Storm Clouds Over Europe
Paul Krugman reminds his readers today that tough economic times can sow the seeds of authoritarianism. He then offers an analysis of what is happening in Europe. The economic crisis there, he writes, is killing the European Dream:
Specifically, demands for ever-harsher austerity, with no offsetting effort to foster growth, have done double damage. They have failed as economic policy, worsening unemployment without restoring confidence; a Europe-wide recession now looks likely even if the immediate threat of financial crisis is contained. And they have created immense anger, with many Europeans furious at what is perceived, fairly or unfairly (or actually a bit of both), as a heavy-handed exercise of German power.
And the truth is that, historically, what happened in the United States in 1932 — the election of a leftist government — was the exception, not the rule. Europe appears to be following the rule:
Right-wing populists are on the rise from Austria, where the Freedom Party (whose leader used to have neo-Nazi connections) runs neck-and-neck in the polls with established parties, to Finland, where the anti-immigrant True Finns party had a strong electoral showing last April. And these are rich countries whose economies have held up fairly well. Matters look even more ominous in the poorer nations of Central and Eastern Europe.
The more the political elites on both sides of the Atlantic preach austerity, the worse things will get for ordinary citizens. And, as their anger grows, there is no guarantee that they will turn to another Franklin Roosevelt — even if such a leader is available.
13 Responses to “Storm Clouds Over Europe”
Paul Krugman has never met any form of deficit spending he does not love. One thing to rememeber is most economist are not mathematicians or he would know that the well runs dry at some point in time. His point in time seems to be well after his lifetime has ended and the future generations are required to pay the debts of their fathers.
This is what is happening today in Europe after years of deficit spending and his solution is more deficit spending?
And he is a professor at Princeton trying to educate our future generations into accepting this voodoo economics.
Good grief. There are no Nazis coming over the hill in Europe.
RP, you do know where the expression “voodoo economics” came from right?
I’ll go with the Nobel Prize winner thanks.
JSpencer, I sure do remember and he was right then and he is right now. It is based on reduced income and the belief that reduced income will lead to reduced spending. Didn’t work then and it isn’t working now.
In Europe they did it just a little different from my understanding. They spent widely on social programs, civil service employment, pensions and retirement ages that Americans in the 1% can only dream of achieving. Then they did not provide for those expenditures through their revenue from taxes.
Either way, it is voodoo economics. Is there anyone in our government that is not a practicing witch doctor today?
JSpencer, by the way, Obama won the nobel prize well before he did anything, so I put little credence into this prize now. They seem to use voodoo criteria for this award now.
“Is there anyone in our government that is not a practicing witch doctor today?
Well, the popularity of cynicism would indicate no, but popular culture (which includes political junkidom) has a low bar these days, so I’ll go out on a limb and say yes. They don’t get much press though do they. As to the Nobel Prize, point taken. That said, I believe Krugman has been making a great deal more sense than his critics – who only seem to repeat the same failed mantras ad nauseum.
I think JSpencer was referring to Krugman’s Nobel Prize in economics, not Obama’s Peace Prize. And if you think that modern economists don’t study mathematics you’re as wrong as you can be. However, ideology can trump common sense or else you couldn’t possibly explain the Chicago School.
Thanks Jim, you are correct. As for voodoo economics, that was the expression used to describe supply-side economics when Reagan first fell in love with it.
That’s right, JSpencer. While a dislike for his pandering to the Religious Right didn’t help my opinion of him, the whole “I can cut taxes, increase defense spending and balance the budget.” routine was something I just couldn’t buy. And I was right, too.
Yeah, Jim, me too. When I was too young to vote (1980 election, I was 17) two major policies/candidates were put into governance. Ronald Reagan promised the three Jim mentioned (balanced budget, increase defense spending, lower taxes) and 8 years later the song “Two Out of Three Ain’t Bad” should have been the theme song for his entire presidency.
The other policy? I was a Massachusetts resident and Proposition 2 1/2 was passed. It made it illegal for any local entity (think town or city) to assess property taxes at greater than 2 1/2% of the value of the property. My school superintendant said that if the bill passed he would have to cut 7 English teachers from the high school. A local, conservative, political hack scoffed at that claim and said that it would only cause a reduction in waste (more on this claim in a bit). The referendum passed and 7 English teachers at the high school lost their jobs.
Did the political hack have to apologize for his errant claim? Of course not. Just as so few conservatives have apologized for their claims about Iraq (whether or not WMD’s existed, should we have 330k troops instead of 175k, did Iraq have anything to do with 9/11, does supply-side economics really enrich all people instead of the rich only). Oh, as for the waste? Yeah, my home town eventually had to eliminate community garbage pick-up. In other words, taxes used to take care of making sure that garbage was picked up. Not anymore. So the hack’s claim that the bill would eliminate waste? Well I guess one could say that the town cut waste–in the form of no more waste-removal for residents.
Authoritarianism is not happening in Europe.
The far right extremism is a result of immigration and lack of assimilation.
More importantly…the EU is not Greece nor Italy. The EU is also Germany, Sweden, Netherlands, ect… The social spending works and is sustainable in countries that work, as in “go to work”.
[...] I have no idea what right wing/left wing means in this context. [...]
This is complete nonsense. Krugman regularly and repeatedly expounds on the difference between a healthy economy, where deficits are bad, and an economy in a liquidity trap, where deficits are good. Its just basic economics. Conservatives are just people who don’t never passed economics 101. They have absolutely no argument about why basic economic theory is wrong, so they just repeat mindless mantras so many times that people give up trying to explain even the simplest ecomonic facts to them.