Big elections in France in Greece recently, and I don’t which story, or which piece of commentary is funniest. Well, actually, Jon Stewart’s funniest. Jon Stewart on Europe. But this Very Serious commentary comes pretty close: Deseret News scolding.
Often debates over economics come down to theory and opinion. There are, after all, a variety of schools of thought in the world of economics, and each tends to align rather nicely with a corresponding political stance. So I have theorists I like, conservatives have theorists they like, and we can have a jolly old time insulting each other: “you, you, you’re a a a Keynesian!” “Yes I am! As for you, you like Hazlitt! Bastiant!?!?! What a joke!”
But now? As it happens, the 2008 financial meltdown was international in scope. Lots of countries ended facing very similar problems with very similar causes: the collapse of the market for securitized mortage bonds. So when we, in the United States, face a recession, and are trying to figure out what to do about it, we can look at other nations and see what they’ve tried, and what works and what doesn’t work. They have similar problems to ours; what works Over There is likely work for us, and what hasn’t worked There, is unlikely to work for us. It behooves us to pay attention.
This fairly obvious point seems to elude a lot of Very Serious commentators in the national press. First, we have an election going on, which means that thoughtful, informed discussion of policy is right out the window–watch any major news show, and see how thoroughly horse race coverage dominates. So when Romney embraced the Paul Ryan budget plan, almost nobody actually got into the nuts of bolts of economic policy–instead, it was presented in political terms–mostly as Romney caving in to Tea Party extremists.
And the path most of Europe has taken–under Germany’s leadership–is austerity. It’s all about cutting deficits, cutting spending, curtailing social services, economic retrenchment. It hasn’t really worked anywhere. Great Britain, my gosh–they’re rioting there, it’s gone so well. Now French voters have rejected it wholesale, by electing Socialist Francois Hollande, who proposes a major tax hike on the richest Frenchmen, and doesn’t intend to retrench anywhere else. And Greece, wow. Greece just put in a Communist/Neo-nazi coalition.
This is funny for lots of obvious reasons, but it’s also funny because this is Greece. Honestly, I think God decided to give Greece its entire quota of smart people, forever, by the 5th century BC. Read Michael Lewis’ book Boomerang for perspective–for one thing, nobody in Greece pays their taxes. They can have all the debates in the world about what tax policy should be, and it doesn’t matter–nobody pays ’em anyway, except for the VAT tourists pay. Germany demanded that Greece put some teeth into tax collection as a requirement for loan money–it turns out, they polled EVERY MEMBER of the Greek parliament, and discovered that they were all, without exception, tax cheats. The sharpest financial minds in Greece are the monks in this one monastery. OF COURSE Greece is being run by a coalition of two insane parties that hate each other (historically, to the point of murder). Sometimes you’ll hear conservatives in the US use Greece as a cautionary tale. “We’re getting as bad as . . . Greece!” No. We’re not. Not even close.
As for France, what’s happened is that the French people are rejecting austerity. It hasn’t worked, and they’re betting it’s not going to work. They’re sort of giving Germany the finger–which could mean the end of the EU, not that would be so bad. They’re looking for guidance to–drum roll please–Iceland.
Iceland (population 820,00) got crunched in 2008. I mean, CRUNCHED. They transformed their economy from one based on fishing to one based on international banking, and it proved very lucrative at first, then went full melt-down catastrophic. They then turned things over to their women. There are two major political parties in Iceland, as I understand it, one about 80% male and the other 80% female. They put the women in charge. First step: they nationalized their banks. Take that, free market. They kept social services intact, but with some needed cutbacks. They’re talking about pegging their currency to the looney–the Canadian dollar. They’re in way better shape than Great Britain.
If there’s one thing we’ve learned from all this, it’s that four years isn’t enough time for any country to recover from this particular financial meltdown. But the French election gives the rest of the world a counter-example to that of Great Britain and other conservative austerity approaches.
Meanwhile, we have an election coming up. And no, Obama isn’t a socialist and he isn’t a Hollande. But the Ryan plan, which Mitt Romney has embraced, is a more severe example of the austerity policy that is so spectacularly not working in Europe. It’s interesting–the nastiest thing you can say about an American politician, apparently, is that they want us to ‘become another Europe.’ But actually, that’s sort of what Republicans are talking about.
In any event, this is what the election should be about. The economy. Not sound-bites about the economy, Not silly nonsense like ‘Romney’s run businesses; what has Obama ever run,’ or ‘Romney ran the wrong kind of business! Private equity companies are bad for the country!’ Instead, I hope the conversation is about looking around and seeing what works and what doesn’t work. That’d be nice for a change.