth in France, in particular, an easing of fiscal policy
> would have been appropriate. But the stability pact, if followed at
> all
> zealously, rules this out.
>
> Admittedly, old-left types such as Mr Lafontaine always favour lower
> interest rates and more public spending, regardless of the state of
> the
> economy. But at certain points in the cycle--and for Germany this is
> one--endangered old-school demand-managers turn out, for a while at
> least,
> to be right. So this seems a perverse time for governments to be
> celebrating Mr Lafontaine's political demise.
>
> One suspects that the ex-minister's real crime, in the eyes of his
> erstwhile political friends, was not so much that he was wrong as that
> he
> said what should not be said--or, more precisely, that he raised
> questions
> that must not be raised. Governments should have no view on interest
> rates;
> if the stability pact is to be flouted, let it be done quietly, not in
> the
> full glare of democratic accountability.
>
> ...Another favourite theme was exchange-rate policy. Mr Lafontaine's
> idea
> for some international agreement on exchange-rate target-zones was one
> that
> America was unwilling even to talk about. It was embarrassing for
> Germany
> that Mr Lafontaine raised it and was so brusquely rebuffed (as he
> surely
> knew he would be). Also, to talk of a European exchange-rate policy
> was, in
> effect, another challenge to the ECB's independence--because
> exchange-rate
> policy is, to all intents and purposes, the same as interest-rate
> policy.
>
> But sooner or later this issue will need a proper airing. The value of
> the
> euro, especially if it should one day come to seem to be too high, is
> a
> matter on which Europe's governments can be expected to have a view.
> Internationally co-ordinated efforts to move exchange rates are not
> uncommon. How is Europe to deal with this question? The Maastricht
> treaty
> lays down that exchange-rate policy is for governments, not the ECB,
> to
> decide; but since it is, in essence, the same as monetary policy, it
> is
> difficult to see how this division of labour can work. Mr Lafontaine
> opened
> this can of worms before anybody else was ready to look inside...
>