Originally published May 7, 2012
Both French and Greek voters rejected the economic policies of conservatism over the weekend. The Serbs will probably do the same. The austerity program was spearheaded by Germany, which has a very unique economy and history and whose choices for dealing with deficits, debt and a global recession don’t work for everyone.
Nicolas Sarkozy was the first French incumbent President in over 30 years to not be re-elected. Françoise Hollande is the first Socialist elected to the job in 17 years. Let’s just repeat that one. France has not had an honest-to-goodness Socialist in the Presidency in 17 years. So much for the Republicans’ claim that all of France’s and Europe’s economic problems were caused by excessive socialism. Their economy tanked because everyone’s tanked when our financial sector tanked. It really is Bush’s fault, or least the fault of those who lobbied for and got a relaxation of regulations that allowed the financial sector to play silly bugger games with more money than actually exists in the world.
President Obama responded to the news of Hollande’s election with an immediate phone call to suggest a personal meeting before the G8 summit the end of the month. Like Obama himself, Hollande is starting his job with enormous economic problems in his country.
When Obama attended his first G-8, in a rare show of the new guy telling the old guys, and gal, what to do, Obama tried to convince the leaders of Europe that austerity was the wrong way to deal with a recession. They didn’t listen then, and have paid for it since.
Naturally, certain groups have decided to panic. The financial markets don’t want liberal politicians in office, so equity markets fell and the exchange rate for the euro fell, a whole $0.0036, from $1.30 to $1.2964.
Paul Krugman, writing in The New York Times, opined that the austerity strategy was dependent on the idea that drastically cutting government spending would somehow create “confidence” in consumers and businesses and the “confidence fairy” doesn’t exist. All the spending cuts did was cause more unemployment as government workers were laid off, cause a contraction of spending as salaries were cut, caused even more contraction of spending as pension payments and subsidies for the poor were cut. As Krugman wrote, “There seems to be little if any gain in return for the pain.”
And the pain has been extreme, with Greek workers having their minimum wage cut retroactively, so they went a month or more with no pay so they could “repay” their overpayment a year ago, and unemployment among young adults edging 50% in several countries.
Europe has had two years to do what Mitt Romney and Paul Ryan and the rest of the Republican Party want to do to us. They have spectacularly failed to turn around their recessions, even pushing some countries into depressions and double-dip recessions. Trickle-down economics causes recessions. It doesn’t cure them. It never has. Herbert Hoover tried it, from the day the stock market crashed on October 24, 1929, to the day he turned over the Presidency to Franklin Delano Roosevelt on March 4, 1933. The world spiraled into a depression that was in part responsible for World War II.
The French didn’t wait until things had gotten so bad it would take ten years to recover. They have rejected the historically failed policy of trickle-down economics and government austerity in just two years. Of course, the Republicans will say that Europe is going to hell in a socialist rucksack. And to think they accuse liberals of favoring revisionist history.