April 24, 2012
The big news from the first round of French presidential vote is not François Hollande moving a step closer to becoming the first Socialist president of France in a generation by beating the incumbent, Nicolas Sarkozy. It is the Front National's Marine Le Pen's strong showing --18% of the vote.
This is a party that is openly xenophobic, and campaigned on an anti-immigrant, anti-Islam platform. It attracted the support of those opposed to immigrants who takes jobs and social benefits, Islam, globalisation, open borders, and the euro that drive jobs to faraway countries, with no apparent benefits for ordinary people. This is a rightwing cultural conservatism that is suffused with nostalgia for an always better and often imaginary national past – the era before mass immigration, globalisation, Europe, and international finance destroyed, they believe, the old, white, illiberal, homogeneous nation states of Europe.
More broadly there is a democratic reaction to the German-scripted programme of austerity and legally enshrined fiscal rigour that curbs the budgetary sovereignty of elected governments. This socialist François Hollande's central campaign pledge was to reopen Chancellor Angela Merkel's eurozone fiscal pact, an international treaty signed by 25 EU leaders and currently being ratified. The budget cuts are required by EU fiscal rules that mandate that eurozone countries run annual deficits no more than 3% of GDP, Hollande calls for a refocusing of the crisis-fighting strategy away from austerity alone to include measures to boost growth.
What is being challenged is the austerity decreed by Europe's leaders (Berlin and Brussels) as the answer to runaway debt, soaring deficits and a failing euro. Europe's forced austerity is pushing the continent into recession. Like Greece Spain is already in one, and much of the rest of Europe is on the way into an austerity trap of slower growth and higher unemployment. Since budget cuts depress the economy, to achieve a one percentage point of GDP reduction in the deficit requires cutting by more than one percentage point. And when one misses one's target, even more cuts are necessary.
In the Netherlands the center-right government of Mark Rutte fell, unable to cobble together a coalition to pass budget cuts required by EU fiscal rules. The political crisis was triggered by far-right leader Geert Wilders, who refused to support plans to make up to €16bn of cutbacks. The Rutte government has been hoist on its own petard, since it has been the loudest advocates of the most rigorous austerity for the bailed out countries of the eurozone and of the punitive new fiscal rules.
Paul Krugman says that Spain is the epicentre of the economic crisis:
Never mind talk of recession; Spain is in full-on depression, with the overall unemployment rate at 23.6 percent, comparable to America at the depths of the Great Depression, and the youth unemployment rate over 50 percent. This can’t go on — and the realization that it can’t go on is what is sending Spanish borrowing costs ever higher...Nonetheless, the prescription coming from Berlin and Frankfurt is .... even more fiscal austerity.
So Europe continues on its its present course, imposing ever-harsher austerity on countries that are already suffering Depression-era unemployment. Fiscal austerity is the response to any and all problems.