In his insightful Weekend Essay (“The price of peace”, Life & Arts, September 24) John Plender highlights possible relationships between globalisation and geopolitics.
However, he walks a slippery slope suggesting that before the eurozone debt crisis of 2009-12 the German current account surplus affected the eurozone’s peripheral countries by increasing their unemployment and, furthermore, also provoked “investment booms that resulted in serious misallocations of capital”.
The consequences of current account surpluses and deficits are, respectively, capital exports and capital imports. That is an economic truism, something that, bookkeeping-wise, always holds.
Surely there are many reasons why a country, like Greece at the time, runs a deficit on its current account by consuming more than it produces.
Singling out the German current account surplus may be politically convenient, but no more than that.
Equally misleading is speaking of investment booms that provoke misallocations of capital. Are investing countries to be held accountable for the uses to which the Greek authorities have put these capital inflows?
Or have we forgotten that in 2009 George Papandreou, the then Greek prime minister, came to an EU Council meeting confessing that corruption was endemic in his country.
Would we likewise be inclined to argue that Britain, which for much of the 19th century exported capital, the counterpart of its current account surpluses, was responsible for unemployment and capital misallocations in the rest of the world?
Frank Boll
Rotselaar, Belgium
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