Crisis of the Eurocrats

The European project is in deep trouble. The Continent still has peace, but it’s falling short on prosperity and, in a subtler way, democracy.

Comments: 218

  1. How cruel to blame the Euro!
    The fault lies with Merkel, you know,
    By now it is clear
    Simply too austere,
    The Keynesian route would not go.

    The Far Right rears its ugly head,
    Know-Nothingism isn't dead,
    Will the Euro prevail?
    Rightist critics fail,
    Have reason & comity fled?

  2. 'The fault lies with Merkel, you know,'

    No - the fault lies with Micky Mouse!

    And for such simplistic and stupid statements from BOTH of us - I blame Anglo-American economists too -
    The amount of nonsense they have written during the Euro crisis makes it understandable that even on a 'economic' blog you can read sill stuff like ours!

  3. "No - the fault lies with Micky Mouse!"

    Steady on! Larry Eisenberg is not wrong.

    Many economically literate people believe that the fault *does* lie with Muti Merkel and the Bundesbank-like ECB. Some sound reasons for so believing: (1) Germany's annual trade surplus is reflected in an annual trade deficit among its European trading partners. (2) Productivity differences among European member states are too large for a single currency area to succeed. (3) Successful single currency areas invariably have transfer payment mechanisms so that wealthy regions can subsidize poorer regions. The US is an example, where California and the Northeast subsidize the South decade after decade. (4) Germany's anti-inflation mania is making debt more and more onerous now that deflation in Europe is on the cards.

    Mickey Mouse has nothing to do with it!

  4. 'Mickey Mouse has nothing to do with it!'

    Okay - then Uncle Scrooge?
    Because - WHO in the world is this sad sack 'Mutti' compared to the richest man in the world who can with the help of his Geithner destroy any economy he wants -(or not) - and then all kind of 'Muttis' are struggling with cleaning up the pieces!

  5. "Modern Europe is built on a noble idea, but that idea needs more defenders."

    What Professor Krugman does here is offer a well laid-out argument. But, as someone who was raised in America and in Europe, I differ in its explanations and posit that modern Europe, like America, is built on the rotten foundation of supremacy. While America was physically built on the labor of slaves, Europe invented, promoted, and profited from slavery past the time it no longer actively engaged in activities to support it. Europe, at its core, still sees itself as a collection of superior cultures, with superior sub-cultures within it.

    The resurgence of rightist groups in these times is a different incarnation of the same old fears and responses. France's Jews are leaving en-masse today, after waves of antisemitic activity, with violence attached. Antisemitism is rising in Europe, including in the East and Turkey. Attaturk's Turkey is far more European than Turkey has ever been before in history. After the terrible mining incident, pro-Erdogan Hurriyet was quick to blame Jews for the mismanagement that led to the recent mining accident. Antisemitism is only one kind of prejudice. Europe has been full of other kinds.

    A society that operates under the assumption that some people are better than others is a sick society. We will achieve nobility when we resolve to rid ourselves of the sickness that is accepting and believing that there are others who are lesser than ourselves for any reason.

  6. Some related reading:

    From David Frum's Forum: "It’s Hamilton vs. Jefferson All Over Again"

    "When General Lee handed Ulysses S. Grant his surrender and my ancestors went home in defeat, there was reason to believe that one of the great unresolved conflicts over the meaning of the American experiment had been laid to a bloody rest.

    "I’m not talking about slavery, and it did not in fact prove to be the end. The most important original argument over American’s identity was best encapsulated in the competing visions of Thomas Jefferson and Alexander Hamilton."

    Forbes: "The Messy Link Between Slave Owners and Modern Management"

    Ta-Nehisi Coates: "The Case for Reparations"
    "Two hundred fifty years of slavery. Ninety years of Jim Crow. Sixty years of separate but equal. Thirty-five years of racist housing policy. Until we reckon with our compounding moral debts, America will never be whole."

    Algemeiner: "Jews Implicated by Pro-Erdoğan Turkish Newspaper for Coal Mine Disaster"

  7. AND please - you as one of the most reasonable commenters here - do not believe in this myth of the sudden rise of the European right wingers. There always was about the same amount of a right wing fringe in Europe - and each time the dough got short it flared up -(like the NDP in Germany some time agö) - BUT the fact remains that a contraire to the US the right wing fringe in Europe is more or less powerless and it made me literally sick to see the ugly Pen on the title of the American Time - as if it would be a realisric challenge.

  8. @PieceOfCake

    Trust me, I've never been under any illusions that the right wing completely disappeared in Europe during any given period of time. In good times, the pot simmers. In bad times, the pot boils. At this point in time, barring someone turning down the flame, the pot is about to boil.

  9. The unification of Europe is foremost a political , not economic , project. That is why it is still holding together in spite of Paul's prediction that the Euro would fail , and in 2012 , that Greece would exit the Euro within 12 month .

    As to its likely future prospects diagnosis should be left to political scientists .

  10. One of the biggest causes of the Great War was the lack of living memory of war's pervasive horror. Even those who were alive during the war of 1870 saw a small scale and limited event.

    The rise of fascism predated the Great Depression, as European capitals were filled with legless soldiers and grieving widows, and currency was delivered in wheelbarrows in Germany. Their reality became incomprehensible and horrifying, a void filled by goose stepping fascists all over the Continent.

    The situation is different now. The vast majority of Europeans have remained calm in the face of stubborn unemployment and a steady state future. Fortunately for them- unlike we Americans- there is a strong safety net, and starvation and homelessness are rare.

    America's economy shows more strength, but we are now the ones with a dark side, including growing ignorance, denial of basic science, and bizarre religious beliefs, including carrying pistols into church services.

    America is more likely to blow up than Europe, except that our lunatics are not called fascists.

    What both regions must learn to develop is a steady state economy, and even our best economic minds- such as you, Paul- must throw out all of your training and think in terms of a steady state economy. That means durable and useful consumer goods, and no expectation of even a 3% growth rate. Otherwise, the world burns, and its creatures go down with it.

  11. I couldn't have said it better. Instead of focusing on the rise of fascism in Europe, Americans need to wake up and smell the fascist coffee (or tea) brewing in their own kitchen. Give me Europe any day.

  12. We also have funneled investment capital abroad to low wage countries -- in our case China, India, Bangladesh, etc. As a result we have chronic unemployment amongst our former factory workers and we have become the world's prime debtor. Once we were the world's prime lender and the proud producer of factory produced consumer goods that dazzled the world. Now nothing on our retail shelves was made here. We have become a helpless giant in the consumer sphere. Instead we make only expensive weapons that, along with our young people, are employed in counterproductive Asian wars. The Europeans at least have advance beyond that.

  13. Maybe the struggle going on among EU members and the various parties is really a fight they want to have anyway and the economic policy aspect is just the particular form that struggle happens to be taking this time around. If we are seeing familiar divisions and frictions, maybe those are the dog and not the tail? Which is not to say the issues can't be argued as if they were about economic policy, but if the problem is neither about expertise nor about ideology but rather about something pettier and more base, it probably won't go away completely even if prosperity returns and the manifestations of the divisions diminish.

  14. Governments and legal systems exist primarily to protect private property - even collective ideology is about establishing the ownership of property.
    People, in general, find that magnanimity comes more easily when their basic needs are securely met, which requires employment. The economic situation is always the major underlying factor when it comes to political dissent, and aside from the data collection aspect, economics is all about ideology.

  15. Dr. Krugman I know little about the National Front but I do know that you would have had to be living in a vacuum since 2007 to not believe that the" American and European financial oligarchy" have been running the world and profiting handsomely in doing so these past years, with little regard for the welfare of the rest of us; and your insistence that low interest rates and easy money are the solution have benefited only the wealthy while the rest of us must live with the big lie of no inflation and an ever shrinking ability to get by: so why would anyone be surprised at the anger in Europe, their middle class much like our own; has been eviscerated by globalization and financiers of all stripes.

  16. 'but I do know that you would have had to be living in a vacuum since 2007 to not believe that the" American and European financial oligarchy" have been running the world'

    or let's call it the 'Geithner Illusion'?

  17. Dr. Krugman has not insisted that 'low interest rates and easy money are the solution". HOWEVER - You are absolutely correct on the rest of it! The difference is that the EU has more political parties and more parlimentarian forms of govt. So the people have more party choices. They also have the experience of revolution - unlike us. But make no mistake: the oligarchs are running this country, those countries, and the rest of the world.

