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Matt Browne

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Romney's Own Greek Tragedy: Austerity Isn't Working!

Posted: 01/18/12 11:40 AM ET

While Mitt Romney may be trying to frighten American's into believing President Obama will turn the United States into a European socialist dystopia, it's his own economic vision they should be most afraid of.

In recent weeks, Mitt Romney has been malevolently arguing that a second term for President Obama will lead the United States into a financial crisis similar to the one faced by Greece and Italy. Lumping all European countries together, and offering the current Euro crisis as evidence of inherent weakness in all Europe social models, Romney has also accused the president of siding with Europeans, and pursuing the most anti-business agenda in generations.

While this makes for good populist politics, it would lead to terrible policy should Romney ever become president.

The economic situation of United States is incomparable to that of Greece and Italy. The U.S. has a far more dynamic economy, a sounder tax base, does not face the problems of an aging society, and -- perhaps most importantly -- can indirectly self-finance with the Federal Reserve buying Treasury bonds on the secondary market. So, while the long-term U.S. budget does need to be addressed, austerity is not the correct response to achieving this.

Indeed, if Romney had cared to look, national economies across Europe are faring very differently in the current global crisis. Germany, as I have noted elsewhere, is witnessing record lows in unemployment and its manufacturing sector is booming, an achievement that has been achieved with the help of -- not in spite of -- a generous social safety net.

Britain, however, is already in the grip of a double-dip recession. The Centre for Economics and Business Research report released last week points to negative GDP growth in final quarter of 2011 and first quarter of 2012. Indeed, the British economy is not predicted to pick up for at least another year, and according to Ernst & Young, unemployment will continue to rise due to further public sector redundancies and private sector sclerosis. Indeed, with private sector recruitment on hold, public sector redundancies are now forecast to increase unemployment levels to just shy of 3 million people early next year -- representing over 9 percent of the British workforce.

The British example is instructive for American readers. The British economy is structurally closer to the U.S. than other European nations', and David Cameron's austerity programs -- drastic cuts in government spending, employees, and social provision -- are precisely the policies Mitt Romney is advocating for America. Unfortunately, for Romney, even the International Monetary Fund and World Bank believe these have failed. Driving the economy back into recession while simultaneously risking increases in the size of the budget deficit, as President Clinton warned last year.

Ancient Greek tragedies commonly employed a hidden stage that rolled out to display the aftermath of a violent event that happened out of sight, one that reveals a profound truth to the audience. Romney's jingoistic attempt to vilify Europe may well focus American attention on the real lessons from the Old Continent. Progressives should ensure that it does.

If they do, attempting to profit politically from Greece's tragedy may just be Romney's undoing!

* I would like to thank Emma Ellis for help in researching this article.

 

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