So, it's not all bad news in the world. Some sanity prevails when real-life economics, not blather about the glories of the "free market", triumphs and one can hope for a bit of truthiness to spread.
First, the good news:
President François Hollande’s Socialists and their allies won an absolute majority in runoff parliamentary elections on Sunday, strengthening the hand of Mr. Hollande both at home and in Europe, where he is pressing for less austerity and more growth in the face of a deepening recession.
Here, particularly, is why this election helps with the messaging and framing of the worldwide crisis:
Mr. Hollande is pressing Germany to concentrate more on growth than on fiscal discipline and austerity, but his plans rely more on putting existing funds to other uses and passing a financial transaction tax than on increasing spending.
At home, Mr. Hollande has campaigned on increasing spending on social programs and education, with higher taxes on corporations and the wealthy to come later. But France has also promised to reduce its budget deficit to 4.5 percent of its gross domestic product this year and to 3 percent for 2013. In a slow economy, that will require tax increases and spending cuts, and the finance minister, Pierre Moscovici, has promised to do what is necessary to reach those targets. “France has made commitments to its partners to reduce its deficit,” he said last week. “We will keep to those commitments.”
So, the positive: it has long been, in my view, entirely idiotic for governments--including the Obama Administration--to focus on "fiscal discipline" (and, to point to one of the dumbest ideas,
the president's convening of the "bi-partisan" deficit and debt Commission) , at a time when the most pressing crisis is deep unemployment and under-employment. What we need to do is spend MORE money, not less.
And a lot of that can be underwritten with a financial transactions tax--I've covered that here. My own view is that France does not need to spend an iota of energy on reducing the budget deficit--pour money into jobs. Hopefully, the focus will be on spending more money and taxing the bankers.
And maybe the Administration in the US will learn.