  18. I hear this talk of, "running governments like businesses". But the reality is they run them like corporations. Therefore the rich, powerful, economic sectors, like oil and banking, get prime access. And what are they doing with this access is to have government protect them from their mistakes and allow them monopolies in their individual fields, disregarding the fate it has on the people. The first world countries/governments have over the last 40-50 years haven been infiltrated by these powers and put themselves ahead of society. Every once in awhile, society speaks, and they squirt a little grease, but the reality is they protect themselves against the people and fairness.
    This has to change or radical forces will come into play. I like the example in Asimov's Foundation Series, the "Mule" character. A person with immense power twisting the Societal Principles on their head. It's scary for our democracy to be so close to the edge, when it obviously shouldn't be.

  19. Perhaps Paul, your are having trouble understanding European situation because it's not really, at its core, an economic problem subject to rational exploration. Likewise the Republican resistance isn't really about the deficit.

    The more I look at it, the more it seems to me to be, at its core, an US versus THEM struggle. An American president with a Kenyan parent. A Europe with loosened borders (for ease of trade) is now faced with growing numbers of non-nationals within borders. Cheap labor brought in by business who also bring their foreign culture. Republicans who won't change immigration laws but will hire undocumented workers under the table. Entitlements paid to *them*. Urban versus rural. Jobs exported and goods imported. We can't do anything about global warming because it's their fault and they stand to have economic gains.

    Until we all recognise that we are all aboard Spaceship Earth as equal passengers, we won't come together do do what is needed. We need the Overview Effect and soon!

  20. Unfortunately, as the author of the manual for operating spaceship earth so aptly put it, you need a society capable of reading it and implementing it. Such conditions do not obtain in either Europe or our own country. We need to look at transforming human beings

  21. In many ways the European elite deserves to lose to the right wing. They have sacrificed the economic future of millions of Europeans to the fight to save the Euro and the battle against non-existent inflation. They have condemned Europe to stagnation and decline. The European Central Bank charter speaks only of containing inflation, and says nothing about unemployment.

    Hopefully the right wing victories in the May election will persuade Europe's leaders that fighting unemployment is more important than fighting inflation or saving the Euro. The European Union did very well before the introduction of the Euro and it could survive the demise of the single currency. At very least the ECB could do a program of quantitative easing as the Federal Reserve did in the US.

    However I am not optimistic. Europe seems determined to repeat the mistakes of the 1930s. Fortunately, this generation of right wing nationalists seems to be a lot nicer than the Nazis were, so maybe things will go better this time. However, taking the chance that history might repeat itself is dumb.

  22. 'In many ways the European elite deserves to lose to the right wing.

    It NEVER will happen - and it also NEVER will happen - that reasonable and sane European politicians will pander to the wishes of the idiots - in the same way American politicians listened to the Rea partiers!

  23. Mussolini. Franco. Hitler. The Greek colonels. Incompetent European elites have lost to right wingers many times.

  24. 'European elites have lost to right wingers many times.'

    That's why Europe learned it's lesson and once bitter enemies like France and Germany are friends - and that's why the European right is irrelevant!

  25. 'Modern Europe is built on a noble idea, but that idea needs more defenders.'

    Yes! - Like in the Past also from Liberal Anglo-American economists. And it is no help when 'right-wing extremists hostility' is always emphasized in such a unrealistic way.
    Compared to the US, where idots like the Tea Partier have real influence the right wing in Europe still will remain on the powerless fringe.

    And the sometimes stupid Anti-Americanism is more or less a reaction for 'serving the American financial oligarchy.'

    AND please stop using this funny 'Elite argument'.
    You don't have to be 'Elite' - to believe in the 'European project' -(with all it's understandable faults) - and the deep irony lies in the fact that one of the most influental enemies of this project hasn't been the European 'right wing' but Anglo-Saxon economists!

  26. Pogroms and wars have raged, as people will follow vacant leaders and condemn everyone to a brutal existence so that they can feel powerful. Europe is divided by racial hatred and distrust ,which makes this an easy play. Watch the Balkans, both the EU parts and those that are not.

    Another nail in the coffin is being driven in September, as independent Scotland if the people so elect. Perspective is everything in our understanding. If the EU and its Euro survive, it will be because we will it to do so through our level headed rejection of the similar neo-fascist elements that hold too much power in the states. Elections are being held all across Europe, and here in the US. There are many types of elections and most have more to with personal power and little relation to democracy.

    People elect to give in to the easy thoughtless solutions and blame others for their problems. The preposterous thing is with all our myths about democracy and divine elections that so few people here go to the polls at all. We must go to and reject the tainted messages of the reactionary right and give a new perspective to our democracy, upholding our noble experiment.

  27. Dr. K,

    Think how much worse it would be without the EU Central Bank. Europe has its social structural problems that will cause fissures in the society but fundamentally the principal objective of the EU member governments is to promote full employment. Prolonged under & unemployment has a corrosive impact on society and the corrosion must be stopped if the promise of the EU idea is to be realized.

    As you have identified, austerity, has been an unwise fiscal policy. The extremely wealthy of Europe, much of it based on inherited wealth, cannot be allowed to continue to set policy in their own interests any more than it can in the United States. It almost always ends in a horror story for the society.

    Essentially capitalism must be reinvented to permit greater social mobility and reward for creativity and entrepreneurial prowess. Scandinavia, France, Switzerland & Germany appear to be have a handle on things and there are probably others. Your analysis seems to correspond to what you have been saying for years that these problems can be solved if we pay attention to equality of opportunity and jobs. If stimulus is required, so be it, but it is a mistake to not act to confront the growing threat of deflation, both in the EU community and here.

    I see potential for a better life in Europe for all income strata. But the creative minds and competitive spirit of its people must be unbound.

    Ms. Regas' report of antisemitic activity is not a good omen.

  28. James, each time you mention Europe in your letter you could substitute the USA and nothing is different.

    Wherever prejudice and ideology become policy, e.g.; Austerity, reason goes out the window.

  29. Dear Prof. Krugman,

    Thank you for your excellent analysis on the current European and US economic and political situation. Your opinions are always backed up by facts despite the growing neoliberalism that tends to dominate mainstream media.

    I was hoping you could possibly broaden you focus and do some analysis on Australia. Often held up by some as a beacon of good management and fiscal policy. The new current government is facing scrutiny after introducing Austerity measures despite low debt levels (13%) and slightly lower than average growth forecasts.

    Im sure you could bring some important and insightful analysis, and that people in Australia would be willing to listen.

    On another note, having lived in Europe for many years the current situation there is very depressing indeed. Not only is unemployment way too high due to bad national and EU policy but there seems to be no end in sight. the news is a constant stream of negativity and as mentioned in the article Right wing groups are using this as an opportunity to gain power and influence. I am sure an economic recovery would fix this... but the GFC has lasted longer than any one imagined.

  30. Thomas,

    Read Bill Mitchell's blog for excellent coverage of Australia issues. Prof. Mitchell also has a book on the EU underway which promises to be very good reading once in print.

  31. I'm sorry, but I am confused. Is Europe perfect, as often alleged here (by numerous expats and Euro-wannabes) OR is Europe a mess?

    Does Europe have high unemployment (compared to the US) or low unemployment? Since Europe has very lux unemployment benefits, including lifetime "dole" income -- why would anyone care about being unemployed anyhow? Free health care, free day care, free college -- those are the things Americans work to afford. And in Europe, they are FREE. So why work?

    How can Europe have ANY reactionary conservative groups, when they all live in this amazing paradise of free "everything"? It can't be high taxes. It can't be unemployment. So what is it?

  32. "How can Europe have ANY reactionary conservative groups [...]"

    Simple: our reactionaries are far to the left of your reactionaries.

  33. This is how the world works whether in Europe or the U.S. This is an old story but rest assured, the principals haven't changed:

    "Donald Trump has become infamous for telling business mogul wannabes "You're fired!" every week on prime time television. Yet, after Trump's casino operations filed bankruptcy for the second time this past November, many have wondered if it isn't time for board members to give Trump a pink slip. Despite the company failings, Trump will remain as chairman and CEO and continue to collect a $2 million dollar paycheck. does a CEO decide to file for bankruptcy twice and still come out at the top of the heap?

