FRONT PAGE CONTRIBUTOR
Keynesianism is dead in Europe
The G-8 and G-20 meetings in Canada were remarkable in historic terms. European governments criticized the United States for being spendthrift. Brazil provided political cover to the US on behalf of the developing countries. This has been a consequence of something truly remarkable happening in Europe. Keynsianism has lost in Europe. There is no political support for it. And Barack Obama got hit in the face with this reality.
Since the beginning of the financial crisis, conservative and liberal parties have defeated socialist parties in nearly every election in the European Union. They won the European elections and elections in the UK, Italy, Belgium, Germany, the Netherlands, the Czech Republic, Hungary, etc. A reformist, pro-market right has beaten a traditionalist right in Poland. There is no credible political voice for more spending in Europe. The Greek and Portuguese financial crises have destroyed a political argument for deficit-funded stimulus packages. (note that this opportunity is not being wasted: European countries are raising retirement ages and trying all sorts of other strategies to cut their extensive entitlement systems)
Furthermore, the only European Union members with Socialist governments are Portugal, Greece, and Spain. (note that Austria has a “Grand Coalition” where the right and the left share power) You will note that this is three of the four “PIGS” countries that are the weakest economic performers in Europe. Furthermore, the Greek Prime Minister is the leader of the Socialist International, which coordinates policy and political positions internationally across all the parties of the left. How is that working out?
It is pretty astonishing that Barack Obama went to this crowd to demand that they spend more. It was both tone deaf about the epochal changes in European politics and indicative of a broader incompetence in our foreign policy.