The financial crisis in Europe is not yet over, for the average politician in the Eurozone it appears that it has hardly begun. The latest commentary by New York Times columnist Paul Krugman goes some way to illuminating the disconnect between reality and the morality play in which politicos appear to be engaged.
The logic goes something like this: People in Southern Europe, countries like Greece, Spain and Italy, have been living the high life for too long, and therefore it is time for them to feel some pain. Not because they deserve the pain, or because they have done anything to cause the pain, but just because pain is good and people should have to experience it. When people are having a good time, like having a job and being able to afford the rent, it must be time for seven lean years. After all, it happened in biblical times, it should happen now too.
The claim is also made that they have been living at government expense, getting luxuries like health care and pensions and food. It is time that this high living stops and people realize that they cannot have a good life forever.
The fact of the matter is that in Spain, and possibly Italy, the people were not living the high life. Spain’s relative prosperity came as the result of a number of factors. First, they joined the fellowship of European nations, which allowed them to access financial markets more easily and trade goods more effectively across the Zone. When the Euro was formed and Spain became a member of the club, the nation became more financially efficient. Instead of nations having to trade in different currencies, they could trade in a single currency, putting trading on an equal footing with other nations.
Spain benefited enormously from this series of events. As a result, people became more prosperous. At the same time, interest rates fell, making housing more affordable, loans were easier to obtain and people wanted more housing. The result, as it was in the United States, was a building boom. The Spanish government was never extravagant, and in fact lived with a surplus. Programs like social security and medical benefits were well funded.
When the bubble burst, revenue fell along with it, and Spain’s deficit grew, but it never became a problem.
It was the moralistic Nordic nations that decided that Spain’s gravy train as they saw it had to stop. People need to suffer. It is a superficial religious precept that springs from pre-Christian Judaist theology that proposes that being sinners, we are all guilty of something and should have difficult lives or we don’t appreciate anything.
The reason for austerity measure is thus not to solve the underlying problem, which is one of unemployment, not overspending. It is to inflict pain and suffering on people that should not be enjoying life. It is noteworthy that it is almost always the poor, the middle class, the elderly, and the young that are made to suffer these indignities.
Austerity has not worked, and has only caused more needless heartache and suffering for the disaffected, the poor, convenient targets of a conservatism run amok.
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