Hans-Werner Sinn has an article in today’s New York Times. The main point of the article is to rebut arguments from President Obama that Germany should be doing more to resolve the euro crisis.
Sinn argues that Germany has done enough:
Should the euro fail, Germany would lose over $1.35 trillion, more than 40 percent of its G.D.P. Has the United States ever incurred a similar risk for helping other countries?
Most of this $1.35 trillion potential loss figure comes from the possible loss of the Bundesbank’s Target2 credit, something which I have argued can be dealt without any new taxes on German citizens.
But, forgetting that for a moment, it appears that Sinn views “Has the United States ever incurred a similar risk for helping other countries?” as a rhetorical question to which the answer is “No”. In fact, I suspect the vast majority of US citizens are perfectly aware that the answer is “Yes”.
One example that the good professor has probably heard of: World War 2. Once the United States entered World War 2, defense spending rose from 1.64% of GDP in 1940 to 37.19% in 1945. The US debt ratio went from below 40% of GDP in 1941 to over 120% of GDP in 1946. And this doesn’t put a price on the tragedy of over 400,000 deaths of US troops.
The readers of the New York Times are likely to be aware that the freedom and prosperity that modern Europeans enjoy is due in no small part to the massive financial and human costs incurred by earlier generations of Americans. Perhaps Professor Sinn should consider an apology.