The We're-Not-Europe Party

The We're-Not-Europe Party
The bill comes due for a life of fairness at the expense of growth.

By DANIEL HENNINGER

One of the constant criticisms of Barack Obama's first year is that he's making us "more like Europe." But that's hard to define and lacks broad political appeal. Until now.

Any U.S. politician purporting to run the presidency of the United States should be asked why the economic policies he or she is proposing won't take us where Europe arrived this week.

In an astounding moment, to avoid the failure of little, indulgent, profligate Greece, the European Union this week pledged nearly $1 trillion to inject green blood into Europe's economic vampires.

For Americans, this has been a two-week cram course in what not to be if you hope to have a vibrant future. What was once an unfocused criticism of Mr. Obama and the Democrats, that they are nudging America toward a European-style social-market economy, came to awful life in the panicked, stricken faces of Europe's leadership: Merkel, Sarkozy, Brown, Papandreou. They look like that because Europe has just seen the bond-market devil.

Daniel Henninger discusses Europe's economic stagnation, noting that President Obama's health-care and energy policies will surely make us more like Europe.
Podcast: Listen to the audio of Wonder Land here.

The bond market is a good bargain—if you live more or less within your means. The Europeans, however, pushed a good bargain into a Faustian bargain, which the world calls a sovereign debt crisis.

In the German legend, Faust was a scholar who sold his soul to the devil many years hence in return for a life now of intellectual brilliance and physical comfort. In our version of the legend, Europe's governments told the devil that, more than anything, they wanted a life of social protection and income fairness no matter the cost. Life was good. A fortnight ago, the bond devil arrived and asked for his money.

In the U.S., the Obama White House and the Democrats have decided to wage politics into November by positioning the Republicans as the party of obstruction, which won't vote for things the nation "needs," such as ObamaCare. Some Republicans voting against these proposals seem to understand, as do their most ardent supporters, that they are opposing such ideas and policies because the Democrats have pushed far beyond the traditional centrist comfort zone of most Americans. A Democratic Party whose current budget takes U.S. spending from a recent average of about 21% of GDP up to 25% is outside that comfort zone. It's headed toward the euro zone.

After Europe's abject humiliation, the chance is at hand for the Republicans to do some useful self-definition. They should make clear to the American people that the GOP is "The We're Not Europe Party." Their Democratic opposition could not attempt such a claim because they do not wish to.

The state of Europe can be summed up in one word: stagnation. Jean-Claude Trichet, the European Central Bank president who just agreed to monetize the debt that Europeans can't or won't pay, noted in a 2006 speech that "over the period from 1996 to 2005, euro area output grew on average 1.3 percentage points less than in the U.S., and the gap appears to be persistent."

Angus Maddison, the eminent European historian of world economic development who died days before Europe's debt crisis, wrote in 2001: "The most disturbing aspect of West European performance since 1973 has been the staggering rise in unemployment. In 1994-8 the average level was nearly 11% of the labor force. This is higher than the depressed years of the 1930s."

Stagnation isn't death. Economies don't die. Greece proves that. They slow down. Europe's low growth rates allow its populations to pretend that real, productive work is being done somewhere by someone. But new jobs are created slowly, if at all. Younger workers lose heart.

Economic stagnation is a kind of purgatory. Once there, it's not clear how you get out. The economist Douglass North, in his 1993 Nobel Prize acceptance speech, said that one of the vexing problems of his discipline is, "Why do economies once on a path of growth or stagnation tend to persist?" Japan also seems unable to free itself from stagnation.

The antidote to stagnation is economic growth. Not just growth, but strong growth. A 4% growth rate, which Europe will never see again, pays social dividends innumerably greater than 2.5% growth. Which path are we on?

Barack Obama would never say it is his intention to make the U.S. go stagnant by suppressing wealth creation in return for a Faustian deal on social equity. But his health system required an astonishing array of new taxes on growth industries. He is raising taxes on incomes, dividends, capital gains and interest. His energy reform requires massive taxes. His government revels in "keeping a boot on the neck" of a struggling private firm. Wall Street's business is being criminalized.

Economic stagnation arrives like a slow poison. Look at the floundering United Kingdom, whose failed prime minister, Gordon Brown, said on leaving, "I tried to make the country fairer." Maybe there's a more important goal.

A We're-Not-Europe Party would promise the American people to avoid and oppose any policy that makes us more like them and less like us.

http://online.wsj.com/article/SB100...5240591350076252.html?mod=djemEditorialPage_h

 

This article is idiotic.

Europe isn't Europe.

What I mean by that is, you can't compare Portugal and Greece to Germany and Sweden. Yes, they all have social safety nets, but their economies differ. So what is Europe? Is the current issue a monetary issue, an economic issue or a political issue? Or a combination? It's much more nuanced than what the article portrays.

And the crisis started here, not Europe. The article also neglects to mention how having the world reserve currency has saved the US' ass. Or how our deficit financed defense spending props up the economy artificially.

There is much more to the crisis.

Personally, I think if you want to get to the root of the crisis - it's the fiat monetary and banking system. Whether that system is manipulated or artificially inflated for the benefit of the masses (safety net) or plutocrats (bailouts), it all stinks.

The biggest issue I have with such articles is that it conveniently avoids or distracts the reader from what the Banksters have wrought.

After all, the banksters ALWAYS make money - whether it's selling to pensions, defense spending, or their own bailouts... they get the most $$$$ from all these activities.

 

You know...in part 2 of that story, it was the devil that introduced paper money to the german empire which saved them financially in the story.

Also at the end of that story, Faust was redeemed. The angels said it best in that story, "Whoever strives in ceaseless toil, may obtain redemption still."

The problem is that many do not strive in ceaseless toil. They say the thing that the devil wanted Faust to say in that play which would cause Faust to die instantly. The people say "Ah this moment is so pleasant. Let it last a while longer" If you remember Nov 4, 2008, when Obama got elected, more than half the country were saying those words. And now our country is going to hell in a handbasket.