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Keynsianism is dead in Europe

By: Soren Dayton (Diary)  |  June 28th, 2010 at 01:05 PM  | 

RESIZE: AAA

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.

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COMMENTS

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  • Adjoran

    The EU powers have been telling him this for months now, of course he knew they couldn’t possibly go on another spending spree.

    Obama is setting up his counter-attack for the inevitable Second Dip his policies have virtually guaranteed, assuming even the Democrats in Congress have no further appetite for the failed Keynesian spending. When things go bad, he will now say, “I tried to tell the G-20 and the EU what to do to save the world, but they wouldn’t listen, and the Republicans stopped me from saving America with my plan, and now look at the mess they’ve created. Oh, well, should have listened to me, too late now, I have to go – I’m late for my tee time.”

    It will only fool the ignorant, of course, but Obama has already proven that at least 53% of the American electorate is ignorant.

    • samiran

      Obama’s re-election strategy needs to be economic recovery. Now that might be a tact to the right, or some magic, Stalin-esque 5-year plan that sacrifices the future for a year or two of GDP gain (this is unlikely given what will happen in the midterms).

      Trying to bank on a double-dip, and blaming congress? Ain’t gonna happen. No matter who runs Congress, the president *will* get blamed for an economy in the toilet. Republicans could take back both the House and the Senate, and proceed to destroy capitalism, and the masses would still blame Obama.

      The “ignorant” that Obama is trying to fool don’t bother to delineate between President, Foreign Heads of State, and Congress. They think the following: Bad shit happens? Blame the President.

      Obama’s omnipresent media strategy doesn’t help this, either. The man is a tool; he is in over his head. We shouldn’t fear his grand strategy, because he doesn’t have one. We were originally correct with our arguments against his first campaign: he is incompetent; his staff is only good at campaign politics, not real politics; and America will regret him in 2012.

      I would be deeply unhappy if we entered a great depression. That being said, I’m *certain* that a great depression starting in January 2011 would be blamed on Obama.

    • hoootie

      You are 100% right about Oblameo. He reminds me of a little kid. It’s always somebody else’s fault. Your last comment, if i may, I would like to amend. While I hope this doesn’t sound like a lecture I hope it makes a valid point in conjunction with your post ! The difference between “ignorant” and “stupid” is a very fine line. And at times they merge as in this case of the 53%. The way I understand the two words is this…Ignorant means you have the ability to get knowlege and or information, stupid means you don’t have the ability to get knowledge or information. Ignorance you can fix, stupid you’re stuck with. With all due respect, in my opinion, the 53% aren’t ignorant, they’re just plain flat out STUPID !!!!!

  • E Pluribus Unum

    If we can just keep them from losing their countries to Radical Islam, there may yet be a revival of liberty and prosperity.

  • jackhammer

    most european countries, with the notable exception of France have birthrates of under 1.5 children per woman….that means they have shrinking and heavily aging populations….a country like germany has an average age of 44, compared to the american average of 37….they simply cannot take on as much debt, just like a bank won’T give a 30 year mortgage to a 70 year old man.

    The ? also has resulted in the greatest misallocation of capital ever….and Germany must exert fiscal discipline to stop a complete disintegration of the region…..imagine if Texas were on the hook for all the social programs in California and NY….

    • edintexas

      “…imagine if Texas were on the hook for all the social programs in California and NY?.”

      Odd, I thought that was exactly what Dear Leader was trying to do with attempting to send even more taxpayer’s dollars from the non-existent Treasury to the states most in need of bailouts (i.e. those states with huge debts and deficits due to profligate spending).

      • Zaber

        That’s why we need to keep Rick Perry in office, no matter the cost. He’s a bit wacky at times (succession, anyone?), but he’s not going to take any nonsense from the Obama/Pelosi mob.

        I live in Dallas (originally from New York City), and one of the things that makes living here bearable, in spite of the wonderful summer heat (100 degrees in May?) and the massive problems with illegals in the city and state is the lack of a state income tax. How is it that we manage to make budget every year without one, but California can’t come close, even with a state income tax? Oh, yeah.. thats right.. Texas doesnt mollycoddle the lazy residents and illegal aliens.

