Saturday, June 29, 2019

The Era of Big Government Being Over Is Over

Certainly, the way the Democratic presidential candidates are positioning themselves would suggest this. But this front-page article in the Wall Street Journal perhaps even more so. Under the title "Europe’s Struggling Political Parties Promise a Return to the Pre-Thatcherite Era", the article begins:
"To win voters lost to an anti-globalization backlash, Europe’s mainstream parties are going back to the 1970s.
In Germany, the U.K, Denmark, France and Spain, these parties are aiming to reverse decades of pro-market policy and promising greater state control of business and the economy, more welfare benefits, bigger pensions and higher taxes for corporations and the wealthy. Some have discussed nationalizations and expropriations.
It could add up to the biggest shift in economic policy on the continent in decades.
In Germany, Europe’s biggest economy, the government has increased social spending in a bid to stop the exodus of voters to antiestablishment, populist and special-interest parties. Reacting to pressure on both ends of the political spectrum, it passed the largest-ever budget last year.
“The zeitgeist of globalization and liberalization is over,” said Ralf Stegner, vice chairman of the 130-year-old Social Democratic Party, the junior partner in Chancellor Angela Merkel’s government coalition. “The state needs to become much more involved in key areas such as work, pensions and health care.”
The policies mark the end of an era in Europe that started four decades ago, with the ascent of former British Prime Minister Margaret Thatcher and her U.S. ally, President Ronald Reagan."
Good stuff. In all due modesty, I must also say that I did kind of predict this. From the concluding chapter of The Optimistic Leftist:
"[T]he political dynamic unleashed by right populism will actually contribute to its own demise. Right populism is distinguished by not only its nativist cultural attitudes but also by its economic populism and rejection of austerity economics. The National Front in France, for example, has become steadily more militant in its defense of social programs and resistance to spending cuts as it has become more popular. Other European right populist parties have followed a similar course. And in the US, Donald Trump’s successful capture of the Republican Presidential nomination was importantly driven by his rejection of standard Republican talking points on cutting government spending—especially on programs like Medicare and Social Security—and on tax breaks for the rich.
The competition this is creating for voters on the right will force more mainstream conservatives to back off their commitment to austerity economics and rediscover the virtues of some government programs and spending. And even on the left, the rise of right populism will undercut the political rationale for the “responsible” soft austerity that has inveigled so many European social democrats and which still has a presence within the American Democratic Party. When so many voters on the right are rejecting the need to cut government, it makes no political sense to stick with austerity as an economic program on the grounds that opposing it isolates the left. On the contrary, it is supporting austerity and failing to deliver growth that isolates the left. The left will eventually take this lesson to heart."
I guess I was just a bit before my time.
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To fend off populist insurgents, once-dominant parties are overthrowing decades of free-market economies for bigger spending, generous welfare and greater state control of business. It amounts to the biggest shift in economic policy on the continent in decades.

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