Monday, May 07, 2012

"Austerity" Was Not on the Ballot In Europe

Of course, nearly every media outfit is covering the European elections as a defeat for "austerity."  Nauseating.  Let's strike a blow for truth by using words based on their true meaning.  So, I must revive this post:

"Austerity" Is Nothing of the Sort

The most enlightening essay you will ever read if you want to understand politics and become a more educated and sophisticated voter/citizen is George Orwell's "Politics and the English Language." It remains the gold standard in demonstrating how words shape (read: distort) the substantive debate.

Today's sovereign debt crisis in Europe is a great case study. Europeans in general, and the ideological allies of the social democratic welfare state in particular, complain about the "austerity" being either contemplated or imposed on certain European nations. Greece, of course, is the poster child here. Yet, no reasonable, economically literate person would characterize the move from how the Greeks have managed their economy to how they should manage their economy - expressed principally by the German government - as "austerity." Any reasonable analysis would call it moving from "profligacy" to "normalcy". Spending what you can afford is definitionally "normal." Spending more than you can reasonably afford is definitionally "profligate." Spending modestly, less than you can afford, is "austere." Germany may be advocating that Greece be "more austere" in relative terms, but it is by no means proposing "austerity." Greece has an enormously unproductive and inconsequential economy, and yet they have pretended for years to have the living standards of much more prosperous and productive neighbors. They did this by creating needless work for tens of thousands of people and paying them compensation well beyond their competitive worth, and borrowed ungodly sums to pay for it all. Greek civil servants earn 14 months of salary for 12 months work and there are about 30% more of them on the government payroll than needed. Ceasing this fantasy is not "austerity" as a true description of their state of affairs. What is being asked of Greece is a return to normalcy, and only austere relative to its former profligacy.

Yet the likes of the Greeks, the Portugese, the Italians, the Spanish, and all their ideological allies are crying a river over what "austerity" will do to their economies when what they mean is what having to abandon profligacy will do to their economies. They may be right in terms of what the shift will do - I suspect they are wrong, see here - but they are being dishonest over the terms of the debate. Do you really think they'd win their terms by moaning over what "abandoning profligacy" will do to them? They have to shield the reality of the debate by manipulating language - the difference between "more austere" with no reference to starting point and "austerity" as an absolute state of being simply must get lost in the shuffle to serve their political goals.

The same is going on here in America. We hear the same arguments about budget cuts. Over-stretched government entities talk about cutting "necessary" services, when close to 50% of what government spends its money on is completely superfluous. This is what must happen to win in politics, the superfluous must become the necessary, normalcy must be austerity.

So they next time you hear that austerity is killing Europe, understand it for the socialist nonsense dressed up in Keynesian jargon that it is.
:Austerity" was not on the ballot.  What was on the ballot across Europe this past weekend was Continued Severe Profligacy vs. Slightly Reduced Profligacy.  Continued Severe Profligacy won.  Thus the markets will no have to rebuke the voters and attempt to pressure the newly elected to go back on their campaign promises. Otherwise, the voters will have voted for bankruptcy, as bankruptcy always succeeds profligacy that is unchecked.  Monsieur Hollande will not prove much of a socialist if he is to prevent a total collapse of France's economy.


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