        Now, I’d move back to NYC in a heartbeat, if they’d make a few changes.. like killing the state income tax, flushing about half of the libs out of Manhattan, and stop renting refrigerator boxes for $2000 a month on the east side.. :)

  • johnt

    or our media and the left at large. The Chief Jerk knew all this before the meeting began & still called for that heavy drug of the statist, the fantasy called “stimulus spending”.
    Power & Harm are the realities of the current USA political crowd, one leads to the other, that’s all that matters.

  • jaykali

    You can argue Republican calls for spending cuts, tax cuts, pro-business policies grow the economy I think the Democrats have lost the argument that the gov’t arbitrarily picking winners to hand money to including union dominated businesses, over-bloated state govts while sprinkling in some construction projects has helped anything (see unemployment rate).

    Their comeback, “actually it would have been way worse, oh and also what we’re seeing is that bush/republicans left the country in even worse shape than we thought!”

    Well except all these clowns were elected on the promise not that they’d correctly identify who’s fault all this was (according to them) but that they would actually move it in the right directly. Trillions of dollars later the economy kind of looks the same and the deficit is much deeper so I think they’ve lost the argument with rational americans who see this model doesn’t make any sense.

  • Joliphant

    Is a bit of a misnomer. Most of the people participating in them did so at gunpoint. Sometimes more literally than others but usually with no choice on their part.

    That said anything that marginalizes them and brings closer the day they either get privatized or eliminated has to be considered a plus.

    • Doc Holliday

      because the government spent the money before you even paid in. They are simple ponzi schemes. I can see why someone would want their payback, but in know way are these retirement investments. If you want your money, you will only get it from your kids.

      change the world by voting correctly.

      • Joliphant

        And please I don’t mean to be argumentative, I seem to be bumping up against my own linguistic limitations. Part of my problem with the terminology would be that it lumps together things that really shouldn’t be.

        At the worst end of the spectrum you have entitlement programs for people that contribute little to nothing towards the advance. These would be those programs that try to displace what should be done by private charity. Except instead of being at the discretion and kindness of private individuals, they now form a limited right for these people to effectively rob society.

        At the other end you have programs like farm subsidies, or other such industrial policy programs where money is taxed from people creating wealth, and a lesser amount is returned after being filtered through the outstretched palms of a hungry federal government. Social security/retirement programs are a situation where it was paid in for a much later return at a much lesser rate.Its always good to remember the people that built our social security program lifted heavily from Von Bismarck’s in Germany which was pretty much designed never to pay out. The percentage of people living past 70 in the 1800s was negligible.

        I guess my point is when you lump social security in as an entitlement program you are grouping it in with things that for most people it has little if any resemblance to.

        As I said in the first post anything that actually makes them go away is a good thing. But to clarify anything that makes them an even worse deal for the people trapped in them is very bad. Just decreasing benefits to try and decrease deficit spending would just be an increase in government theft. Thats really nothing to celebrate at all.

        • Doc Holliday

          they were sold as a type of insurance for the retired. And anyone who paid in should get their money back. The problem is that the money is long gone and the government is broke. At some point people will have to pay. Our children may not get retirements because they have to pay off ours.

          There are other things that make Soc. Sec. and entitlement program like that failure to adjust the age for benefits along with the longer life span. And since the money is already spent, what about the fact that their are too many baby boomers and not enough gen x’ers to pay for them.

      • bay0wulf

        SSI (Social Security INSURANCE)
        UI (Unemployment INSURANCE)

        While I understand your point of view that the Gov spent the money as fast as (or even faster than) they got it, it doesn’t change the fact that these were “Insurances” we were paying for. That’s what we were told, that’s what was written on our paystubs, that was what we were led to believe and expect. (In some states UI is a separate line item on your paystub … in some, not.)

        I’ve been working and paying taxes (and these other “remittances”) for 44 years. I wasn’t “asked” to pay them, I was given no choice. The Gov took them.

