Opposite Strategies in Europe and America
Two radically different solutions to a common problem are being proposed in Europe and America – or so it seems. All our economies are in trouble: massive indebtedness and credit shortages, on the one hand, while housing, employment, and growth are stalled. In America the answer is, by and large, stimulus. In Europe it’s austerity. How to make sense of this?
To be sure, this is an oversimplification, but the difference in emphasis is striking. While in the U.S. some far out Republicans oppose government programs in the name of “free markets,” and make political capital about deficits, there is a rough consensus in the U.S. that the economy needs stimulation. On the other hand, as The New York Times noted disapprovingly: “Europe’s leaders, masters of denial, are still insisting on destructive austerity.” (See, “The Global Economy at Risk.”)
But maybe the problems just seem the same. They look like economic problems on the surface, but maybe they are really radically different political problems.
Europe is struggling with unification. A common market and currency have obscured profound cultural and political differences forced to the surface by the Great Recession. It was a nice idea to bring together Germany and Greece, for example. The great German poets Goethe and Schiller worshipped ancient Greek culture, and you can see the influence of the Athenian acropolis all over Berlin. But what do they actually have in common? Do they understand or care about each other? Do they even need each other?
The idea of “Europe” consolidated the influence of the Enlightenment, but that did not prevent two world wars from decimating the continent. Now again, different ideas of government, different attitudes towards corruption, different habits of work are proving difficult to reconcile.
Austerity is being promoted as a means of creating a shared base line of fiscal prudence and social policy, a potential common denominator for a real European community. If there is no common culture at a deeper level of shared assumptions and habits, can one be created as a solution to this crisis?
America, on the other hand, is being torn apart by an emerging new class system, fueled by dramatic income inequality. Corporate pay is reaching shocking levels, even in the face of indifferent corporate performances, and shareholders are beginning to rebel. Employment is still anemic. The middle class is beginning to feel that the deck is stacked, that America is no longer the land of opportunity. As a result, the political problem is to shore up the economy without worsening the gap between the rich and the poor. Can it be done?
Hostility to the welfare state has left the poor exposed, with few safety nets left to cut. Austerity here would be yet another way of illustrating the indifference of the rich. In the current election campaign, Obama is promoting the “Buffet rule” to ensure that those making more than a million dollars a year pay increased taxes, while Romney, labeled as “wealthy,” is struggling to overcome the perception that he is out of touch.
Bound together globally, Europe and America both struggle to revive their economies, but do we really have anything to say to each other? Our different answers may be because we are actually asking different questions.