    "First, Trump doesn't get personally involved. ...Hence, (the first time) when his casino fell into about a billion dollars in debt, the corporation filed for Chapter 11...

    "... This past November, Donald Trump filed for Chapter 11 a second time. Again, Trump asked to be able to restructure his company's debt and overhaul its aging casinos ... (listing) $1.3 billion in debt and $1.5 million in assets."

    You see, if any small guy misses payments creditors are all over us. The same is true in Europe: creditors don't allow countries to declare bankruptcy the way that the creditor class does. The small guy has to suffer to pay the wealthy investment and interest.

    P. I. I. & G. should have done what Donald Trump and Iceland did.

    Instead, welcome to Germany, circa 1930... Come this Fall's elections, our Congress may well mirror Europe.

  34. "bad policy. European leaders insisted and continue to insist, in the teeth of the evidence, that the crisis is all about fiscal irresponsibility, and have imposed savage austerity that makes a terrible situation worse."

    I am deeply suspicious of explanations that very smart people in the most important matters they handle are doing very stupid things, doing stupid things despite clear evidence it is stupid.

    Yes, everyone will make some mistakes. This sort of determined drive into the wrong answer is not just a mistake.

    I look instead for an explanation which shows how those making that policy are benefiting in some way they conceal behind the rhetoric that is so stupid.

    I see here that just as in the US, those who promote the foolishness in fact profit themselves, profit massively, from that policy.

    I conclude from that they are trying to do what they say they are trying to do. They are trying to do what they are actually doing -- enriching themselves at the expense of those who lose so much under these policies. This crisis is an opportunity for them to enrich themselves, and they are using it very well to do exactly that.

    This is not a mistake. It is exploitation. Some in Britain call the Conservatives "The Nasty Party." That is what this is.

    They can't be convinced they are making a mistake, because they are NOT making a mistake. They know exactly what they are doing, and they are succeeding -- for themselves.

  35. If they are as successful as they are trying to be, the result will be a repeat of the French Revolution, with the tumbrels and the guillotines. People who were "making it" by playing by the rules and then become disenfranchised are very dangerous people - and there will be a lot of them.

  36. @ Joe from Boston -- it will be very hard to repeat the French Revolution, when the people running this country have a vast military apparatus, the local police have been militarized, and the govt. spy apparatus can track your every move, collect your phone calls, emails, and bank records, and even view the videotape of your colonoscopy.

  37. Mr. Thomason, your comment produced an eye-opening reaction in me.

    Of course, the behavoir of what Dr. Krugman has been describing all these months as wrong-headed is indeed a relentless policy of subugation.

    I am grateful.

  38. About six years ago I was in a trip to Dublin, before everything collapsed financially. Both Dublin and Belfast was booming housing-wise, etc. We asked our cab driver if Ireland had any interest in reuniting with Northern Ireland and his response was "why would we want the headaches involved."

    The reality was and is that if the economy thrives and people can get ahead these problems don't exist. The IRA collapsed when their members got jobs and became apart of society.

    The poverty of the 1980's created the skinheads in the UK, the IRA while it goes back further still is nothing but a product of poverty. The National Front in France only has success has been because of lost jobs, blamed on foreign immigrants while it is really the off shoring of jobs by major corporations.

    The devil makes use of idle hands, while unemployment seems to be a taken for granted these days it is the real root to these problems. The oligarchs would have us return to the days of Charles Dickens and debtors prisons when the real reason for all of these problems is a lack of jobs and people trying to find a purpose in life with a system that doesn't care about anyone except billionaires.

  39. Well said Andy, well said.

  40. Brilliant! now, tell us how to create those jobs.

    Because none of the pundits on the right OR the left seem to have the foggiest idea. We had 8 years of Republicans and now 5.5 years into the Obama administration -- went from right wing to hard left -- and somehow, we still don't have those jobs. We haven't made even a token effort at creating jobs.

    Frankly, I do not even see IDEAS on the right OR the left about to create new jobs. Every previous idea tried as failed. We are out of ideas.

  41. It's a shame that you're missing the political underpinnings of the Republican movement in Ireland. To those who understand the situation there, your comments do provide some chuckles.

  42. As I see it, the primary problem is Nationalism. After WWII the leaders of Western Europe got together to try and prevent the continuation of ongoing wars that were the history of Europe.

    The task was to unify them to a common cause, to stop the constant intrusions into each others territory for some supposed aggression by the other country.

    Two ways to do this was to make open borders, and a common currency. The open border is widely accepted. You no longer have to stop at every border and show your papers. The idea is that everyone is a citizen of Europe.

    But the problem of national identity remains. Unlike the U.S. where we do have differences between the states, they are all governed by a common law, the Constitution, the European Union is not a union of states, but of individual countries, with their own laws, languages and customs. We have a common language, they do not. The citizens of the various countries do not want to follow the laws of the other countries.

    For instance the countries that are weaker economically resent the Germans, who are very conservative with their money. other countries do not want to beheld to their austerity. The extremists are the same as the the Tea Party here, they want things the way they were in the last century, the want to take back their imagined superiority. Many of them re still holding a grudge against Germany, which is the most stable state. Getting them to all agree is a Herculean task.

  43. True.

    However, this is how Germany was made from the money German states. It was a step-by-step process starting with a customs union. For a very long time the Kings and Princes remained. They kept their own "national" armies through WW1, although they were armed and trained as one and had second designations as German units. Other national institutions like railroads were the same.

    Italy and Spain have similar features in their history and in their current structure. Further back, so did France.

    The EU is set on a path that has been done before in Europe. Now is a phase, not the final product.

    Too much American commentary sees what is now as what it is meant to become. It is not. This is a way point. They know the method well. They've used it often. It can work. Yes, it can also fail.

  44. The problem is not nationalism, but envy.
    Germans like me are upset about french having a 35h work week and a retirement with 60, while greeks did retire even much earlier and got a pension which was 50% higher than the german average.
    As a german you hardly get a credit to buy a house, even if you got a solid well payed job, while in other countries every unskilled worker expects to own a condo with a pool - resulting in the lowest homer owner ratio in the whole EU.
    You can't call someone selfish if he blames you of an unbiased and unfunded advantage.

    Europeans are insanely jealous at social benefits in other countries, that's the real combustible for nationalism or austerity. And that does conceal the fact that most people don't care about nationalism and would prefer to live in harmony.

  45. If trends continue, we are headed the way of Europe, i.e. a loose confederation of groups of states along ideological lines.

  46. AND please - as somebody who has relatives in five European countries -(and the US) - this is a very sad and sorrow post - because it (again) doesn't focus on the real issue.

    Or - as another commenter already has mentioned: In Europe - and to a much, much bigger extent in the US - INEQUALITY is destroying societies - and in another twist of bitter irony - a lot of what dear Prof. calls 'Eurocrats' are fighting this destruction -(at least the Eurocrats on the left!) - and that a liberal economist is unable to see that - is truly sad and dissapointing!

  47. America believes it is morally superior to Europe as does Europe to America. In fact it seems that it is a large part of the human condition to believe in our personal moral superiority. We all come from the same roots as human beings. But our stubbornness to hold onto positions despite evidence that proves those positions harmful comes from our desire to prove ourselves superior. Our wars, economic and environmental crises as well as much of our poverty is born within our desire to be right at the expense of everything else. Economic systems become divorced from the needs of people. Illusion becomes the norm And how to take humane action is lost. My belief is that there is enough for everyone, but that our lack of wisdom and greed corrupts our ability to humanely share our wealth. Perhaps this seems off the target of the European economic situation, but we all share in our common humanity. To paraphrase, the answer lies not in our stars, but in ourselves.

  48. Americans tend to chide the Europeans for sacrificing their militaries on the alter of the Nanny State; but, in so doing, they altogether, though not unexpectedly, desert historical antecedent and context. James J Sheehan, who wrote the German volume--which chronologically precedes Gordon Craig's magnum opus--for the Oxford History of Modern Europe, has written a book, several years ago now, which helps solve what for some is apparently a puzzle: "Where Have All the Soldiers Gone?: The Transformation of Modern Europe." To him who utters such criticisms it is much recommended.

    The problems with Europe's odd, straightjacket-yet-catholic economic getup, problems which've been turned inside and out during inspection by everyone and his mother, are, as consensus has it, in-built. There have been strides toward emendations that may fix these, but not enough. It's often hard to cede sovereignty on anything (ask our Republicans), but retention of a viable, long-lasting euro model could require conceding quite a lot, if such be the objective.