        If you paid for Insurance from any legitimate Insurance Company, it would be at your option and they would HAVE to pay out any legitimate claim or there would be hell to pay.

        I knew the Gov was using these funds as a slush fund all along. It upset me to see it. The Gov was merrily spending this money with no thought of ever replacing it. I loved the way they kept telling us that our tax rate was … “Only …%” when technically this was also just another tax.

        NOPE! If AllState, Prudential, MetLife or any of those guys got to where they couldn’t pay off on the policies I paid for, I would wait impatiently for my share of the proceeds from their bankruptcy sell-off.

        This might not strike YOU as Patriotic but … I PAID the premiums for years. I am not ENTITLED to the payout. I am OWED the payout.

        If the people (Gov) that OWES me has to cut off every vestige of foreign aid and sell off bunches of assets in order to SATISFY THEIR DEBT to me … too bad. I am not China or some other Creditor. I didn’t extend the Gov credit, they came and took from me without me having any input.

        • Doc Holliday

          devalue the dollar and say “well, we paid you back”. I agree it is a serious wrong, but Social Security is not really insurance. If you croak at 64, you get nada. It was supposed to protect people from destitution after retirement. Also, they figured most would not get their money back since the average life expectancy was the same as the age you began to collect.

  • http://www.AmericanThinker.com Hammer2008

    as the president was preparing for G-20 summit. A difference of opinion perhaps on where to go from here?

    On FB and Twitter I’m likening this news (and linking this blog) to Dorothy’s house falling on the Wicked Witch of the East, awaiting to see what it has in store for the witch of the west :o )

    • BA Cyclone

      The fiscal day of reckoning is coming, though I doubt PO foresaw this interesting face-slap coming from the G-20.

      There will be no good political answers, and I would guess PO saw that writing on the wall and preferred not be the face man to “explain” this fiscal malfeasance.

  • http://reaganiterepublicanresistance.blogspot.com/ reaganiterepublicanresistance

    Just contrast Obama’s $800B beautification of the New Deal (this time on steroids) with the REAL-world Reagan Recovery of the 1980s… which actually brought us back from 11% unemployment plus double-digit inflation AND interest rates.

    This was accomplished through an adherence to the teachings of Milton Friedman- implementing spending and tax cuts, in addition to deregulation and incentives for small businesses and entrepreneurs- all aided by his sunny optimism and complete faith in the American free-market-enterprise system-
    This is all of course 180-degrees from what Obama has foisted on us.

    Reagan created over 20M jobs, growing Real GDP by almost 30% in the process… and giving this country eight of the best years it’s ever seen.

    Those kind of results makes one wonder why Obama?s multi-trillion-dollar spending would impress anybody, with his pledged 3M new and ?saved? jobs (whatever those are)? a paltry figure 17M shy of Reagan?s impressive accomplishment.

    And it’s quickly become obvious that Obama’s empty pledges can’t be delivered upon anyway… a comprehensive failure sure to cost him in November

    • Zaber

      BHO has single handedly created or saved every single job that there is in the United States. Just ask him.

      Obama wants so badly for us to be like Europe.. he’s dying for us to adopt the socialist model that so many European countries use healthcare, welfare, etc (and until recently, government).. but every chance he gets, he kicks the European leaders in the ‘nads.. How does he honestly think this turns out well for us? The man has shown zero respect for our allies since he took office, and its going to take decades to undo the damage he’s done in a year and a half.

      I’m waiting for the Bush “Miss Me Yet?” billboards to start going up overseas.

  • GOPer

    we’re all dead.

    http://www.youtube.com/watch?v=d0nERTFo-Sk

  • texasgalt

    Chaos again in Greece. Communist protesters have blocked ports, trapping tourists. Decades of deficits and Mr Krugman would have everyone spend even more.

    http://finance.yahoo.com/news/Strikes-hit-Greece-and-Spain-rb-2965016305.html?x=0&sec=topStories&pos=4&asset=&ccode=

  • pirate55

    …when the European economies went on “life support”. Our friendly liberal intellectuals believe they are above this and “know better”, a typical arrogance found in ideologues.