I've recently come to the Austrian School line of thinking and it really all makes sense. What I'd like to hear someone comment on is how Europe has been able to stay afloat (sometimes barely) for all this time as they have historically been worse keynesians that the US? It should have crashed down years ago?
Two, given Austrian theory I have an idea what's in store for America, does anyone care to posit a time frame and details on how it'll all play out? I have yet to see an Austrian say "x, y and z will happen in 2, 3 , 5 years".
Any one care to take a shot?
Europe had something of a golden age in the post-war era, with Germany and France practicing very liberal economic policies and full employment being the norm. The post-war era is remembered in France as the 30 glorious years. The place didn't go full out socialist until the 80's.
The fallacies of intellectual communism, a compilation - On the nature of power
There are two time frames:
Pre Euro (Pre European Central Bank)-Each country had their own central bank that created money individually. These central banks could not be that aggressive in cutting rates as businesses in other countries could just come in and start buying businesses, property and other assets.
Post Euro (With the European Central Bank)-Individual countries get all the money creation of the central bank even if their economy is in different shape from others countries. Moreover, the wealthier countries (I never cease to be amazed that these people voted for this, but the US did vote for both Bush and Obama so I should not be suprised.) pay the less wealthy countries for the privilige of being part of the EU.
So at first competition kept them from going nuts creating money and now nothing does. So the EU central bank is in the great devaluation race with the US and Japanese central banks to wipe out wealth on an huge scale.
According to Peter schiff, rather than size of government it has to do with the amount of savings.
Supposedly, consumption over there has not been funded by the same level of debt.
Interesting questions. Why hasn't it been even worse?
I think, that in a longer perspective, Europe has indeed lost a lot. It has gone from the sole world dominator 100 years ago to a second rate stagnating subcontinent. In recent times the fall of the Soviet has helped since it has provided great new trade opportunities where Western Europe has had comparative advantages culturally and geographically (although German politicians made the worst of its reunification with the ex-DDR "Mitteldeutschland").
Saving ratios also must've played a part. Anglo-Saxons and Scandinavians are much more into the debt-thing than Germans and Southern Europeans, apparently for cultural reasons. Maybe their disastrous experiences of war and outright dictatorship last centrury have made "them" (the Continentals) more careful and less naive, than "us" (the Anglo-Scandinavians).
Also note that the industries feeding the system in Europe, are the industries which are least regulated. Manufacturing is much less regulated than finance, services or construction.
It's not fascism when the government does it.
“We must spend now as an investment for the future.” - President Obama
The answer is pretty simple and has already been outlined before.
Around 1948 most European countries, still pretty much staring despite the Marshall plan, decided to deregulate their economy.In all countries moderate politicians like Luigi Einuadi realized the need to keep the very large Socialist and Communist parties (most of which acted like they routed the Germans without any outside help) at bay without crippling the economy. This led to much lip service being paid to Socialist values and the most intelligent Communist leaders played along: despite much flamboyant rhetoric nobody wanted a civil war, especially after seeing what had happened in Greece. This allowed building a "capital" of wealth which is still substaining Europe nowadays, though we are beginning to have short breath. Around 1968, starting with the student riots in Paris, the economic and political climate changed for the worse. To cut a very long story short Socialist and Communist movements reclamed a central place in politics, slowing increasing the welfare state's pressure, building up restrictice legislation and increasing taxation. It wasn't a sudden action: Socialism is a slow acting neurotoxin, slowly getting to people's mind. There's strong suspicion that the USSR played at least a part in this upheaval, pretty much as they are suspected of having helped kickstart the enviromentalist movement. US and European intelligency agencies were also deeply involved. it was a very dark period and many countries got very near the breaking point, ie either open civil war or coups d'etat by extremist movements. Mind that Europe was far from a free economy paradise even up to 1968 but at least people with a good idea and the will to take risks had many more chances than today and states were very frugal by today's standards. My personal opinion is that the seeds of these problems were not sown by the KGB but had always been lying in pectore ever since Socialism become such a huge hit at the beginning of the XX century. Seeing the Soviet Union standing triumphant at the end of WWII and seeing "conservatives" lean towards Fascist ideals surely didn't help one tiny bit.
What will happen to America... it all depends on exactly how much the Obama administration will do. Even with the modern State's near omnipotency they have simply promised too much. Resources are bound to dry up sooner or later and choices will have to be made: you cannot impose a "green revolution", take over banks and carmakers, get involved in a potentially catastrophic strife in Pakistan, keep bribing Iraqi warlords, keep bribing Kim Jong-Il, inflate to stimulate the economy, keep feeding Israel and Egypt, try to irritate the Russians, end world hunger etc. Obama may be bluffing: perhaps he's just talking big to keep people from realizing that government isn't an omnipotent God and to keep them happy. But I doubt we'll be so lucky. Inflation and regulation will probably create a "minibubble" in the immediate but will simply push reckoning day further away. How long can they push it further away I cannot say: I've said 10 to 15 years on previous occasion but given people's stupidity now I am beginning to doubt this prediction. The Roman Empire should have fallen when Decius and his whole army were slaughtered by the Goths at Forum Trebonii, yet the wretched Western Empire lived to oppress people for two more centuries, though after Constaine's death it was in name only. Now I understand why when the heretical and foreign Franks arrived in what today is France cities threw their doors open and priests thanked God for deliverance...
Thank you everyone. I'm going to study these answers and follow up.
The story I've heard is just about the contrary of what most people have said...
In France at least, the state was rather involved in the economy up until the 1980s (a philosophy called "dirigisme", which roughly means "leader-ism"). Starting in the 80s, state intervention started to be viewed less favorably, setting off a process of deregulation which arguably continues today under Sarkozy. That said, the state never played an overwhelmingly large part in the economy - it mostly contented itself with owning railroads, utilities, etc.
1980 was the election of France's first socialist party president. His economic policies were so disastrous that they caused state intervention to be viewed less favorably.
That's what it is, isn't it... good old Mitterand.
Some have proferred that Europe can afford to waste more money on government intrusion because they lack any real military complex that needs to be funded in that the US provides the real security. That certainly would seem to factor in.
Penn: Some have proferred that Europe can afford to waste more money on government intrusion because they lack any real military complex that needs to be funded in that the US provides the real security. That certainly would seem to factor in.
Historically the only security threat faced by European states was each other. There's really no need for U.S. provided security.