Just Throw Money At It

The Euro crisis drags on, and nobody in Europe, at least, seems to know quite what to do about it. Greece, of course, is headed for more elections as it dithers about with no solution in sight. Germany, seemingly the only economy in Europe with any sort of financial strength, is being hammered from all sides; every country in Europe wants German money, but no one is willing to accept any strings. The leaders of both France and Greece have gone so far as to demand money from Germany.

Worse, the debate is being misdirected and obfuscated by the adoption of new terminology by liberals and socialists. Liberals and socialists, at least in America, used to be somewhat distinct groups; since the Obama Administration, America's liberals have practically adopted socialism into the Democrat party platform.

Within the paradigm promoted by this new terminology, the debate is defined by the terms "pro-growth" and "austerity." Both of these terms misdirect the debate. "Pro-growth" in this context is limited to government growth. Those who use "pro-growth" in this context assume the government alone is responsible for all job creation and economic growth; the private sector is tacitly deemed irrelevant. The flip-side of the coin is "austerity." Anyone who seeks to limit the size of government is guilty of seeking to harm the poor citizens, who will suffer from the resulting economic collapse and loss of jobs (or benefits).

By embracing this paradigm, any real debate of alternative proposals is effectively foreclosed. If the private sector is irrelevant, the only question is whether the countries with money (the Germans) will be "caring" enough to "help" those who don't (everybody else.) In this scenario, "austerity" is the culprit, and it's just obvious that the bailouts will have to occur.

However, this is a false scenario. First, the private sector is not irrelevant in any country which is not totally Marxist; only in the old Soviet Union and its satellites did the government hold all property and create all jobs. Second, in Europe, as in the U.S., the private sector is far more responsible for economic growth and job creation; government employment only accounts for a certain portion of the jobs market. Third, increasing the size and power of government suppresses private sector growth, by removing capital from the private sector to the government and increasing the costs of the regulatory burdens. Government "austerity" can lead to an increase in a nation's economic performance when it frees up the private sector.

It's now a liberal article of faith that Europe is having economic problems as a result of austerity; yet austerity was imposed as part of the bailouts required by the collapsing economies in the Eurozone. And the nations needing bailouts are not the bastions of capitalism, but those which lean to socialism. As Prime Minister Margaret Thatcher famously said, "The trouble with socialism is that eventually you run out of other people's money."

The socialist-leaning nations of Europe have not only run out of other people's money, but they have borrowed nearly all of the other people's money they can lay their hands on. They have incurred massive debt loads which they cannot pay. Yet they are trapped in a paradigm which prevents them from reaching any workable solutions, so they pretend the debt problem will magically vanish if they continue to borrow more money and just throw money at it- but they are quickly running out of other people's (the German's) money.