Infantile Expansionary Contraction?

Democracy is about elections and we might not always like how people cast their votes but to dismiss their choices as “infantile” strikes me as high-handed — and in the case of the elections recently in Europe mistaken.

In the wake of the elections in four European countries – the UK, France, Italy and Greece — many Conservative commentators have been on their high horse. Of course, on the left their counterparts have been on braying form when some humility may have been in order, after all traditional left parties also bear a fair share of responsibility for the debt disaster that’s struck Europe.

As far as many Conservative commentators are concerned the narrative is this: Europeans displayed an astonishing lack of adult seriousness by either voting for fringe parties as in Italy or Greece or for the traditional left in France and the UK. By voting the way they did they displayed “wishful thinking” and ignored economic realities. Only by backing parties that are supportive of German-dictated austerity would they have shown they were serious.

And the fringe leaders are all lumped together regardless.

Anne Applebaum writing in Slate Magazine, for instance, argues that the fringe parties are “anti-European, anti-globalization, and anti-immigration. Their leaders, in the words of a French friend, want to ‘withdraw from the world.’”

And she added: “Above all, they are anti-austerity: They hate the budget cuts that they believe were imposed on their national governments by outsiders in the international bond market and by their own membership in the euro currency zone. Never mind that those same national governments had created the need for austerity by overspending and over-borrowing, or in some cases—most notably Greece—by funding vast, unaffordable and corrupt state bureaucracies over many decades.”

Well, the budget cuts were in a sense imposed by outsiders and in Italy and Greece the parties most responsible for over-spending and over-borrowing were the hardest hit in the elections – in Greece the two mainstream parties that have dominated politics there for the last 35 years, and in Italy the center-right parties that were in the coalition governments of Silvio Berlusconi.

In the UK, the local elections success of Labor, the party responsible for the country’s economic mess, can partly be put down to a series of poor decisions and cock-ups by the coalition government and to a general feeling in the country that “we aren’t all it together”.

In Italy and Greece, voters turned to fringe parties to express their distrust of the center. The traditional left did well in Italy but not as well as it should have given the circumstances. It didn’t do so because of the scandals that have hit some prominent leftwing politicians.

And it isn’t clear to me that Italian voters who backed the movement of Beppe Grillo, the comic-turned-blogger activist, were expressing anti-European, anti-globalization or anti-immigration positions.

True, Grillo wants Italy to drop the euro and re-introduce the lira, but is that what was uppermost in the mind of voters when they backed the comedian’s Cinque Stella movement? Of the more the more than 20 people who voted for Cinque Stella who I have spoken with in the last few days not one of them mentioned dropping the euro as Italy’s currency. Nor are any of them anti-immigrant and none of them were anti-European.

They say they voted for Cinque Stella to record a protest against many things – from the corruption of the mainstream parties of both the center left and center right to Silvio Berlusconi’s disastrous stewardship of the country and to the fat-cat Italian parliamentarians, the highest paid lawmakers in Europe.

And none of them were that critical of caretaker premier Mario Monti or his efforts to reduce the public debt or implement structural reform, including changes that would open up the country’s rigid labor market.

Monti’s government is a technocratic one and he and his government were not standing in the local elections. Interestingly, despite the pain Monti is causing people with cuts, reductions in pensions, etc, he has high popularity ratings in the opinion polls of more than 50 percent.

While all of my Cinque Stella voters had questions about austerity and the cuts – from the timing of them to where the cuts are being applied – they all accepted that Italy has to reduce its public debt, improve competitiveness and cutback on the country’s bloated public sector.

And why in the world would they vote for Berlusconi’s party or the Northern League, his onetime coalition partners, when they accept change has to take place?

After all Berlusconi implemented scant reform when he had the opportunity to do so and under his rule, Italy grew at an anemic annual rate of one third of 1 per cent and dropped further down league tables for economic freedom and competitiveness and media freedom. Under Berlusconi, there was a resurgence of the Mafia and increased public corruption. During his tenure his coalition partners approved 18 pieces of legislation that sought to protect his own personal business interests and to provide him with legal immunity for wrongdoing. Is that center-right record one that deserved to be rewarded? Would the voters in Italy have shown more adult seriousness by voting for the center-right?

Brendan O’Neill writing in Spiked in an article headlined “Posturing against austerity: an infantile disorder” strikes the same kind of notes as Applebaum, first misunderstanding that the Grillo vote was a protest one and not one aimed at the Monti government and then arguing that elsewhere the leftwing groups that made electoral gains are driven by a desire to avoid reality.

