Is Paul Krugman Anti-European?

henningThe answer is no. In a recent blog post he has revealed the tactics – also employed in the US during the Bush years – that are at work here: if you attack a policy and a leading proponent of it – what he did with Olli Rehn and the EU’s austerity push – you get accused of of being against the wider idea (Europe). But Krugman made clear that:

As it happens, I’m very much pro-European; I consider the European project, the path of peace through prosperity and integration, one of the best things to have happened to humanity over the past century. I’ve seen the good work Europe has done in promoting democracy.

My problem isn’t with Europe, it’s with the bad policies that are ripping Europe apart, and with the officials who for whatever reason – intellectual inflexibility, ideological blinders, or, I suspect, sheer personal vanity, an unwillingness to admit that they were wrong – have refused to consider any modification of these policies despite years of disastrous results.

And the attempt of these officials to wrap themselves in the mantle of European unity is truly contemptible.

I happen to agree with a lot of things Paul Krugman writes but I don’t want to defend him per se. It is more important that the substance of his criticism is reinforced.

To be perfectly frank: the biggest threat to the European integration project is the economic policy course pushed by people like Olli Rehn. It is also a perfectly legitimate criticism to state that a lot of people (though not all) in Brussels are living in a bubble and are completely detached from what is happening on the ground in many European countries. And when election results show how dismissive people are of their approach, they feel deeply hurt and blame them for not seeing the good intentions and the big picture. There is no alternative anyway, right? What comes to mind is the famous question posed by Bertholt Brecht: ‘would it not be easier still for the government to dissolve the people and elect another?’

There has been a lot of talk about Europe’s democratic deficit. I am beginning to think that there is not just an issue in the governance construction but also in the way actors absorb democratic decisions into their actions. This looks like an entrenched cultural rather than just an institutional issue. This needs to change.

Does this kind of criticism make me anti-European? Of course not. I want Europe to work so the bits that don’t have to be identified and changed. Olli Rehn should better get used to this sort of criticism and think hard about it. He will hear a lot more of it from people he is supposed to serve.

  • http://www.facebook.com/wilf.tarquin Wilf Tarquin

    Everyone who’s been reading Krugman knows that he’s pro-europe, but very strongly anti-austerity.
    As for me, I’m torn. On one hand he’s of course right that austerity contracts the economy at the worst of times and that simple and effective Keynesianism suggests that one should instead spend… But on the other hand it’s hard to see how especially Greece would ever get their economy in order without selling off nationalized industries, raising retirement age, and ending lifetime employment (none of which Greece has done even now).

    • Tiago Diniz

      Wilf Tarquin.
      I actually have a question for you.
      What do countries gain by selling off their nationalised industries?
      Does it create any employment? (All it does is in most of the cases transfer income from the state to some private individuals, or unless you wish to privatise those non-profitable businesses no one want but are essential for any country and its people)
      Is the nationalisation of the UK railway system a success? (It costs the government more than it used to, and there are many other cases)
      What did Portugal gain by privatising its electricity companies? Short-term money? Is that all?
      That privatisation in particular creates no employment, and actually makes the society worse-off

  • http://www.Steven-Hill.com Steven Hill

    Thanks Henning. While I agree with you that Paul Krugman is certainly not anti-European, it’s also true that he is pretty ignorant of some basic realities regarding Europe. He has inappropriately applied a “one-size-fits-all” anti-austerity analysis to both the US and Europe, and yet that is an apples to oranges comparison because the US is a full-fledged fiscal, banking, transfer and political union, while Europe is not. Krugman’s European ignorance was fullly evident when he penned a 6000 word article in the New York Times Magazine titled “Can Europe Be Saved?” I rebutted that article for Social Europe Journal here, “Can Krugmanomics Be Saved?” http://www.social-europe.eu/2011/02/can-krugmanomics-be-saved/.

    The issue of austerity in Europe is complicated dramatically by the fact that the European “union” is still very much in formation. Should the Germans, Swedes, Dutch, etc. bail out the Italians, Greeks, Spanish, Irish and Portuguese? And should they do this on a regular basis, year after year, just as Californians, New Yorkers, Illinoisans and others do for those living in Mississippi, Alabama, etc.? That is a very controversial question, one that will not be settled easily or quickly. Nor should it — if Europe is going to launch a major redesign of political and economic institutions, it should be thought through carefully and deliberately. Indeed, our union in America is showing signs of extreme dysfunction specifically because some of the institutions and practices that were embedded into this union two centuries ago — see this excellent article in today’s NY Times about how an unrepresentative and anti-majoritarian Senate that favors low population, conservate states has given a Republican rump in the Senate (which represents barely a third of the nation) a veto over what Senators representing two-thirds of the country wants, http://www.nytimes.com/interactive/2013/03/11/us/politics/democracy-tested.html?_r=0#/#smallstate.

