Sunday’s elections in Europe occurred in three countries with diverse economic circumstances (France, Germany, and Greece); and they were for different levels of government (presidential, regional, and parliamentary respectively). Add to this rout last week’s Dutch rebellion against austerity and the resultant collapse of the Dutch government. The clear common message from the electorate is undeniable, reminiscent of a famous line in the 1976 movie Network: “I’m as mad as hell, and I’m not going to take this anymore!”
Europe’s electorate is angry and has lost confidence in the ability of in-place politicians to solve their crisis. Hollande’s victory means the end of “Merkozy,” the Franco-German confederacy establishing the past two years austerity regime. Stocks moved down initially on the result as conservative investors and business acolytes perceive the french socialist as dangerous to their interests. Perhaps they would have a point if the austerity strategy were working…or, maybe had a reasonable chance of working. Austerity isn’t and doesn’t… time for a changed course.
What’s wrong with the current German Austerity Regime? See previous posts, “Transform France Into A German Economic Model? Me Thinks, Not So Fast…” and “Europe’s Debt Trap: Austerity Is The Wrong Path.”
As American economist Paul Krugman wrote, “Europe’s voters, it turns out, are wiser than the Continent’s best and brightest.” Citizens yearn for alternatives but, as yet, are not coalescing around a common view of what these should be, just as in the United States. As a result, political realities will complicate even more what is an already tenuous economic and financial outlook for Europe, the world’s largest economic area.
Compromise and a new course should rule the day with coordinated stimulus added to mitigate austerity, and this must include,
- greater harmonization of labor markets and corporate taxation,
- imposition of financial transaction fees, and
- proper rebuilding of the eurozone structure/european central bank with,
- common eurobond issuance funding all national governments in conjunction with the new common fiscal harmonization pact,
- ECB purchase of government bonds like a U.S.-styled Quarterly Easing program as instituted by our own Fed — and…
- in particular, to assign a new mission for the European Central Bank away from obsession with inflation and toward focus on growth.
Europe must pull together in their anger and act as one interest, instituting intergovernmental transfer payments from wealthier EU regions (states) to those in need, just as occurs already in individual EU states internally with money transfers ongoing from Western Germany to the former East Germany, Northern Italy to the poorer Southern Italy, London and South England to Northern England/Scotland… just as transfer payments and block grants within the U.S. ameliorate regional economic disharmonies without turmoil (aside from the occasional right-wing rant).
What Europe needs in order for these significant changes to take root is the sudden appearance of decisive leadership at the EU-wide national level to overcome long-standing impediments to growth, jobs and financial stability. What they will receive more immediately is greater fragmentation amongst regions as cross-border coordination and collaboration grow more complicated with new political interests empowered.
I have faith in my beloved Europe that they will kick the s+#t out of each other and then regroup and dynamically move forward on the required reforms mentioned here…for without them, all European political and business leaders know that Europe will devolve into small nation-states at the mercy of jungle-violent globalization…where the a#^-kicking will be unrelenting.
These institutional changes and greater solidarity will only materialize properly in the context of a clearly articulated vision of what a unified Europe should look like in three years’ time. And that will take inspired and inspiring leadership of dynamic Heads-Of-State.
Holland of France is on stage. A Deutsch progressive Chancellor willing to speak for more than just wealthy Germany must replace Merkel in 2013. Then, competent, newly installed pro-business technocrats in Italy and Spain will join in unison, followed by the Benelux and Scandinavian countries. New Europe (the former communist bloc) will have little choice but to take up the mantra and get in line.