[Vision2020] Socialism: Neither Cause nor Solution to Euro Crisis

[Nicholas Gier]

*Good Morning Visionaries:*

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*This is the second part of my column on the Euro Crisis.  Both parts were
published together in the Sunday edition of the Idaho State Journal, which
does even a better job of saving money by having no syndicated columnists.*

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*If the Daily News wants to spend money, they should choose much better
conservatives and liberals.*

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*The full version is attached.*

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*Yours for increased revenues to balance deficits,*

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*Nick*

*SOCIALISM: NEITHER CAUSE NOR SO**LUTION FOR EURO CRISIS*

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GOP leaders are quick to claim that Europe’s problems are due to its
“socialist” governments and that, as a fellow traveler, Obama’s policies
will take the U.S. into an economic abyss. As Republican Congressman Paul
Ryan predicts: “What we are seeing is the failure of European socialism and
the social welfare states.” The facts prove Ryan wrong.

The dictionary definition of “socialism” requires that the state own the
means of production, and only Cuba and North Korea qualify as socialist
states in this sense.  In Europe the means of production are in the hands
of world-class private companies operating in market economies.

The World Economic Forum’s list of competitive economies for 2011 includes
seven European welfare states : Switzerland (1st), Sweden (3rd) , Finland (4
th), Germany (6th), the Netherlands (7th), Denmark (8th), and the UK (10th).
The U.S. is in fifth place. The free market *Economist* has chosen Denmark
as the most business friendly and it hailed Finland was the most
innovative.

One way to measure the strength of any nation to manage debt is to look at
its credit rating.  Good credit means that governments are able to issue
bonds at low interest rates.  Greece, Italy, Ireland, Portugal, and Spain
(GIIPS) are now paying so much interest on their bonds that they will never
be able pay off their debts.

Even before it lost its AAA rating, the U.S. did not make the top ten
credit worthy nations, but 8 European welfare states did.  The latest
ratings from Standard and Poors indicate that there are 15 countries with
AAA ratings before the U.S. at AA+.  Except for Hong Kong all of these
countries have higher tax rates than the U.S.

The number of European nations led by Labor, Social Democratic, or
Socialist parties has been declining over 20 years and now stands at an all
time low.  Iceland, Ireland, Italy, and Greece ran up their bills (all over
100 percent of Gross National Product) under center-right governments.

In Ireland, where the Labor Party always ran third, the budget deficit
reached 32 percent last year and unemployment is running at 14 percent.  By
2007 Ireland’s Anglo-Irish bank has loaned out $91 billion. As a proportion
of population this would be the equivalent of an American bank loaning out
$3.4 trillion.

Those European countries with the highest taxes have some of the lowest
national debt. This is not the result of socialism, but a common sense
financial philosophy that one should balance expenses with sufficient
revenue.  Congressman Ryan’s budget proposal which dramatically cuts taxes
and spending—but wipes out America’s social safety net—will reduce deficits
by a paltry $155 billion over ten years.

Current national debt per GDP in the Nordic countries was 36.7 percent for
Sweden, 43.7 percent for Denmark, 48.2 percent for Finland, and 48.9
percent for Norway.  Sweden is the fastest growing economy in Europe (4.2%)
and Denmark—thanks to Social Democratic programs in the early 1990s—has had
an unemployment rate of 3-4 percent for 20 years.  A Social Democratic jobs
plan allowed Germany to increase employment during the Great Recession.

Norway is currently running high budget surpluses (13.1%) and Sweden’s
financial books are balanced. Denmark and Finland have been running very
low budget deficits (3.9% and 2.5% respectively).  From 2000-2010 Finland
has had budget surpluses in 8 of those years.

The current budget deficit for the 17-member Eurozone is 4.1 percent, and
that includes debt-ridden Greece, Portugal, and Ireland.  Only Finland,
Estonia, and Luxembourg have abided by the 3 percent deficit agreed on in
1999. Even Germany was one of seven that busted the 3 percent barrier in
2001.  From 2000-2010 twelve other euro economies, including France, stayed
below the limit more consistently than Germany.

Comparable figures for low tax U.S. are 100 percent of GDP for total
national debt and a budget deficit of 8.6 percent.  The U.S. has run up
more than twice as much national debt as Europe. Each person in the EU owes
$19,522, but each American is $48,860 in debt.

A recent cartoon depicted the Statue of Liberty warning off a boat loaded
with euros.  She cries out: “We don’t want your economic policies!”
Actually both American and European governments have very similar austerity
plans: dramatic spending cuts (especially in Britain, Portugal, Ireland,
Spain, Italy, and Greece), which make it impossible for these economies to
grow enough to hire new workers and pay off their huge debts.

There is strong correlation between economic growth under Obama’s stimulus
plan the slide towards recession after the money was spent.  The
right-wing’s call for austerity driven economic expansion is a dangerous
illusion.  It’s not working in Europe and it won’t work here either.

Nick Gier taught philosophy at the University of Idaho for 31 years.
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