    Of course, antidemocratic voices don't disappear in a thriving democracy. They're simply drowned out by the system's success (nothing succeeds like it). When failure takes hold, or perceived failure, the game changes. These forces then become the listened-to myth-makers--and the Scapegoater takes the day. Europe doesn't only need virtuosic technocrats, doesn't just need visionaries; it needs intra-system inspiration and effective communication.

  49. The nations of the EU need lower taxes and higher public spending in every category in order to spur economic activity and revive their moribund economies. When Europe's economic recovery becomes self-reinforcing, but no sooner, the EU countries can cut spending and raise taxes in order to pay down public debt and run balanced public budgets. Read Paul Samuelson or Professor Krugman if you fail to grasp the basic premise that in a time of private recession public spending alone can revive the economy; and when the economy revives public debt and deficits can be most safely put in order.

    Unfortunately, these countries have gone in the absolute opposite direction by slashing spending while raising taxes in order to pay down debt and cut deficits at the worst possible time. Because of the EU's wrong-headed austerity, Spain, Greece and Portugal are suffering from actual, ongoing Depressions. Italy and France are not doing much better. It is very disconcerting.

    It is tragic too. European austerity has precipitated widespread impoverishment, precarity, and desperation, providing fertile ground for the far-right racists, whose own nostrums of protectionism and national preference, if enacted, would make everything even worse.

  50. But...but...but....countless posters here opine that Europe is better off than the US and indeed, near to perfect. Everyone is rich, the safety net is strong, benefits are lavish, unemployment unknown and health care & college are completely free!

    And masses of Americans are frantically leaving here and emigrating to Europe! how do you explain that vs. your claim of high European unemployment? Which is it -- Krugman's "81% of French employed vs. 76% of Americans" or is it "Depression-era levels of unemployment in the EU" (uh, also Krugman)? Come on people -- it can't be both.

  51. The far right racists are a problem on both sides of the Atlantic. Globalization is leading to a very ugly place as we all race to the bottom.

  52. I agree with the public spending part, and with cutting taxes on working folks, but I submit that any society whose economic elite hoards trillions in cash (and that means every society on this planet) should not be borrowing funds, but simply taking them. We are not tenants on their estates, and we should not be paying them interest for our use of the common wealth.

  53. Poor performance eases the way for biases. A cloud of miasma leaves it difficult to tell when something is upside down. Unseen causes offer new opportunities for visible blame. Europe got it wrong.

    Its governments and their policies furthered the breakdown of peace. But if governments are inept, a belief system of conservatives, what about the vaulted private sectors, especially its large banks?

    The Times recently published: "More than two dozen traders on four continents have been placed on leave or fired as a result of internal investigations at several large financial institutions involved in foreign exchange trading, including Barclays, JPMorgan Chase and the Royal Bank of Scotland.

    Deutsche Bank, the largest player in the currency trading market, with a share of about 15 percent, and Citigroup have each fired employees as a result of their own investigations."

    The large, global private banks were engaged in manipulating currency. How much more difficult were things made by the economics of corruption?

  54. What makes you think that it's just "conservatives" who drool at the prospects of profiting illegitimately from a corrupt international banking system? Do you really think every high frequency trader frontrunning the markets is a Republican? Ever heard of Jon Corzine?

  55. Joe:

    What makes you think I refer to "just conservatives"? My only reference to conservatives is the well-established idea, accepted by conservatives and others, traced to Reagan's presidency, that conservatives believe big government to be inept. See the phrase: "a belief system of conservatives."

    Regular readers know I never stoop to "drool." I describe miasmas. I also don't discuss "prospects," preferring to cite verifiable facts (easily checked, using internet search!)

    Lastly, international currency trading manipulating the markets by the major international banks should not be confused or tied to "frontrunning markets," a very different form of trading with different targets: currency trading changes the price of everything, globally.

    (Side note: Corzine clearly was not a frontrunner--since he lost billions, and frontrunning is a selling strategy produces a small, high volume profit on every trade--see CBS' pop piece on 60 Minutes or read the new book that describes it.)

    Note again, in this comment above, I make no reference to party nor do I assign blame: I do ask that we consider the effect of the economics of corruption; that applies to numbers and thinking.

    I hope this helps to clear up any misperceptions.

  56. The anti-immigrant European tea partiers are less a threat to Europe than the austerians. Take a breath. The form-over-function European parliament will still have its centre-right and centre-left coalitions as the largest groupings with a dozen or so other party coalitions.

    Americans have two parties to choose between: the plutocrat conservatives (Dems) and the plutocrat bonkers party. Europeans have a panoply including a growing neo-Marxist left which is prepared to gut any emergent plutocrats. Which democracy is healthier?
    The current American legislative system is paralytic at the top while presenting crazy ideas through its body like the election of judges. Things can get done in Europe.

    European democracy is stronger because the idea of the citizen imbued with economic rights is stronger and the welfare state far stronger.
    Dr. Krugman just wrote a blog reporting that 81 per cent of prime-age French are working compared to 76 per cent of Americans.
    The U.S. leads in guns, mass poverty, the maltreatment of workers, and rejection of science.
    On all indices of worker conditions, the Europeans lead. Workers have rights, and are not disposable widgets for the hyper-wealthy.

    Elite is a French word and the European elite of Jean Monnet's vision has far more commitment to the broader public good than the plutocratic U.S. elite; the likes of the Kochs far more dangerous to democracy itself than all the national fronters outside of Hungary.

    Worry for America, not Europe.

  57. 'Worry for America, not Europe.'

    Nearly all the expats in Europe do!!

  58. "Worry for America, not Europe."
    We (expats) do, and very much, all the more as the contrasts are so stark and increasingly so. Locally we have to worry about growing minority extremes while the comparisons pale when looking at the broader US picture. We recently spent three months back home partly to plan our future return - that idea is fading very fast - my Dutch spouse says the US is still in the throes of adolescence. Europe has centuries of lessons learned, obviously in our times enough to avoid the warmongering pitfalls aka Iraq, its societal inclusion is a strength where our now passé tradition of community has devolved, resorting to one of club, ideally gated.

  59. I worry for both.

  60. Crediting the "European project" with keeping Europe's peace seems a little off. The peace was the precondition of the European project, and that peace was imposed on Europe by its devastation during the war and then the Cold War.

    And now, Europe's simply lost the habit of war. The world wars were led up to, and partly caused, by generations of European glorification of national military forces, which became proxies for each nation's sense of self-esteem. That's simply gone, even in Russia. Europeans wouldn't know how to get a war going even if they wanted to.

  61. While we in the U.S. have no problem invading and occupying country after country. Stay tuned for the Barack/Hillary attack on Russia, then the sequel against China.

  62. AND if the comments here returning back to the same old duoplay - 'Austerity against Keynianism' I'm going to scream -
    - and i understand - that with the American chaos and tragedy it might be welcome to moan about some 'others crisis' - but as another commenter already listed -(from 'stronger democracy' to better 'working conditions') -
    Europe should be THE example for the completely disfunctional US!

  63. I have lived in Austria for 50 years. This small country has health care, both private and national, for everyone. There is adequate unemployment insurance---the rate is the lowest in Europe: 4,5%---exports are good as is the balance of payments, women have paid leave to raise their children, it has a coalition government which works moderately well and is not dysfunctional, inflation is low but there are no signs of deflation, there is no death penalty, the judicial system is adequate....I could go on and on. The USA should have it so good! Different cultures, history and languages are considered an asset, not a divisive factor . Long live the EU!!

  64. The only thing dysfunctional about the US is the Right's constant drag on implementation of progrssive economic, social, and environmental policies as well as their appetite for war and foriegn military interventions that suck up the majority of our tax dollars.

  65. Krugman's alarmism in the opening paragraphs is unnecessary. Fortunately he quickly moves on to the surer ground of economics, which defines much of Europe's predicament.

    "The immediate problem is poor economic performance." This is not only exactly correct, but central.

    "The inherent problems of the euro have been aggravated by bad policy." Once again, spot on. The challenge the Far Right poses to the mainstream parties is to come up with a coherent response, most likely built around deeper economic integration within the euro zone. And then sell that policy prescription to voters by putting better economic statistics up on the board. Results count.

