The theme song of a popular TV show from the last decade featured the lyric “I worry all the time. If you paid attention, you’d be worried, too.” It’s a wise posture when analyzing the slow-motion crisis that is Europe.
European governments are toppling like clock towers in an earthquake. The Dutch government fell on April 23, when it failed to agree with the opposition on an austerity plan. On May 6, Socialist Francois Hollande defeated France’s Nicolas Sarkozy. Greece’s ruling coalition has been shattered — the vote splintered among dozens of small parties.
Turning the rascals out is a normal and healthy thing in a democracy. Who in China or Cuba wouldn’t love the same opportunity? But the European elections are signaling something disquieting — the rise of radicals of both right and left.
In the first round of presidential balloting, nearly a third of France’s voters chose either a Trotskyite, Jean-Luc Melenchon (who campaigned to confiscate the incomes of the wealthy) or Marine Le Pen, of the National Front, whose protectionist party fuses anti-immigration fervor with a grab bag of nationalist sentiments. Hollande himself campaigned on raising tax rates on the wealthy to 75 percent, boosting the minimum wage, breaking up large banks, reversing the Sarkozy retirement age reform (Sarkozy had increased it from age 60 to 62 for younger workers) and instituting huge new Keynesian stimulus programs.
France is choosing unwisely, but perhaps the twin guardrails of the bond markets and Angela Merkel will limit Hollande’s options.
Greece, on the other hand, seems to be feverish and unhinged. For decades, Greek governments have promised ever more lavish benefits to voters with the costs put off into the indefinite future. That future is now arriving in the form of bankruptcy or because Greece is part of the Eurozone, externally imposed austerity. Violence has flared repeatedly over the past several years, as a spoiled population has chafed under the combined effects of recession and government cuts. Now more than 60 percent of Greek voters have chosen small left- and right-wing parties over the ruling Pasok and New Democracy parties.
The Golden Dawn, whose symbol bears a close resemblance to the swastika, won 7 percent of the vote and will send 19 delegates to the 300-member parliament. Golden Dawn opposes not just the austerity plan, but also the “so-called Enlightenment” and the Industrial Revolution. As firecracker-wielding young toughs with shaven heads demonstrated outside, Golden Dawn leader Nikos Michaloliakos announced from an Athens hotel that “the time for fear has come.” Warning, “Greece is only the beginning,” Michaloliakos promised to make war on “world usurers,” referring perhaps to the International Monetary Fund, which has imposed strictures on Greece as part of a multibillion-euro bailout package.
On the same end of the spectrum (the political spectrum is a circle, not an axis), Syriza, or the Coalition of the Radical Left, won 16.4 percent of the vote and 51 seats in parliament — triple its previous total. Like Golden Dawn, Syriza trafficks in implied and sometimes actual violence. The names of its component parties pretty much tell its story: Synaspismos (Coalition of the Left of Movements and Ecology); AKOA (Renewing Communist Ecological Left); KOE (Communist Organization of Greece); DEA (Internationalist Workers’ Left); Ecosocialists Greece; DIKKI (Democratic Social Movement); and so on.
Greece may be the loose thread that unravels the garment. Economist Desmond Lachman, formerly of the IMF and now at the American Enterprise Institute, is concerned that if Greece does not comply with its obligations, the sovereign debt crisis in Europe will be dramatically deepened, with contagion dragging the continent into another financial crisis from which the United States would not be shielded.
Unlike floods and earthquakes, this disaster is entirely man-made and utterly avoidable. Europe is tremendously wealthy and productive, but Europeans sabotaged themselves by embracing the foolish idea that they could have an economic union without a political union. They are also paying the price for failing to come to terms with actuarial realities; their populations are graying. Without reforms of pension and other benefits, they cannot sustain their standard of living. Rather than face their own corruption, the Greeks principally, but also other Europeans, are disintegrating into raging extremists blaming anyone and everyone else.
That’s the object lesson for us. Here, President Barack Obama and the Democratic Party are promising Americans more of this fool’s gold — limitless government benefits with costs imposed on someone else (“the rich” or future generations). It’s an engraved invitation to Athens.