There is fresh news out of Europe with the Greek election and there are hints of a trend towards reassessment of the half-witted mantra that “Austerity and unemployment are good for you.” The cumulating evidence on both sides of the Atlantic is that the policies of cutting budgets, cutting workers and letting your GDP shrink to alarming levels may not be the best antidote to the economic and financial crisis we are facing.
First, the Greek elections only proved that while a pro-EURO party came out on top, the broad consensus including the New Democracy party, wants a renegotiation of the austerity terms forced on it and supports a real “growth” agenda. Second, the G-20 meeting in Mexico is still in progress, but the Financial Times today notes the group remains in a condition of policy “paralysis”.
But the trend is growing in recognition of the absurdity of the slash and burn policies of the conservative-led governments and their allies who control legislative bodies similar to the Republicans in the United States. There is an intellectual blind leap in conservative thinking that despite the facts on the ground, one must stick to a failed agenda and defend it even more strongly even as the ship goes down. To them suffering of the average citizen or of the most vulnerable is of little consequence.
Earlier there were hints, that at last, the German government, seeing the critical and dangerous crisis of its policies, would finally have brought upon Europe, the “project” that is a united Europe. Yet indications are coming from the CDU leaders that it will stick to its failed stance. Germany has gained the most from the EU, the Euro zone, and from European integration. Past German leaders took a principal hand in bringing the EU institutions into existence. It has the most to lose if European unity unwinds.
It is fair to characterize Chancellor Angela Merkel and the German Central Bank solutions as either “too little and too late” or “kicking the can down the road” or more truly as the worst policy possible. That is a benevolent description of the mayhem wrought by the constricted perspective of the conservatives in Europe who seem, like our own of that tribe here in America, to show total disregard for the human and social costs of recession, unemployment, and the decimation of both private enterprises and social infrastructure.
The price already paid is in the trillions of dollars of missed opportunities, productivity, loss of securities and housing values since the crisis took off. It would have been comparably a pittance of that cost if Europe had undertaken a strong intervention at the start.
Merkel is not alone in this folly. British Prime Minister Cameron is one of the biggest offenders as seen by the on-going British recession. The ToryLibDem government is an example of this mindless austerity, with its ideological aim to cut government’s role along with human welfare services. One can’t help but believe that they are mainly about cutting the poor and middle class from any support, while making sure the bankers of the City (from who the Tories get their money) are amply rewarded and protected.
Yet as noted, Merkel may not yet be ready to “bell the cat” of awaiting catastrophe. Each day that goes by the crisis or as the Europeans call it the “contagion” spreads. The ongoing crisis has spread from Ireland, then to Greece, to Spain, and to Malta most recently, Portugal, and now to Italy, the fourth largest economy in the Euro zone. Flavored.
If this coming EU summit does not take a comprehensive and conclusive act of unity and provide sufficient resources, then the cost later will just be that much greater. At some point the cost of undoing the harm will be just too great as economies spiral downward and the social and political unrest will bring to the fore the extremes of the right and left and faith in democracy will be lost to those left behind.
America, under Obama, led the way in arguing for a global stimulus and coordinated action to grow all our economies. It was the strong support of former UK Prime Minister Gordon Brown in the new G-20 context that held out a promise of a better global strategy. But the voice of Germany and others prevailed and when the Labour Party lost the election, the stage was set for policies which were clearly going to lower growth and create even larger burdens of debt as a percentage of GDP.
It did not take any genius to know what the results would be. Europe and our own Congress here in the US became captive of rigid ideology that refused to face the facts, and that favored obsolete economic theories. Here in the US, Senator Mitch McConnell leader of the Senate GOP said that their major objective was to defeat Obama.
In Europe, the acknowledgment by the conservative parties that their right-wing prescription was wrong from the start would have exposed their political and social agendas which were really to cut the underpinning of the social contract and safety net that their opponents had put in place. They saw the crisis as an opportunity to lower taxes and regulations for the rich. So the price of rigidity and greed won the day and the question is will we have to live with it’s consequences for decades. Or is there in the end some “light”?