    "By closing ranks, the elite has in effect ensured that there are no moderate voices dissenting from policy orthodoxy." This seems to me to be an important fresh insight. The elite needs to reach out further for more thinking and put it into a cohesive sensible package.

    " ... the National Front in France, whose top candidate for the European Parliament denounces a “technocratic elite serving the American and European financial oligarchy.”" That also describes a lot of Elizabeth Warren supporters in the US, or at least me!

    Krugman's critique of the European elite is trenchant and correct. Europe is less about the "rise" of the Far Right and a lot more about the inadequacy of the center.

  66. "Poor Euuropean performance"? Maybe you should compare German, French and UK stock markets, all of which have run rings around the DJI for some years now.

  67. Most right-wing political leaders of the E.U. and American Republicans seem to be invested in failure, seemingly unable to let go of economic theories that demonstrably don’t work in practice. And now we are seeing movement by right-wing ideologues toward rejecting democratic values in America and Europe; and in favor of what? Corporatocracy and profit at ANY cost values?

    Doesn't it seem odd to want to undermine a 70 year-old post WWII European and American success story?

    What if there’s a picture we aren't seeing and only right-wing politicians, big banks, and multinational corporations see? Big banks amassed, cumulatively, several trillion dollars; American multinational corporations keep huge profits in off-shore banks; a global financial crisis virtually engineered by bankers and enabled by right-wing policies; and conservative political leaders of E.U. countries and in America have similar responses to the economic crisis.

    Easy to just pass it off as blind allegiance to an ideology; or Lemming-like behavior, and so forth. But this is too big to be so glib. The well-being of entire countries and their citizens is at stake.

    What if? Can we afford not to take a parallax view of patterns that seem fundamentally odd and destructive? What are possible alternative motivations to continue to drive a failed economic policy and undermine American and European democracy? Follow the money… where does it lead us?

  68. I think your commentary, particularly your second paragraph, hits at a deeply ironic problem in the U.S. (and perhaps Europe, as you indicated). It is this: the right's critique of America is a solution without a problem. We are beyond a doubt an enormously successful nation on almost every scale of measurement. Yet the right tells us that this success is threatened on all sides. Too much regulation. Too much concern about climate changes. Too much debt. Too much taken in taxes. Too much invested in the social safety net for the lowest income earners. Too much effort to help those who previously had no health insurance. Almost all of this is predicated on belief in future events which can't be fully predicted by anyone. Disaster awaits, they say, but where is it?

    If everything is so bad about what we are doing now, how did we get to be the largest, most successful single nation economy in the world? Working against these supposedly horrid impediments to business success, we somehow made it. Nonetheless, the right wants to tear down all of the pillars of that success based on their assumptions and little more.

    The right's critique appeals to people who are unhappy with their own lives, or who feel threatened by the potential rise of others, and then project these fears unto policies they don't really understand, using fouled metrics and misstatements about the national debt and relying on propaganda outlets pretending to be news sources.

  69. Great comment! The right-wing mentality seems to be poisoned by fear and a belief in scarcity...

  70. Why should be believe that the end of quantitative easing in the USA will end in anything but extremely bad economic news both for America and Europe? I don't see good times around the bend. Market indices in the US have been inflated by the fed. When they pop, investors will run for cover. Where then does that leave the purported economic recovery?

  71. Krugman's column is simplistic, focused too heavily on the economic, especially macroeconomic, aspects of the situation.

    That said, the column could as well have been written about the United States. Instead of nations blaming Brussels for their problems, we have states blaming Washington. Instead of parties and candidates for the European Parliament running on platforms to dismantle most of its and the executive bureaucracies' power, we have parties and candidates running for Congress to dismantle its and the executive bureaucracies' power.

    In both, faith in the ability of the central government to solve problems has plummeted, as has faith in the institutions themselves. In both, nativist right-wing parties are seeking to prosper by promoting division and sectarian views. In both, advocates of central power are devoid of ideas about (as opposed to affirmations that we should) get from "here" to "there." In both, there is general consensus across political views that officeholders at the central level are so enraptured of the forest that they ignore the health of individual trees.

    To a large extent, the entire process reflects the current world-wide struggle between forces of unification, such as globalization, Al Qaeda, the International Court, and the internet with forces of decentralization such as secession movements i(e.g. Scotland, Quebec, and Catalonia), religious wars (e.g. Syria, Iraq, Nigeria), and ethnic/tribal battles (e.g. Myanmar, Kenya, the Balkans.)

  72. Agree with him or not, Professor Krugman is never simplistic.

  73. 'the column could as well have been written about the United States.'

    ONLY with a LOT more exaggeration - because as we all know everything is much MUCH BIGGER in America!
    -(even the hate for the Washingtoncrats and the love for Inequality!)

  74. in reply to Rima Regas:

    Rima, I think Krugman underestimates the importance of various versions of "tribalism" that remain in Europe, whether ethnic, nationalistic, religious, or historical. That is, I believe, what accounts for much of the political momentum away from what would otherwise be the economic self-interest of the many.

    In addition, it would seem that the Council of Europe, in its laudable goal to create transnational consciousness and rules, have (sometimes self-righteously and arrogantly) ignored the political realities in the various countries, as well as the personal values of many electorates.

    I did not mean to imply Krugman is either simple or simplistic. However, he is primarily an economist, and the effecting of policies to achieve desired ends, a.k.a. politics, is simply not his area of expertise. I think what is needed is not so much a description of where we should go but, rather, a description how, in the world of political realities, we get from here to there.

  75. AND the last -(and final) piece of bitter irony -

    WHY or WHY - do I hear the same kind of arguments about the European crisis on the table of my Republican American Grandfather?

    The same displeasure with 'teh evil Eurocrats' -(minus the Keynes argument)

    The same 'Angst' about 'the rise of fascism' -(with the European left as 'the fascists')

    AND I never could have 'thunked' that American liberals could be AS confused as their Republican counterparts...?

  76. or actually - once upon a time - when one of the major American proponents of civil liberties -(Glenn Greenwald) started flirting with a dude like Ron Paul - I thought - How deeply confused can you get?

    -(or what a strange connection between American liberalism and American reactionairies?)

  77. The economic models of the industrial age are no longer viable and all our economies will collapse hopefully slowly but the possibility is there for an avalanche. I am hopeful that the world's democracies will build strong social safety nets for their citizens but I am deeply concerned that the oligarchs in the US and Russia will not give up any of their wealth and power to make life more secure for the many. I think it more appropriate now when we know the fact to remember the slogan that precipitated the Spanish American War "Remember the Maine." How many died to protect the wealth and power of the Duponts of Delaware.

  78. Most of our foreign wars have been about making the world safe for American business interest. Then, of course, there is the unfinished Civil War. The guns stopped firing, but the war continues to this day.

  79. PK is too modest. Who are the far right-wing parties quoting for their economic guidance. Why Paul Krugman! I guess that's normal, because the left-wing in the US is about equivalent to the far right-wing in Europe.

    If you really want the euro and the EU to survive, you will get the UK out of the EU, so the rest of the EU can finally take the necessary steps to closer integration.

  80. 'Who are the far right-wing parties quoting for their economic guidance.'Why Paul Krugman!'

    That's now one of the most favorite strategies of the European -(and American) Europehaters alike -
    AND the next time somebody will quote dear Prof. for their crazy right wing fantasies I'm going to relief my stomach all over them - and tell them -(very politely): 'You really smell bad'!

  81. Mr Krugman,

    I admire your hope that the elite in Europe -- and in America, for that matter -- will realize the need to value democracy over "price stability and fiscal probity." I wish I could share that hope.

    Here, in America, it's a settled fact that the financial elite get more than their fair share of political and economic power and well being, at the expense of democracy. There's only limited hope for changing that.

    I'm sorry to hear from you that Europe is going in the same direction.

    As you point out in your reference to the enduring peace following the last world war, strong democracies offer the best defense against violent unrest between and within countries.

    Let's hope that the elite in power -- both in America and Europe -- realize that choosing to support economic policies favoring the wealthy erodes democracy and eroding democracy leads to violent unrest. Let's hope there's time and the good sense to back away from the current trends favoring the wealthy and hurting democracy.

