“The Greek Way” no longer has quite such splendid implications for many. This is the title of a best-selling book on ancient Greece by German-American author Edith Hamilton, published in 1930 and reprinted regularly since. She was one of the most visible public advocates of the classics of the 20th century, and her influence continues.
Today, this phrase immediately conjures up the continuing economic weakness of Europe. The troubled and heavily indebted economy of Greece has often been a center of attention.
Economic weakness has fueled political instability. Failure of the Greek parliament to elect a president led to elections on Jan. 25. The left anti-austerity Syriza party emerged with the largest bloc of seats and has now formed a coalition government with the conservative independent Greeks. Hostility to European institutions and the austerity measures imposed on Greece unites this odd couple.
Since 2009, there has been ongoing uncertainty about the future of the euro, the common currency of most — though not all — members of the European Union (EU). Greece was the first country in the organization to receive an economic bailout. There have been persistent understandable concern and speculation that the country would leave the euro zone, which might in turn spark a general disintegration of the pressured currency.
The now long-term European economic problems were initially sparked by the collapse of the housing and associated financial derivatives markets in the United States. The resulting severe recession on both sides of the Atlantic has left behind widespread losses and persistent high unemployment.
This is important background to keep in mind. Americans too often are quick to condemn European allies for ineffectiveness. Our own current gridlock between Congress and the White House is hardly inspiring.
Current complex challenges reinforce the role of Germany, which has the strongest national banking system and the largest economy in the EU. Chancellor Angela Merkel has proven effective in juggling contentious interests at home, including unashamed nationalists, while building coalitions among the diverse membership of the EU.
General structural features further reinforce Germany’s influence. First, since World War II, the U.S. dollar has been essentially generally convertible. Growth of dollar holdings overseas reduces money supply control by the U.S. Federal Reserve, while expanding global American influence.
With the dollar a world currency, the relatively new European currency provides a tool to coordinate financial management by governments while facilitating regional trade and investment. U.S. commercial and especially corporate interests have enormous economic influence, while our government has limited leverage.
Second, effective government regulation is essential. In retrospect, irresponsibility was fed by abolition in the U.S. of the Glass-Steagall Act in the late 1990s, which segregated commercial banking from other financial services. Germany and other European nations generally have kept such financial regulations in place.
Hamilton, who praised the lucidity, rationality and intellectual interests of the ancient Greeks, had strong ties to Germany. In 1896, she and her sister Alice studied classics at the University of Munich, drawn by the global prestige of the university in that field. Alice went on to become the first woman professor at Harvard Medical School, in 1919. In that era, Germany was rapidly becoming a leader in literally every dimension of scholarship.
Merkel so far has established a remarkable track record of success in building on these positive dimensions of Germany’s complex history.
Arthur I. Cyr is Clausen Distinguished Professor at Carthage College in Wisconsin and author of "After the Cold War" (NYU Press and Palgrave/Macmillan). He can be reached at acyr@carthage.edu