He wrote: “The alarming thing about Hollande and Alexis Tsipras, the comparatively youthful leader of Greece’s Coalition of the Radical Left, is that they are being treated seriously despite the fact that they, too, are a bit of a joke, a comedic interlude in mainstream politics who offer little, if anything, in the way of an alternative.”

Pairing Hollande with Tsipras seems a tad odd. The latter is far to the left of Hollande and has declared the recovery blueprint approved by the European Union and the International Monetary Fund (IMF) as “null and void” while the new French President has talked only of renegotiating the EU fiscal compact his predecessor, Nicolas Sarkozy, signed.

Hollande is an experienced and mainstream politician and arguably his vagueness during the election campaign on the details of what he would do in office is a reflection of political wisdom – he has avoided over-selling presumably in order to try to lower the expectations of his supporters. He has given himself room for maneuver. He has committed to balancing government spending and borrowing by 2017, avoided making commitments to increase public sector employment beyond education and even with his pledge to hire 60,000 additional teachers he has stressed that this will not be done overnight.

In short, it strikes me that voters on the whole in Italy, Greece and France turned to what they had on hand to punish the mainstream parties responsible for the economic mess while at the same time registering as best they could their opinion that the current approach to dealing with the crisis isn’t working. Is that infantile posturing?

Of course, the voters aren’t alone in being critical of the current austerity tactic. They have plenty of fellow-conspirators – to name a few, the International Monetary Fund; the Italian Premier; the President of the European Central Bank, Mario Draghi; the Financial Times economics columnist Martin Wolf; and The Economist magazine – hardly a bunch of leftwing or fringe loonies. They all argue for blending public debt reduction with growth measures.

Take what The Economist wrote in last week’s edition. “Germany will find itself isolated. It has pushed austerity too far and too fast. The myth of an expansionary fiscal contraction, the idea that deficit cutting would boost growth, has been largely dispelled. The latest evidence is that in a downturn the multiplier effect of fiscal tightening can lead to a deeper recession, making it even harder to cut the deficit.”

Or consider what Martin Wolf wrote in a column this week. “The fact that the policy for dealing with it (the crisis) has been such a disaster – sending unemployment figures through the roof and magically increasing budget deficits – only hastens the final act of this drama: the possibility that Greece will default, leave the euro and increase the contagion in Spain and Italy.”

Wolf argues that German Chancellor Angela Merkel will have little choice but to agree to some changes to the fiscal compact and to soften austerity in its current form. “Whether it is renegotiated, modified or supplemented with a growth pact is a matter of words.” And she has little choice not only because the economic realities demand it but the voters fired a warning shot.

 

 

 

 

 


Parlez Vous Francais, Mr President?

President Barack Obama better brush up on his French: Francois Hollande acknowledges in an interview with Slate magazine that he speaks English, “but a French president has to speak French!”

The two leaders are due to meet at Camp David on May 18 and 19 at the G8 Summit, although the White House has invited the French President for a bilateral meeting in Washington DC beforehand.

Asked if a leader should understand the main language of international diplomacy, i.e. English, Hollande responds: “he needs to understand it and to be able to have unmediated exchanges with his interlocutors” but adds that he is “attached to the French language.”

On other fronts, the U.S. and French presidents may have much in common. He notes: “We have similarities on the economic level.” By this he presumably means their shared opposition to the idea that deficit cutting can boost growth. Although it is doubtful whether Obama will want to get two kisses on his cheek from a French President who is a declared “Socialist” — that would be a godsend for the folks at Fox News!

He praises Obama in the interview, saying, “the Democratic administration’s choices in terms of foreign policy showed serious and beneficial changes compared with the preceding one.”

And he mentions he has no wish to make life harder for Obama with an upcoming election: “I intend to assert France’s independence without making Barack Obama’s task any more difficult. For example, I will maintain the position I had during my campaign of a pullout of French troops from Afghanistan by the end of 2012, in agreement with our allies.”

What will he push at Camp David? There are hints. He says “convertibility of the Chinese currency should have been discussed at the G20” earlier this year and he argues that reform of the international monetary system must be “a priority.” He shares his predecessor’s tough line on Iran and the development of a nuclear weapon but appears to see some room for maneuver in terms of negotiation.