  82. Which elite were you referring to, those in Texas or those in Massachusetts?

  83. Things seem not to be so well today with the European Union. Dr. Krugman writes:
    1) "So far, as I said, the elite has been able to hold things together. But we don’t know how long this can last, and there are some very scary people waiting in the wings." And:
    2) "It’s terrifying to see so many Europeans rejecting democratic values, but at least part of the blame rests with officials who seem more interested in price stability and fiscal probity than in democracy. "

    So he again equates 'democratic values' with a kind of economy and supporting fiscal policies that consider any deflation to be an utmost kind of evil. He refuses to see how this has been causing not only a high level of unemployment, but a lagging rate of PER-CAPITA production.
    The population has not been supporting its level of consumption. This is profligacy, pure and simple.

    And any way out of it that entails something that could be construed as 'austerity', is then summarily rejected ... at our peril.
    Injecting more money into a system cannot increase the per-capita production level. Why then continue flogging that dead horse of govt. stimulus?

    And when democracy becomes equated with policies that engender slackening productive level, democracy becomes itself debauched beyond redemption.

    That is too high a price to pay for any supposed freedom, something so important for Americans in particular.
    (Freedom anyway is continually eroded by the expansion of usurpative government overreach.)

  84. Krugman and his fellow inflationists take that tack for one reason only: it takes from savers and gives to spenders, thus expanding the economy. That's the dirty little secret they don't want you to know.

    There is no other mechanism causing inflation to expand the economy. None. Switzerland is one shining example. The dollar has lost 88% of its value against their Franc and guess what - they're the richest per-capita country in the world, giving the lie once and for all to Krugman propaganda, which incidentally is the same specious line Greenspan used to rationalize the fall of the dollar in his day ("a falling dollar is no problem unless Americans choose to travel abroad"). .

  85. It's rather depressing to reflect that Paul Krugman's rant against Eurocrat elites could well be a speech from Marine Le Pen, the far-right French leader.

  86. At least most Europeans know - that the nasty Pen is ultimately irrelevant!
    -(as long as Time doesn't put her on the cover of the magazine 'as a major threat to Europes unity'.)

    How CRAZY!!!!

  87. Mr abo, you forget to mention that he follows the remark with the comment about the absence of moderate voices among those who fall in line with the whole elite line. As a longtime French resident, I've been shocked at the continual denial by the two major parties (UMP and Socialists), that such issues as immigration, excesses by financial institutions, and yes, the euro itself are all problematic and need thoughtful solutions. The only folks recognizing the problem seem to be the radical right. Since their draconian (did I say fascist) "solutions" seem to be the only game in town - a frightful prospect.

  88. 'The only folks recognizing the problem seem to be the radical right.'

    You mean the radical right always massages the lowest instincts of the voters?

  89. The end of WW1 resulted in retribution: Germany had to pay hug reparations.The loss of Lorraine also meant they had to use foreign currency to buy more iron ore for industry. With a population of 70 million in a small area, a diet heavy in animal fats they had to import food, grains and basically everything but coal. But Germany still had world class intellectual and economic institutions and competitive industries that it could use in world trade. The demands for imports AND reparations created currency exchange problems that left the economy anemic. (In 1929 the U.S. produced 5 million autos, France and England 250,000, Germany only 90,000)

    The Liberal & Social democrats pursued a policy of international economic integration based upon reliance on Americans to help them with currency problems. In mid1920s the US provided loans that stabilized Germany's economy and soon began to thrive.

    The nationalist lead by Hitler resented the dependency and so advocated for unilateralism. In 1928 Gustav Stresemann the architect of the liberal system actually participated in a debate with Hitler in Munich. The problem with unilateralism was Germany wasn't self sufficient. (Hitler's solution for that was conquest of territory)

    In 1929 the US economy cratered. US banks called in their German loans, and Germany' cratered too. Internationalism failed. This created the opportunity for nationalist, Hitler specifically.

    Until recently the peace after WW2 had avoided the mistakes of WW1.

  90. The problem now is similar to the problem 85 years ago.

    In 1929 wealth concentrated. Money left the demand side of the economy (the 99%) and moved to the supply side (1%). Demand (for the 99%) was sustained thru credit from the 1%. When the credit ran out demand collapsed and took finance with it. The collapsed rippled like a tsunami wave to Europe where many experienced collapse too.

    The continent's legal system was based upon Civil Code which prohibits judge made law and thus ideological pragmatism. Instead all law is made by legislatures. This causes politics to be an ideological struggle. Whatever ideology dominates a legislature, it has hegemony over all other ideologies. Thus Civil code countries collapsed into rogue ideological rule: Russia-Communism, Italy-Fascism, Germany-Naziism, Spain-Falangism, France paralyzed between left & right, Japan Militarism.

    The Anglo-Saxon common law nations, with their judge made law pragmatism that muddled thru the crisis until they pragmatically stitched together a solution, a mixed-economic system (the New Deal in US). In a sense WW2 was fought between Civil Code systems on the right vs Common Law systems + Russia on left.

    Today most civil code nations allow some form of judicial review.

    Unfortunately our right, including on the Supreme Court are attempting to ideologicalize our system. Once again we are in another crisis caused by concentrated wealth that began in the US. Greece's problem began after collapse of US demand.

  91. And the swindlers from Goldman Sachs whom Greece was dumb enough to trust.

  92. in reply to Rima Regas:

    I think Krugman underestimates the importance of various versions of "tribalism" that remain in Europe, whether ethnic, nationalistic, religious, or historical. That is, I believe, what accounts for much of the political momentum away from what would otherwise be the economic self-interest of the many.

    Krugman also underestimates the relevance of my previous comment: to a large extent, the entire process reflects the current world-wide struggle between forces of unification, such as globalization, Al Qaeda, the International Court, and the internet with forces of decentralization such as secession movements (e.g. Scotland, Quebec, Catalonia), religious wars (e.g. Syria, Iraq, Nigeria), and ethnic/tribal battles (e.g. Myanmar, Kenya, the Balkans.)

    In addition, it would seem that the European Parliament and the European Commission, in their laudable goal to create transnational consciousness and rules, have (sometimes self-righteously and arrogantly) ignored the political realities in the various countries, as well as the personal values of many electorates.

    I did not mean to imply Krugman is either simple or simplistic. However, he is primarily an economist, and the effecting of policies to achieve desired ends, a.k.a. politics, is simply not his area of expertise. I think what is needed at this point is not so much a description of where we should go but, rather, a description how, in the world of political realities, we get from here to there.

  93. I understand now. I know from experience that 1500 characters are very, very limiting. :-)

  94. Rima, I tried to find a way to respond directly but, alas, I am not connected to any of the sites you appear to inhabit. Anyway, I expect it's time for both of us to get off the fershlugginah internet and go to sleep.

  95. "It’s terrifying to see so many Europeans rejecting democratic values, but at least part of the blame rests with officials who seem more interested in price stability and fiscal probity than in democracy."

    Officials? Thinly undisguised newspeak.

    If the Front Nationale gains influence, they will have done it at the polls, a particularly weird way to reject democratic values.

    Too much Andrew Higgins, too little actual thought.

  96. Krugman's could be the speechwriter for Marine Le Pen, right down to the use of "eurocrat". He is exactly in the spirit of the Far Right he pretends to dislike: unable to construct, he sets out to destroy.

  97. Here an hypothesis:

    The reason that extreme right-wingers are so visible and in Sweden even Nazistic right wingers is that in European democracies there are more than two parties.

    If any political scientist reads that hypothesis I would like a response, here or at blog (below).

    In the US (my US, born in the USA) there are only two parties so the views expressed so clearly by an independent party in Europe (Swedish Democrats, for example) cannot be expressed so openly even if the same views are held by a Tea Party person or other.

    Any thoughts?

  98. I disagree. I find the Republican Party to be more reactionary than the Sweden Democrats. American right wingers are just as hostile to immigration and internationalization, but they use less inflammatory rhetoric.

    On the other hand, the Swedish mainstream has not tolerance for "god, guns & gays"-type social politics. If Jimmie Åkesson were to make creationism and climate-change denialism part of their platform, the SDs would be voted out of the Riksdag in September.

  99. Right Larry -my experience has been the same here in Denmark and I often have trouble explaining how things work over here to my many family and friends in the US who simply do not understand parliamentary democracies and assume or are brainwashed to believe that any systems which have strong social security nets are "socialistic - aka commies". Add that to the huge difference in voter turn-out between US and EU elections and one cannot resist the temptation to conclude that this is the result of a lack of representation and a total feeling of alienation from the electoral process due to the stiff US 2-party system.

