Austerity in Europe

Austerity protests in Greece

I’ve said for years that if a country tries to put austerity into practice for an extended period of time, an eventual revolution will be the outcome. In Greece and France this past week that is essentially what happened. I have no doubt there is more to follow.

France elected Francois Hollande of the Socialist Party last week, the first left leaning President to hold power in seventeen years. Hollande promised a “new start” for France and vowed to challenge the austerity plan that now dominates Europe. “Austerity can no longer be the only option” he said.

Over in Greece, it’s a little more complicated to be sure. The two parties that have driven the Greek economy into the ground then signed on to a disastrous austerity program (in exchange for dead-end bailouts from the EU and IMF) were widely rejected, receiving only a combined 32% of the vote.

When people become as desperate as the people of Greece, they tend to stop thinking rationally, just as the people of Germany did in the 1930s. The Neo-Nazi “Golden Dawn” party of Greece received 7% of the vote. Therefore, 21 Neo-Nazis will now have the right of sitting in the Greek Parliament. No Nazi has held a seat in a European nation since the Second World War.

Since no party received more than 19% of the vote, if a coalition government can’t be formed, a new election will be called at the begging of summer. SYRIZA, the Coalition of the Radical Left who recently finished in second place for the first time, is now leading in nationwide polling with 25.5%.

Francois Hollande

The radicalized politics in Greece and the election of Hollande in France are the result of austerity measures put in by the IMF and the Euro-zone (led by Germany) to fight spiralling national debt.

The policy of austerity is nothing new; the International Monetary Fund (IMF) has pushed free market policies and austerity since the 1970s and it has never worked. Every country that has adopted austerity has doomed themselves to high unemployment or the forced liquidation of government assets. South Africa following Apartheid is a great example of both.

It was much the same for South America. Decades of periodic financial crises and imposed austerity measures by the IMF kept their economies from growing. In Argentina’s case, the IMF drove their economy completely into the ground in the late 90s.

Luckily, Hugo Chavez along with leaders of Argentina, Bolivia, Brazil, Ecuador, Paraguay and Uruguay eventually rejected the IMF and World Bank and formed their own (Bank of the South). As a result, their economies handled the financial crises and are among the fastest growing in the world.

Back in Europe though, nothing much has changed. Austerity measures in Greece and Spain have led to Great Depression-like unemployment numbers (21% & 24% respectively). Unemployment in the Euro-zone is over 10% and among youths 18-24 it is closer to 50%.

Austerity protests in Greece

Great Britain’s self inflicted austerity programme has led to a double-dip recession. Their economy contracted by more than 7% during the 2008-2009 recession, which lasted fifteen months. Since then, recovery has been slow – the weakest in a century in fact, even slower than the Great Depression.

Pretty soon, the governments of Italy, Ireland and other nations where austerity is taking hold will be forced to answer to the people. If Greece and France are any indication, a left turn away from austerity is what the people will choose.

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