MILAN – Charles P. Kindleberger, the great economic historian, once noted that the Great Depression was so deep and so long because of “British inability and American unwillingness” to stabilize the system. Among the functions that the great powers failed to perform, a few should ring a bell to European leaders today. Kindleberger singled out their failure to “maintain a market for distress goods” – that is, to keep their domestic markets open to imports from crisis-stricken economies.
Surely history is not repeating itself – at least not in the literal sense. European creditor countries today are not tempted by anything like America’s Smoot-Hawley Tariff Act, which crippled world trade in 1930. Germany, the Netherlands, Austria, and Finland remain committed to the European Union’s single market for goods and services (though their national regulators hinder intra-European capital flows).