Europeans have rejected austerity measures
Recent elections proved that a great majority of the European people are against the austerity measures, imposed by their governments in spite of widespread unemployment and poverty in many countries. Months ago EU leaders agreed on a balanced budget rule to resolve the sovereign debt problems. They also promised to focus on creating jobs and growth. However, it is now understood that they could not convince the people how they would manage to realize those contradictory targets together. Of course, they were aware that austerity measures were unpopular and carried a risk for their political future, but they also knew that they were necessary for the recovery of the European economy.
As everybody knows, austerity measures simply mean cutting government expenditure and raising taxes in order to control budget deficit and public debts. The implementation needs the cutting of wages and salaries in the public sector, trimming social aid programmes, as well as raising taxes and imposing new ones.These are good for restoring macroeconomic balances, but not so good for individuals and in the end they may not also be good for the economy, despite the fact that this is targeted at the beginning.
The reason is obvious. There are social and political limits to implementing austerity measures. Nowadays in evey western country , the gap between the living conditions of the rich and poor is growing continiously. This means that the unjust income distribution is becoming a serious social and political problem. The rise of the left and also the extreme right during the recent elections can partly be explained by this fact.
The new governments mainly formed by the political parties on the left front can not immediately abandon the implementation of all austerity measures, although they promised to do that during their election campaigns. However, it will a very difficult task for those governments to decide on which level of the austerity measures might be tolerated now by the people who originally supported them. To use a method of trial and error is risky, both for the national economies and also for their political future. And they know well that it is generally fruitless to explain to people that quitting all austerity measures will be more harmful than the present troubles and difficulties. Previous governments tried that and lost the elections.
To narrow the budget deficit and to pay debts in time, beyond austerity measures, reasonable growth is also necessary. When victors of the recent elections defended that idea they were right. However, they did not explain how they could manage to stimulate growth, even if they quit all austerity measures for a time. For reasonable growth, reasonable domestic and foreign demand is also needed. As export markets are generally countries that are struggling with the same problems, a reasonable foreign demand is out of the question now.
It must be accepted that even if all austerity measures are abolished and governments turned to ease their monetary and fiscal policies, the creation of a strong domestic demand will take time, maybe even years. The obvious example is the United States. Inspite of all the efforts of the Federal Reserve Bank and the Treasury, its domestic demand is still not strong after so many years. Moreover, the present administration has paid less attention to taming the budget and the current account deficit in an election year. In addition, there has been no foreign pressure on U.S. authorities like most of the European governments face. However, the economic recovery is still very slow. Unfortunately new European governments will not have the luxury that the U.S. administration has had. It is almost impossible for them to forget about deficits and debts.
One last note: The people who suffer most during economic crises generally become ready to accept the accusation of social, political and economic systems and regimes instead of governments and institutions, without taking into condsideration their human mistakes. This time, western capitalism was declared the main culprit by certain political parties during election campaigns, and this declaration was accepted by the voters who are suffering most. They almost did not care about the negligence of the ethical rules besides the ignorance, inability, selfishness and short sightedness of some authorities. The problem of capitalism is now the attempt of the victorious political parties to introduce all these defects as natural and basic elements of the system, and the readiness of a significant part of the European people to believe this.