  100. and just to ponder - There are ALL kind of 'Eurcrats' -(very bad but also pretty good ones) - and MOST important - that there will be a solid majority (again) for European integration - and NOT one of these 49-51 percent thingys - and that illustrates the major point: HOW awesome is it that a continet whit so many completely different countries and cultures sticks together -(with a HUGE social conscious) - IF a country -(I should not name) - can't even care for it's unemployed decently?

  101. It is sad, but true and dangerous, that the peoples of mainland Europe have never been very good at politics. With few and relatively weak exceptions, they are too susceptible to ideologies, they have not learned to compromise, their governments come and go like revolving doors—habits which are mutually destabilizing. Coming out of the French Revolution, the revolutions of 1848, and 19th-century imperialism into World Wars I and II, there are more bad than good examples of political leadership at any level, from conceptualization to practice.

    Americans, however, need to know how exceptionally fortunate we have been. We got off to a good and inspiring start in the Enlightenment, inspired and practiced in philanthropy—practical humanism (i.e., not just rich people helping poor people), private initiatives for public good—which has provided a good and strong continuing tradition to inform our greatest leadership. The coming elections here are our comparable political test.

  102. 'Americans, however, need to know how exceptionally fortunate we have been.'

    I think we are wll aware of that already -(as your description of 'mainland Europe and the 'never very good at politics' - proves) -

    AND that's why the whole of Europe always is in awe -(and shock?) about the fantastic American politics.

    -(and the never bad advice of American economists)

  103. "We got off to a good and inspiring start." And look how you've ended up. A country where inequality and injustice rules, with a corrupt political process, and a desire to spread the same to all corners of the world.

  104. It should be remembered though, that policy making in the EU is a complicated thing. The Commission most of the time does not do more than design policies, these have to be (simplifying) supported by the national ministers, ratified by the national parliaments and the European Parliament. The statement that 'Brussels dictates' is just wrong - it is usually the national governments who contribute to and accept policy proposals from Brussels.

  105. I am an American who has lived and worked in Europe for 40 years and seen the changes fist hand. Although everything you state in this article is basically correct, it does leave one with a rather slanted view when compared to the same developments in the US. I know very few Americans now living in the EU who would opt to move back to the US at present and with good reason.

    Europe has always had its racist elements and even here in Denmark there is a 15% right wing group who are by my liberal standards nationalists and racists. One must also remember that all these elements come out of the woodwork when the EU elections are on and debates about sovereignty and free trade clash.

    I was walking through our neighborhood last night with my Iranian born wife, who is a nurse and now naturalized Danish citizen. We were discussing the EU debates and she remarked that despite the harsh rhetoric in the press and all the struggles facing Europe, she is convinced that right here, right now we live in the best of all societies ever created in human civilization. I had to agree.

  106. Tim a followup since somebody is approving comments and replies at Krugman in record time.

    When I filed my first reply I had not read your last paragraph. I write this as a reply to show that there are always two sides. My Red Cross colleagues at Träna svenska are Iranians, and one, Z lived in Dallas for 4 years. For her the experience was good, revealing, but Sweden is fine. But her son has his good job in Dallas. Then there are two Iranian-born Kurds who work next door. I said to both of them, why aren't you in college. One of the two took me up, has her ticket to CA with hopes of going to school there. Something missing in Sweden. Then my "särbo" in Gbg dual citizen professor in USA and SE and our daughter also dual 3 degrees (1 USA, 2 SE). Särbon born in Gbg, PhD in Lund, still longs for USA but the longing is based on university life and quality. Daughter agrees as concerns university, no contest, University of Vermont better. Me too emeritus from USA. But there is the question of cost and access. Medical school here is free and direct after "gymnasium" and I have friends from the Horn of Africa who are benefiting greatly here at Hälsouniversitetet. I have many Iranian friends and what stands out is that they as well or better than any others -except maybe some Kurds do extremely well here in "one of the best societies ever created".

  107. I can't find the title but there was a Danish Oscar-nominated short feature about a job search club in Denmark for south Asian immigrants. A very sweet and funny short movie on the experience of the Danish south Asian immigrant.

  108. Economic downturn like the Great Depression and even the recent Greenspan/Paulson collapse that cause high unemployment and uncertainty always seem to drive a class of people to the right. Look even here at home many think the extremism is due to having one of 'those people' in the White House and certainly Mr Obama's race has been a factor but again that cannot explain what is happening in Europe and has happened in Russia. BTW is the Crimea the new Sudetenland? I do wonder if the collapse of the USSR was Putin's WWI experience?

  109. Perhaps the best example is the UK. The United Kingdom Independence Party (UKIP) and their leader Nigel Farage have managed to produce this ridiculous notion that freedom is equated to the ability to spend and make money free from constraint - mainly financial regulation. He and his colleague Daniel Hammond have managed to rally a traditional working class and Labour constituency to favour ideas like immigration control and thinly-veiled racial supremacy with terms like the Anglo-sphere as the guiding light in all matters - culturally and economically.
    Coincidentally, they both favour deregulated, neo-capitalistic policies that are straight down austerity lines. They disguise cuts to the welfare state as reactions to immigrant controls -mainly Romanians and Bulgarians who were supposed to come in droves and have not - as benefit seekers and drains on the economy despite the fact that every major study on the matter has shown how the increase work force almost always produces more tax revenue than uses in benefits. The sad and simple fact is that fear is a great mobilising force and the deadly combination of racial hatred and economic austerity rule the day across the pond. Quite honestly, as a student of History, we should not be surprised that this has become an issue in the old world once again...

  110. There are, of course, austerity hawks in our own corridors of power, with the American difference being that in Europe, saliently Germany and England in particular, they are true believers, whereas here many of the loyal opposition appear to be flip-flopping to undermine presidential success. Recalling GOP economic arguments made while empowered under George W. Bush versus those proffered when sidelined out-of-power leads to this presumption. While this behavior engenders some disgust for party-over-country behavior, at least it provides some optimism for rational fiscal decisions in the future.

    This article tacitly presents compelling justification for the Federal Reserve System to control monetary policy independently from the vagaries of populist swings subject to demagoguery. Thanks for another thoughtful overview, Professor.

  111. I think it is worth considering, although PK did not see it as worthy in this article, the amount of sacrifice inherent in the insistence on a generous welfare state, and a continuous sacrifice of growth in its behalf.

    This article continues the traditions of using the word "austerity" with spit and vile, almost as a curse word, when in reality "austerity" in this context is simply governments trying to make sure their spending is somewhere near, somewhere within the reality of the amount of money they actually expect to take in.

    If the Euro falls, there will have been just two reasons:
    1. The continuing devaluation of growth, and its subtle lack of priority in a system crying out for it; and
    2. The reality that the generosity of the welfare state will always maintain an inverse relationship with growth; thus condemning a generous state, which sees itself as a protector of the people's newly discovered "right" of financial security, to relegation as a 2nd class (if not 3rd class) economic power.


  112. I accomplish the impossible task of disagreeing with you and Rima Regas.

    Here's how :

    1. The original intention of not being able to go to war because they all share the same blood, through their currency, never stopped anybody.

    2. The policy remoteness - and frankly unaccountability - of the ECB privatises the supposed gains and socialises the palpable losses. And there is no one but remote European bureaucrats to blame.
    Watching Dateline London on the BBC last weekend, you'd almost think it was a joke.
    Of course, not so for Cyprus, who were saved (?) by the Euro.

    3. Ironically it will be the very same things that over a longish term WILL actually accomplish the impossible task of integrating Europe better. The characteristics of each nation will "express themselves" because local governments will realise the (dis)advantage of the currency dispensation. They will be *forced* to plan for the inevitably high cost of borrowing or the high cost of neglect because of bad/differentiated fiscal "practices".

    I am more optimistic than you today, Professor. But your anger at policy elitism is inescapable to any thinking person.

    The question being : Who pays the price for Greek excesses or Cypriot protection of Russian oligarchs ? And who is responsible for their occurence ?

