Europe and “Suicide”

by Matthew Payne on April 16, 20127 comments

The Neoliberal Answer for Economic Distress ("The Suicide" by Edward Monet)

 So, a real-life Noble economist has noticed what we at the Paltry Sapien have been banging the drums on for some time, that Europe’s economic policies are literally driving people to suicide.

Europe’s Economic Suicide

Consider the state of affairs in Spain, which is now the epicenter of the 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.–Paul Krugman, The New York Times

Yes, it is a full-on depression (as it is in Latvia, Greece, and Ireland–and soon Italy and probably Great Britain), and it is nice someone noticed.  Of course, Krugman’s idea that this is somehow a “march of folly” like the increasingly insane attempt to maintain the gold standard in the 1930s is untenable.   The epidemic of economically-induced suicides in Europe is clearly “collateral damage” in a plan, a fairly audacious one, to rejigger Europe’s political economy to serve its least responsible parties.  Remember, Spain was a model citizen on debt and was running a surplus before the housing meltdown–said meltdown caused by a speculative bubble fueled by German banks.  And yet the Germans imposed a ridiculous treaty on the rest of Europe in March to guarantee low inflation in the Eurozone (and therefore high profits for German banks and other rentier entities) despite the cost of insanely high unemployment.  And this “hunger treaty,” which Krugman views as a suicide pact, is not fundamentally different in its economic prescriptions to the economic illiteracy driving policy in Great BritainCanada and among the “centrists” and right-wingers in the Beltway. 

At this point it’s increasingly difficult to be shocked by the naked class war expressed in these plans.  It is almost as if the political classes (and yes, that would be the “ruling classes” since they make the rules and, no, not all of them are elected–see “Bernanke, Ben”) are intent on driving down the cost of labor to Chinese levels.

In fact, it is precisely like the ruling classes to want to drive down the cost of labor (and increase the power of the aptly named “plutocracy”).  As Nick Salvatore and Jefferson Cowrie have pointed out, the welfare state brought about by the massive crisis of the Great Depression and part of the average American’s consciousness since the New Deal turns out to have been a “long exception“–a temporary aberration in the long progression from Gilded Age to Gilded Age.  Russians in the age of Putin put it another way, that the Soviet Union was the bridge between capitalism and capitalism.  As Crowe argues, even the term “liberal” gained its current meaning of pro-social welfare during the New Deal era and that world is so far receded that the term itself is now mostly meaningless.  It seems to me that Salvatore and Crowe’s arguments work for Europe and other liberal democracies as well–only under the hammer blows of the rise of Communism and Fascism, and the worst blood-letting in human history, did the bankers and “statesmen” give up their bourgeois moralizing and embrace social welfare and consumption.

This is not their “steady-state.”  The rise of bourgeois morality in the 19th century was not simply a cultural contingency but a trans-global phenomenon.  And, to put it mildly, it was the smug moralism of Dickens’ worst characters aided and abetted by the cruel nostrums of Malthus and Ricardo.  As Anatole France observed, “The law, in its majestic equality, forbids the rich as well as the poor to sleep under bridges, to beg in the streets, and to steal bread.”

Indeed.  And what recourse does the “law” (economic or otherwise) offer those not in the privileged circle of plutocracy.  Why, suicide of course.


Christophe on April 16, 2012 at 2:33 pm. #

Check out this infographic comparing EU wages vs EU unemployment rates

Matthew on April 16, 2012 at 2:57 pm. #

The point being? That if Spain’s minimum wage was as low as Lithuania’s than its unemployment rate would be higher than Ireland’s? Not exactly clear with the correlation is supposed to be but we know–via Krugman and others–that there is a high correlation of budget slashing and unemployment (as well as negative GDP growth). Seems to me if they’d given that last tranche of 29 billion euros that Spanish banks got to individual wage-earners in Spain, or about 1500 euros each, than the economy wouldn’t be tanking. But then again, I’m no fan of Ricardo’s “iron law of wages.” And as for Malthus, meh.

Andrew Loewen on April 16, 2012 at 7:48 pm. #

I hope you don’t mind me saying it’s great to see you offer a corrective (dare I say a left-critique) to Krugman, Matthew. And thanks muchly for the Salvatore and Cowrie, and Crowe, who were unknown to me but whose analyses seem to jive w/ my understanding of the 20th-century US welfare state (so far I’ve just scanned but will read more thoroughly). I dare say we are increasingly speaking from from a similar script.

Not long ago in a discussion thread on the state of contemporary liberalism, I suggested to a left-liberal interlocutor (Chicago’s estimable Rob Warmowsk): “This is where radicalism and liberalism meet: in recognizing shared aims, and letting serious analysis determine trajectories.”

Radicals and principled liberals share many common aims, and between you and me, Matt, I sense our analysis is increasingly of accord.

Matthew on April 16, 2012 at 10:50 pm. #

Well, thanks Andrew. I have to say, it is no longer credible to me to argue that this is incompetence. It is, of course, that but it is much deeper as Krugman himself knows with his rentier analysis. All this might be quite suicidal but it is also quite deliberate as even Krugthullu admits with his fear of a systems crash. Ponder that–Krugman thinks systemic collapse is a definite observation. Now back to our regularly schedule discussion on Ann Romney or some such nonsense.

Laurence Miall on April 17, 2012 at 2:24 pm. #

Sorry to be the visiting pedant but in the last paragraph, the reference to Anatole French is surely intended to be to Anatole France (who was French, but not by family name).

Laurence Miall on April 17, 2012 at 2:25 pm. #

Second last paragraph, I mean.

Matthew Payne on April 17, 2012 at 7:55 pm. #

Ooops, thanks Laurence. Fixed with a definite blush.