HARSH AUSTERITY PROGRAMS CONTINUE TO PROVE UNWISE FOR EUROPE

 

…Greeks demonstrating against their government's austerity programs.

 

More proof that slashing government spending in a depressed economy is a really bad idea.

I did a column about two years ago for the American Chronicle online magazine explaining that even though I was not an economist, I did have a business degree and I did understand basic economics. 

I was writing at the time, that it appeared to me that if Greece, who was in serious economic trouble as were other European countries, if they all continued their harsh austerity spending measures, this was not going to come to a big, happy ending.

I had also written that if America followed these same austerity calls as those from the British prime minister, David Cameron, along with the US budget hawk and House Budget Chairman, Paul Ryan, we were all going to be in the same leaky boat as these European countries.

The experience since back then with Greece, and with the other European countries, that had all forced themselves into harsh austerity measures, that should have convinced them, (and everyone watching), that slashing spending in a depressed economy is a really bad idea.

But as the Nobel economist Paul Krugman had stated, the problem with these political ideologues is that they do not learn from their mistakes, and these European nations are the perfect example.

This is true, even in the somewhat success stories such as Ireland. Ireland made some positive internal changes and is finally growing again, but it didn’t go far enough and it still has almost 11% unemployment.  And it’s twice that rate for their younger citizens.

What is amazing about Greece is that up to now, the general public had kept believing in the claims of their political establishment and that austerity will eventually lead to economic recovery.  But there has been no proof of that happening?

The cutting of their public employment, cutting Greek social programs and raising their taxes, these actions have hardly cured their negative economic situation. A quarter of all Greek workers are currently unemployed and all of this suffering has not yielded any tangible rewards.

The latest news that has emerged is that the Greeks may have finally reached their limit with their current government.

Basically, the current government is contemplating a maneuver for putting-off the next general election. And, if that attempt fails, the likely winner in the up-coming election will be their Syriza party.  This is a political party of the left that has demanded a renegotiation of the current austerity programs, which could then lead to a direct confrontation with their German neighbor, and possibly the exit of Greece from the euro.

If this occurs, it could be the beginning of a mass exodus of other dissatisfied European countries, as it’s not just the Greeks who are “mad as hell and aren’t going to take it anymore”.

In France, Marine Le Pen, the leader of the anti-immigrant National Front, now out-polls the main-stream French candidates of both the right and the left. 

In Italy, half of their voters support radical political parties like the Northern League and the Five-Star Movement.

In Great Britain, both anti-immigrant politicians and Scottish separatists are threatening their current political order.

It would be a devastating if any of these radical groups, except perhaps the mild-manner Syriza party, were to come to power.

To paraphrase the situation, it would be like dealing with a “thumb-tack” political issue in Greece, with “sledge-hammer” political actions across all of Europe.

This is what happens when an elite group claims the rights for ruling their nation’s economy, totally based on their supposed expertise.  They continue to say they understand what must be done, but then they demonstrate that they do not have a clue about what they are doing.

In other words, as Paul Krugman had said before, and I will now reiterate, they are all too ideologically rigid in their economics which keeps them from learning from their mistakes.

Copyright G.Ater  2014