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The New York Times' Coverage of EU Austerity Remains Pathetic

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From flickr.com/photos/121483302@N02/14285598808/: François Hollande is under pressure from the Right and is firing his Left supporters who helped get him elected.
François Hollande is under pressure from the Right and is firing his Left supporters who helped get him elected.
(Image by theglobalpanorama)
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I have explained in depth why the New York Times' coverage of the EU troika's infliction of austerity on the eurozone is dishonest and routinely indifferent to the suffering of the peoples of much of the periphery who have been forced into a second Great Depression. The latest travesty was in an article entitled "French Premier's Push Toward Center Opens Rift on the Left."

The article focuses on the betrayal of the people of France and his own Party by President Hollande, but you won't learn that by reading the article. Instead, you'll learn that Hollande is following the pattern of Tony Blair. Of course, the article doesn't mention four things about Hollande's copying Blair's neo-liberalism, slavish devotion to big finance, his view of even the most helpful and desirable budget deficits as undesirable, and his betrayal of labor.

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"In the cabinet reshuffle last month, Mr. Hollande ousted Arnaud Montebourg, a populist economy minister, and replaced him with Emmanuel Macron, a wealthy former banker at Rothschild who is seen as more friendly to business.

The moves left the traditional base of the Socialist Party feeling angry and betrayed."

First, Blair was copying Bill Clinton. Second, Clinton and Blair's embrace of these policies ended in economic catastrophe. Third, Blair and Gordon Brown devastated the Labor Party.

Fourth, Clinton and Blair had the immense luck of governing during bubbles that collapsed under their successors. This meant that their devotion to austerity bit their successors. Brown and Hollande's refusal to fight for essential stimulus has prevented any meaningful economic recovery and discredited their Parties. Hollande promised in his campaign to fight against austerity, but when push came to shove he purged the members of his cabinet pushing for stimulus. He did so at the insistence of Prime Minister Manuel Valls, the greatest advocate of inflicting austerity in France, the de facto leader of France on economic matters.

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The NYT article description of the purge is inaccurate, but revealing.

"Hours after President François Hollande purged leftist members of his government last month for opposing his economic policies, Manuel Valls, France's combative prime minister, climbed a stage before hundreds of cheering French executives and called for a new relationship with business to lift France from its malaise.

He admonished the left wing of the French Socialist Party to stop posturing against capitalism, then launched into a lengthy pro-business discourse that drew a standing ovation."

Actually, the "leftist members of his government" were purged for supporting Hollande's stated economic policies that got him elected by a decisive margin. Hollande, correctly, pronounced the troika's infliction of austerity to be the problem and promised to stand up to the troika and demand an end to their self-destructive policies. Valls was the leading opponent of Hollande's stated policies. He demanded the purge. Hollande, who everyone considers a weak leader, capitulated to Valls' threat to resign if the economically literate members of the government were not purged.

It is the right, which dominates the entire troika; that is insisting on self-destructive economic policies that have indisputably failed -- catastrophically. Austerity forced a second, gratuitous Great Recession upon the eurozone, forced much of the periphery into a second Great Depression, and has now thrown Italy back into a third recession. As Paul Krugman (and we, and many others) try endlessly to explain, austerity as a response to a Great Recession makes as much sense as bleeding a patient to "cure" him of disease. One might think that the fact that economists overwhelmingly agree that that austerity in such circumstances is criminally incompetent and the fact that the results of the "natural experiment" between (very modest) stimulus in the U.S. and the troika's infliction of austerity are obvious would lead the NYT reporters covering the EU to at least consider the possibility in their articles that austerity was the problem rather than the solution for the eurozone.

Unfortunately, the NYT reporters on the eurozone beat are made of sterner stuff -- they have proved immune to the facts, sound economic theory, and ridicule. There are two obvious truths to these reporters -- the crisis is caused by leftist policies and the solution is to embrace neo-liberal economic policies plus a good stiff dose of austerity. If that dose of austerity makes things worse the answer is to double the dose.

The article about Hollande faithfully follows this fantasy script. It contains one phrase about the idiocy of the troika inflicting austerity on the eurozone -- and even that passage is logically incoherent.

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"'The problem is that Hollande and Valls don't embody anything at all,' said the French economist Thomas Piketty, whose book 'Capital in the Twenty-First Century' explores social inequality in France and elsewhere. 'They are trying to make people believe that Germany is the only country responsible for the catastrophic austerity policy which has plunged the eurozone into stagnation.'

'But in truth,' he added, 'the problem is that they are scared of any progress in terms of policy and budgetary union at the eurozone level, which would yet be the only solution to get out of the crisis,' but was likely to require future trimming of the state to meet the European Union's requirements."

So, austerity is "catastrophic." One would think that would be a rather important point. Logically, it would lead to a discussion of the critical need for Hollande to lead the struggle to end the troika's "catastrophic austerity policy which has plunged the eurozone into stagnation." Actually, austerity plunged the eurozone into a second, gratuitous Great Recession, parts of the periphery into a second Great Depression, and Italy into a third Great Recession -- not "stagnation."

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William K Black , J.D., Ph.D. is Associate Professor of Law and Economics at the University of Missouri-Kansas City. Bill Black has testified before the Senate Agricultural Committee on the regulation of financial derivatives and House (more...)
 

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