    Unfortunately, bad design can creep back to haunt you, and it is doing so today in the USA, just as a poorly designed eurozone is haunting Europe). Certainly Europe has taken some dramatic steps forward towards more of a union, but many more steps still must be taken. I previously outlined some of these dilemmas here: “Patience Europe, Patience” http://www.social-europe.eu/2011/07/patience-europe-patience-2/ and here: “Europe’s Earthquake” http://www.social-europe.eu/2012/10/europes-earthquake/

    Frankly, I don’t even find Krugman’s economic analysis of the US situation vis-à-vis austerity versus stimulus to be all that credible these days. In my view, his analysis relies on a false view of the US economy in the post-World War II era as it emerged from the Great Depression, which I outline here: “Stimulus vs. Austerity: An Unsettled Debate” http://www.social-europe.eu/2012/01/stimulus-vs-austerity-an-unsettled-debate/

    I find Paul Krugman most interesting and insightful these days as a POLITICAL analyst, particularly when he is shooting holes in Republican positions on many matters. But when it comes to economics, I find him to be too dogmatic and not aware enough of his own blind spots to be credible.

    Steven Hill

  • Tiago Diniz

    Wilf Tarquin.
    I actually have a question for you.
    What do countries gain by selling off their nationalised industries?
    Does it create any employment? (All it does is in most of the cases transfer income from the state to some private individuals, or unless you wish to privatise those non-profitable businesses no one want but are essential for any country and its people)
    Is the nationalisation of the UK railway system a success? (It costs the government more than it used to, and there are many other cases)
    What did Portugal gain by privatising its electricity companies? Short-term money? Is that all?
    That privatisation in particular creates no employment, and actually makes the society worse-off

  • Marti Masters

    Do any of you people writing all your opinions actually live in Europe? I lived here before the EU and some nations were truly miserable. Not to mention the time-consuming hassle of having to show your passport several times in one day as you travelled from Austria to Germany to Denmark. Having a common euro currency is not only easier for businesses, it’s a great boon to the consumer. I live in Finland now and I can buy products easily from other countries without having to use a currency rate exchanger (unless I need something from Sweden!). But apart from that, the EU has to rethink some of their basic agricultural laws. Farming conditions in the far north are vastly different than Spain, for example. If it costs Finland more to produce milk, does that mean the Finns should give up on dairy farming? Do I REALLY want to drink milk from Germany when Finland’s Valio employs my friends and neighbors?

    Finland and the Nordic countries have a very good social benefit system, good healthcare (no insurance premiums!), well-maintained infrastructure, no homeless people, no starving children,a and low crime. Is it because all the dullards got knocked out of the gene pool a long time ago – you know, if you didn’t bring in your crops on time or diligently build up your wood pile, you wouldn’t survive the winter? Obviously not, because the guys in the apartment two blocks down are unemployed, alcoholics, and live in state-subsidized housing. If my tax money supports them, I’m okay with that because that same benefit system helps disabled folks, unemployed people looking for work, provides meaningful job training, etc. Finns must be doing something right because university tuition is free and there’s lots of vocational colleges for the less academically gifted students to learn a trade.

    I think the Nordic countries have been very successful economically because they don’t have huge military budgets. The military is focused on defense and you don’t see Sweden, for example, plotting to overthrow a country like Iraq. Yet Finland participates in NATO missions and it was a Finnish general who convinced the EU that Kosovo should be made independent of Serbia because nothing else would solve the crisis.

    What those southern Eurpean countries need to do is study the Nordic Model of Egalitarian Democracy and Social Benefits. The model is a success. Finland is Europe’s Little Red Hen, the northern sister of Germany in terms of production, innovation, and economic stability. That would be a giant step in getting the disorganized, debit-ridden nations straightened out. A bit of common sense, work ethic, compassion, and living a frugal but enjoyable lifestyle.