From FPIF
If Europe's economic situation worsens fails to improve, the far right will be waiting to pounce again with their easy answers: nationalism and racism.
The good news out of Europe is that Marine Le Pen's neo-Nazi National Front took a beating in the May 7 French presidential election. The bad news is that the program of the winner, Emmanuel Macron, might put Le Pen back in the running six years from now.
Macron pledges to cut 120,000 public jobs, reduce spending by 60 billion Euros, jettison the 35-hour workweek, raise the retirement age, weaken unions' negotiating strength, and cut corporate taxes. It's a program that is unlikely to revive the morbid French economy, but it will certainly worsen the plight of jobless youth and seniors -- and hand the National Front ammunition for the 2022 election.
Europe is enmeshed in an economic crisis brought on by the structure of the European Union on one hand and the nature of capitalism on the other. That convergence has derailed economies throughout the 27-member trade group, impoverished tens of millions, and helped conjure up racist, right-wing movements that aren't likely to be deterred by a few election losses.
Obscuring the roots of this crisis is the myth that debt is the result of spendthrift behavior, the economic sluggishness a consequence of high taxes, and rigid labor rules that handcuff businesses and inhibit growth. German Chancellor Angela Merkel is fond of saying that countries should behave like a "frugal Swabian house frau."
Is Merkel's observation based on a myth or is it allegory? While an allegory is the "figurative treatment of one subject under the guise of another," a myth is "an unproven or false collective belief that is used to justify a social institution." While the difference may seem pedantic, it's anything but.
And because myths are particularly hard to dislodge once they become widespread, it's essential to unpack exactly how the EU got itself in trouble.
The Nested Crises of Capitalism
Part of the problem is capitalism itself, an economic system that generates both enormous productive capacity and economic chaos.
Capitalism is afflicted by two kinds of crisis: cyclical and structural. The cyclical ones -- recessions -- tend to occur pretty much every 10 years. The U.S. and Europe went through recessions in the early 1980s, early 1990s, and the first years of 2000. They are painful and unpleasant but generally over in about 18 months.
Every 40 or 50 years, however, there's a structural crisis like the 1929 crash and the ensuing Great Depression.
When a structural crisis hits, capitalism re-organizes itself. In the 1930s, the solution was to create a redistributive capitalism that used the power of the state to prime the economic pump and alleviate some of the chaos that accompanies such re-organizations. Unemployment insurance and Social Security took some of the edge off the pain, public works absorbed some of the jobless, and unions got the right to organize and strike.
Capitalism went through another structural crisis at the end of the 1970s, and it is the fallout from that one that currently plagues the EU -- and the U.S. Using the 1979-1981 recession as a screen, taxes on corporations and the wealthy were slashed, business and finance de-regulated, public institutions privatized, and unions assaulted. Capitalism also went global.
Globalism did spur enormous growth, but with a deep flaw. With unions weakened -- in part by direct attack, in part by the enormous pool of cheap labor now available in the developing world -- wages either stagnated or fell in Europe and the U.S., and the gap between rich and poor widened. A 2015 study by Oxfam found that 1 percent of humanity now controls over half the world's wealth, and the top 20 percent owns 94.5 percent. In short, 80 percent of the world gets by on just 5.5 percent of the world's wealth.
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