The backlash against austerity measures forced on European governments including Ireland has finally manifested itself, with European leaders now falling over themselves to proclaim it is time for austerity to end.
It is about time leaders grasped the essential truth that saddling countries with massive debt, coupled with taxing more and cutting wages, does not lead anywhere except to economic ruin.
Exactly how the continent’s political leaders thought austerity was ever going to work by cutting incomes, raising taxes and hoping that economic activity would pick up could occupy a Ripley’s Believe it or Not exhibit.
The Germans, of course, led the way, with Frau Merkel adamant that everyone had to pay every penny back before she would loosen the purse strings.
One wonders where her country would be today if the Americans had adopted that attitude after World War II and demanded reparations from post-Hitler leaders.
Instead the U.S. conceived the Marshall Plan which generously forgave debt, ploughed $13 billion into modernization and employment projects, and transformed Germany within a generation form Europe’s biggest loser to its biggest winner.
The noted Belgian economic historian Herman Van der Wee concluded the Marshall Plan was a "great success.”
"It gave a new impetus to reconstruction in Western Europe and made a decisive contribution to the renewal of the transport system, the modernization of industrial and agricultural equipment, the resumption of normal production, the raising of productivity, and the facilitating of intra-European trade,” he said.
Those words should be made available to Frau Merkel at the first opportunity, as $13 billion was dirt cheap as the price to restore Western Europe.
Merkel should have been capable of such foresight herself but preferred to follow the example of the disastrous Versailles Treaty which saddled Germany with debt after the First World War and led directly to the second.
Ireland, of course was regularly cited, most recently this week in Bloomberg News, as an example of a country where austerity was working.
That’s only if you discount the massive resumption in emigration which if it had not occurred would show Ireland’s unemployment level to be over 20 percent than the already sky high 15 percent.
No, austerity is not working in Ireland, and the sooner a reflation plan is launched with debt forgiven and tax cuts rather than impositions, then the sooner the economy can begin to recover.
It is time the unelected gnomes in Brussels and elsewhere rethought their economic strategies and made common sense decisions.