The election of Hollande in France likely signals the end of the EU. Europe is unraveling. I think it was David Frum on Meet the Press this morning who said Hollande's election is a good thing in that it shows America the counter-productiveness of austerity, but it's bad news, because he's a socialist and will do things counter to economic growth. What? If only the socialist would spend more money and find a way to create economic growth so that no one has to suffer from years of welfare state madness. Maybe he can hire Frum as a consultant.
Entries in austerity (15)
Between 2000 and 2010, national budgets in the EU increased by 62 % while the EU budget increased by 37% over the same period.
In 2011, 23 national budgets out of 27 are currently increasing. In 2012, 24 national budgets out of 27 are due to increase according to the latest estimations.
The above numbers regarding increase in spending in Europe comes from http://ec.europa.eu/budget/explained/myths/myths_en.cfm.
Paul Krugman is wrong on several levels. Confidence is a problem not only because there is too much spending, but also because there are too many government interventions in the economy -- Obama can't wait.
Obama is in the process of pulling all strings possible to manipulate the economy so that it looks like recovery is taking place. For over 3 years Obama has pushed for government interventions in the economy, with Obamacare and Dodd-Frank the Big Frigging Deals that caused a loss of confidence among investors and entrepreneurs who have no appetite for investing billions of dollars in an economy that could change with a political whim causing great losses. Obama followed Bush's interventions with a zeal we haven't seen in quite a while.
What Krugman doesn't mention is that austerity is rhetoric, and even if there were actual cuts in government, that's not all that's being recommended. There's also a recommendation that economy-killing regulations be abolished, and that obstacles to energy production be removed. There are many things we can do to create confidence among investors so that money pours into the economy, but Krugman wants government to control the "investments" and the money-pouring -- this is what has Krugman's panties in a wad.
The author, Alexander Boot, says EU has a dependent mindset, and while the EU talks about austerity, spending will increase, and governments will change to punish those who even talk about austerity.
Of Britain specifically, Boot writes: "But real austerity is no more possible in Britain than anywhere else in Europe. We’ll never accept it – until it comes down upon us as red-hot shards from an imploding world."
Pay attention America.
Liberals usually sneer when they have no answers for their illogical thinking about economics or failing welfare statism. When comparisons are made between the US and Greece, liberals sneer for sure as they say we are a great economic power who could never reach the financial bottom that Greece has reached. Liberals in Greece are sneering at the Germans and associating them with their nazi past -- now, that justifies a sneer.
It's already started in the US -- OWS protests against "austerity" -- Van Jones calling those who support economic freedom and financial responsibility racists and homophobes and such. It seems like honest liberals would sneer at OWS and Van Jones. Regardless of the good will one can muster to assume that many in OWS are young and sincerely worried about cronyism, in order for their concerns to be addressed properly there must be limits placed on government power, but every protester I hear proposes, in one way or another, more interventionist government. You can write this off as innocent ignorance, and generously say they mean well, but ideas have power, and these statist ideas must be squashed if we want systemic changes. There's much to sneer at, but let's not sneer at real solutions.
In International Relations there are basically three paths to formation of society under State control -- coercion, calculation and belief. Coercion is dictatorial control, although calculation and belief might be mixed in, with patsies calculating their benefits and the intellectual elite believing in the cause. Calculation might be the most common glue -- many people accept the rules of the State because they believe they'll benefit from the arrangement if society is stabilized and the public is protected from bad guys. Belief is uncommon, although in the US we pride ourselves in being believers. But what if our economy gets worse and worse, and unemployment becomes higher and higher? Will we still believe? Will we even make a positive calculation?
In Greece, society is coming unhinged. The State has failed and now austerity is pushed as something the Greek people have to calculate to determine if they'll benefit. No one believes -- that's obvious. If the Greeks can't calculate to their advantage, they'll continue to riot and rebel. What then? What will the EU do if the Greece government can't get its people under control? The EU has a lot riding on Greece and the new bailout agreement. At what point does Germany step in and say enough is enough -- make the cuts, suffer the austerity and shut up?
The American people look on the Greece situation and say -- wow, I'd hate to live in this chaos. If we continue like we're going, we'll be faced with the same problems. At some point Americans will stop believing and the calculations will no longer make sense. If our government comes to us and says we all have to sacrifice, cutting minimum wage by 30%, laying off half of all public employees, ending pensions, cutting entitlements -- what will we do? There will be riots in the streets. But there is no EU forcing us into austerity -- it will be reality that forces government to coerce the public.
We can avoid this crisis, but we can't avoid it the way we're going, just like Greece hasn't been able to avoid its pain. Economic reality can't be ignored and violated indefinitely, no matter what Obama wants us to believe. Did you hear? The Senate is not even going to vote on the budget -- all those blue books going to waste. No, we can't avoid reality much longer.