Profitable Virtue and the Clash of Cultures

One of the odd moments of the U.S. Constitutional Convention was when, at the opening session, Benjamin Franklin rose to propose that each session be opened with a prayer, and the delegates, over half of whom were ministers of various faiths, voted to table his motion, effectively killing it. The clergy could be understood: most of them were dissenters from the Church of England fearful of a return to its religious autocracy and aiming to create a purely secular Constitution – which they did. But what was Franklin, whom we think of today as a liberal skeptic, thinking when he made the motion in the first place?  It turns out, from reading his Autobiography, that Franklin - a relative of the great New England preacher Cotton Mather - began as a devout young man who attended church regularly until he heard a minister he had respected preaching that “the fruits of the Holy Spirit” passage in the scriptures referred not to Love, Mercy, Kindness, etc., as it clearly says, but to tithing, regular church attendance, etc. Franklin, who knew better, was outraged and walked out, never to return. Today we would commend him for showing real virtue. He knew that virtue consisted of more than just obeying rules of good behavior. And at the Convention, both Franklin and the clergy who opposed him were acting virtuously.

I thought of that while reading a fascinating article in the August 3 New Yorker about the Greek Finance Minister and the European financial crisis. The article demonstrated that the crisis is becoming every day more openly and obviously not an economic crisis only but a clash of cultures. In fact, at one point the article reports that the German representatives commented about the Greek that he was only an economist and couldn’t possibly understand the politics. It so happens that a whole cadre of distinguished economists including Stiglitz, Galbraith, Sachs, etc., and staff of the IMF, support the Greek need for debt restructuring, and even the conservative Economist sees it as necessary and laments the lack of a “risk sharing” mechanism in the EU. Where the economists differ is whether Greece, somewhat like Franklin, should storm out of the EU never to return or hang in there for the sake of Europe. Stiglitz says leave; Galbraith says stay. Then the Germans were appalled when Greece actually held a referendum, saying “How could you possibly put an issue such as this before the Electorate?” Funny, I thought electorates were what politics is all about. And of course, Greece basically invented elections. But throughout the whole ordeal the Germans have maintained the Greeks knew the rules and didn’t follow them and austerity is their necessary consequence even if they are destroyed by it.  In Germany, following the rules is a primary virtue and a contract is a contract. Years before when discussing the initial crisis with a friend who had been born and raised in Germany but had lived in the U.S. for over fifty years, I saw that response deeply engraved, almost as a reflex. To the German ministers, Greeks were wild creatures who must be tamed.

Which brings to mind Sapiens: A Brief History of Humankind, a recent book by Yuval Harari.  One of Harari’s themes is that each civilization has embedded in it a hierarchy the chiefs of which profit from a code of behavior that is taught and enforced to the point of becoming a cultural norm. Greek democracy –group decision with maximum laissez faire for individual citizens, even idiots, the old Greek word for those who refused to be involved in group decision, were derided but accepted -  dates back to Solon and the Constitution of Athens and is indeed a cultural norm. A signed contract does not end negotiation; it begins it. That has enabled the growth of many wonderful things from which we all profit every day; and it creates massive traffic jams in Athens each day and makes Greek houses sometimes take two years to build. Germany’s pressure for order and obedience began with the military hierarchy of the Germanic tribes and it too is a cultural norm.  But Europe is seeking a unified voice in a 21^st century world.

The solution may lie in that system of “risk sharing” mentioned by the Economist. That is essentially what Alexander Hamilton invented for the United States when it began.  The thirteen colonies had widely varying cultures and economies and widely varying debt loads. There was a quiet little border war between North Carolina and Georgia going on about that time you never hear about. The U.S. treasury assumed the debts of the individual former colonies in exchange for a uniform tax code administered by the Treasury, a financial code, enabling contracts to be valid wherever made, and the problems of each state to be addressed by all through the federal system. It wasn’t easy, but it worked. The EU lacks that risk sharing, so when Greece got in over its head in the manipulations of the financial corporations, Germany felt no obligation to help them out. And the strength of the Euro from which Germany’s export driven economy benefited devastated Greece’s tourism based economy. Both cultures have to bend to enable such risk sharing to happen, but it can. It really depends on how much each wants Europe to emerge.