Keynsianism 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.

“Tough Decisions” coming for politicians

In the last couple of years, many of us have been laid off, worked at places where people have been laid off, had friends who were laid off, or had to lay people off. It is tough, but often it has to be done by management for them to be responsible stewards of the organization. Last week, the Democratic mayor of Los Angeles (and former Speaker of the California Assembly) Antonio Villaraigosa described the “tough decisions” that he had to make in “extricat[ing]” the people of LA from 3,500 government employees.

In Villaraigosa’s own words, “we’re doing furloughs and layoffs, we’re doing everything we can, including early retirement, to reduce the size of our payroll.” Sometimes a responsible leader in the private sector or the public sector has to do this. But that isn’t what you are going to hear from Democrats this year. Democrats like Barbara “Ma’am” Boxer are going to demonize Republicans, like Carly Fiorina, who were involved in layoffs because it was the responsible thing to do. Of course, the dems will have supporters and fundraisers, like Mayor Villaraigosa, who sometimes do the right thing. Not because they want to, but because they have to.

Erick has lead the charge in picking candidates who will do the right thing in office. They will fight against ridiculous bailouts for the public employee unions. (that’s what these state stimulus bills are, just like the auto-bailout was a bailout for the pension plans of the United Auto Workers) These leaders will also need to make the “tough decisions.” We And when they do it, regardless of party, we need to support their efforts to shrink public expenditures and public payrolls.

And when the Democrats attack on “layoffs” and similar demonization of responsible leadership, we need to fight back harshly and expose their hypocrisy.