Politico’s Ben White has a couple items in this morning’s Morning Money about the French elections and expected coming victory of Socialist candidate Francois Hollande. Not shockingly, financial elites are getting their panties in a twist that Hollande, who is running on a pro-growth platform that would roll back Sarkozy’s austerity agenda and attempt to stimulate the economy, will bring about the end of the world. Because obviously austerity and cutting deficits are more important than having functioning economies and people earning money that they can then spend on stuff.
White quotes one financial analyst who basically thinks that the likely coming defeats of European governments which enacted austerity measures will not actually spell the end of these austerity measures. White also cites an anonymous administration official as saying:
Hollande’s campaign rhetoric on austerity agreements may not translate into governing actions. Even if they do, the official expects Hollande to eventually come to some kind of understanding with German Chancellor Angela Merkel – who faces her own re-election campaign next year – on an approach that would moderate the short-term impact of austerity measures designed to drop annual euro zone country deficits to no more than 3 percent of GDP. There does not seem to be any high-level panic that a Hollande win could throw Europe deeper into crisis.
On the one hand, it’s good that the administration isn’t buying into the freak out that a Hollande victory might cause greater turmoil in Europe. On the other hand, the administration knows a few things about not living up to campaign promises and is surely able to speak to this with confidence and accuracy.
What will be particularly interesting to watch in coming weeks and months is how the US political and financial press comes to terms with the fact that austerity has utterly failed in Europe, damaging the economies and causing real suffering in each country that has enacted it, from France and Spain to England, Greece, and Ireland. The failures of these policy decision to improve economies and make peoples’ lives better is now begetting their political consequences, namely tossing out whoever enacted them and replacing political leadership with people who will oppose austerity and pursue growth instead.
In a functional political debate, this should be reflected in US policy discussions and dissuade Democrats from pursuing austerity, while pundits decry the sophistry behind the pro-austerity arguments. Of course that’s not what we have here and as a result, I expect more panicking and evidence-free condemnations of France than humility about both political parties’ pursuit of dangerous, failed ideas.