    I would really really like to hear your assessment of the Indian economic outlook at a fundamental level. ( Is that asking for too much ? Or are we too ..... unimportant/small in the scheme of things ? :-( )

  113. I believe Professor Krugman wasn't a lot around in Europe those days. A few comments: 1) yes, it's right that there is a growing right movement, but the majority conservative line (i.e., Merkle and consorts) is on the far left , if compared to to US Democrats including Obama, so this lamento has to be put into perspective. 2) Poor economic performance: Ever been at the Berlin Main Railroad station, and then arrive at grimy Penn'Station in NYC, or, drive from Paris to Madrid by car on pristine high speed highways, as compared chugging along bumpy and pot hole strewn US interstates at 55 mph? 3) Ever visited a small town European high school and compared it to the best private $ 40,000 a year private high schools in Mahattan ? I guess no, otherwise the verdict would come out differently.

  114. Gee, YOU have not driven anywhere in about 30 years -- have you? the speed on the interstate is 70 mph most places (65 mph in a few). And the quality of the interstate highways is quite good; I drive across country at least once a year. (Local roads in the Midwest, not so great. That's where the potholes really are.)

    What does the condition of railroad stations have to do with the economy? Europe has state-run railroads; the US has hardly any rail systems outside of the Northeast. It's comparing apples and oranges. We don't put public money into railroad stations because hardly anyone uses them here.

    High school in MANHATTAN? You cannot be serious -- NYC and Manhattan in particular are the most segregated schools systems in the entire US! This is a fact. So of course they don't look especially good (outside of the priciest white areas) but it is hardly fair to compare to an all-white European high school in some tiny Scandinavian nation (I would not be too certain the schools in Greece or Portugal stand up as well as the ones in Denmark and Sweden, or the ones attended by Muslim guest workers).

    Lastly: those $40K prep schools really ARE pretty darn fine.

    I guess you must weigh the advantages and disadvantages against having to pay European-style 65% income tax or 25% VATs. Or $9 a gallon gasoline. Americans have made their choice; you of course always have the choice to move to Europe!

  115. History repeats itself again and again and then again. Europe's move to the hard right and its attendant nationalism is caused by the same factors that have always predicated such shifts. Despair, hardship, poverty, and economic insecurity are the age old drivers of such moves. We also see this unfolding here in America for similar reasons. Instead of a continent of nations in conflict, we have a nation of 50 independent states that make similar claims. Europe's problems may very well become our problems in a few years, if they haven't already. Our civil war never did truly unite us either.

    When times get tough, our species seems to have an instinctive reaction to start blaming others who are labeled as "outsiders" as the cause of the problem. Hence, the predictable rise in nationalism.

    With all of the carnage we have seen in Asia and Africa in the last 30 years, none of it comes close to the level of destruction waged by Europeans against each other in the last two world wars. Such horror was the genesis of a united modern Europe. Lessons hard won are easily lost when the specter of right wing nationalism raises its ugly head.

    Emotion, hate and fear always trump reason and compassion. The level of compassion and tolerance in a society diminishes as the level of despair rises. The prescriptions that the right employs to reduce despair serve to increase intolerance. Europe is traveling down a rocky road and we are not far behind.

  116. That it's hard to imagine war in today's Europe could be Europe's undoing.

    Oh, Germany is unlikely to attack France; but Russia attacking Germany by shutting down natural gas supplies? For 70 years, responsible leaders, mostly in the U.S., but some in the U.K. and on the Continent, as well, didn't have illusions about the nature of disagreements arising from opposed interests. One might call these the adults. Lately, the demands of social engineering, largely an enormous entitlement framework, have made the notion that one no longer needs to defend oneself against opposed interests the faux-wisdom of ... the not-adults.

    And we see the beginnings of danger, don't we? And the apologists throughout Europe for a Vladimir Putin and Russia that would impose hegemony by whatever means -- apologists because any other posture might threaten the knife-edge of prosperity on which almost every European country is poised, that could be destabilized SO easily.

    This is a subject on which I mostly support the Professor, until he wanders and we part on the matter of "austerity". Europe is in grave trouble, and the forces of disunion appear greater than those of union -- as the Professor's been writing about for decades, and I've been agreeing to for almost as long. But those forces are more a circling of individual national wagons at the expense of the wagon train than they are about some generalized "austerity".

    And through it all the man in the Kremlin, his own "Karla" ... smiles.

  117. Actually, the whole Europe experiment was a response to the rise of the right in the 30s and 40s which nearly destroyed Europe. To use "Europe" to let it come back is irony of the highest order.

  118. The European Union is an affront to sovereignty and diversity and like Yugoslavia and the USSR is doomed to failure.
    We inherited a world of diversity and rather than socially engineer it to appease the intellectual narcissists and economic sophists we should respect and maintain the wonders and counterbalances of diversity, including the diversity of races, cultures, traditions and economies.

  119. There is a point of history that needs to be mentioned every time someone talks about economic turmoil perhaps leading to right-wing extremism (particularly in Europe). Whatever you've been told, it was NOT the German inflation of the early 20s that led to Hitler's rise. I have heard that over and over, often said by people who should know better. Or would know better if Americans knew any history. Few do.

    It was the deflationary austerity of Heinrich Brüning, chancellor from 1930-32, that created such high unemployment that many Germans would accept anyone who claimed to have a solution. And austerity is again the policy, with similar results in unemployment, at least in southern Europe.

    But I don't think it will turn out quite as badly this time. Europeans do know some history, so we won't see another Hitler there for a long time.

  120. Smart people in the 20s and early 30s also thought that Hitler was "impossible".

    Today, we see rising anti-semitism in Europe just as happened 80 years ago. Of course, the new fanatical dictator won't be NAMED Hitler or have a funny mustache. Maybe "he" will be a woman with a mild, pleasant demeanor. You just never know.

  121. The rise of the extreme right in Europe has many of the same causes as the rise of the Tea Party here in the US. One of the causes of this malaise is massive unemployment and underemployment coupled with the scarcity of good jobs offering decent wages and benefits.

    In short, the modern capitalist economy is not working. It's not working here in the US and its not working in Europe.

  122. But shouldn't it BE working in Europe? After all, the unemployed in Europe get a lifetime on a generous "dole" which includes free health care, free day care, free college, paid maternity leave and so forth. With such a pleasant lifestyle and no requirement to work, why work at all?

    We are told the European model is near-perfect and should be what the US aspires to, and the only thing holding us back from this paradise is....Fox News and the Koch brothers.

  123. At some point, if only by history itself, leaders must be held accountable. Chancellor Angela Merkel, for all that she represents a very sympathetic figure at home in Germany, has insisted that the EU should present southern Europe with the face of harsh austerity and Depression-like misery with no end in sight. That the austerity policies themselves may have been unnecessary and untimely -- as Mr Krugman and others, like myself, believe -- only represents insult added to injury. And now, as Russia annexes Crimea and threatens the rest of Ukraine with thugs and masked soldiers, Ms Merkel cannot bring herself to ask her own citizens to sacrifice anything more economically than token sanctions. Meanwhile, she maintains a chilly relationship with President Obama because her cell phone was monitored. It is this abysmal leadership by Ms. Merkel, more than anything else, that will be ultimately responsible if the European experiment unravels.

  124. What I missed in the article is the fear of the eurocrat elite that if they give in even one bit to the euroskeptics the whole EU building will start crumbling down.

    For every problem they have a solution that brings more power to the EU. It is unthinkable that even one country would drop out of the eurozone. The EU has even kept its obligation that new members should adopt the euro as soon as possible despite the fact that the problems of having disparate economies within one currency zone are now obvious.

    Given this situation the number of euroskeptics is bound to keep increasing.

  125. We have a crisis in the US that parallels that of Europe.

    “right-wing extremists hostile to the very values that made the election possible”

    Tea Partiers don’t believe in any government, at least when it personally affects them.

    “The inherent problems of the euro have been aggravated by bad policy. European leaders... have imposed savage austerity.. ”

    The middle/working class has been hit hard with cut backs to teachers/ police, SNAP, Head Start, Planned Parenthood, Meals on Wheels. Congress will not invest in infrastructure, reform Entitlements or anything else that matters.

    “But the cost of this elite cohesion is a growing distance between governments and the governed.”

    Congress is the least productive in American history: skyrocketing income inequality, no immigration policy, NSA run amok, Citizens United, and no national energy program in the face Climate Change.

    “the elite has in effect ensured that there are no moderate voices”

    The plutocracy (corporations) write the laws that benefit themselves while the rest of us struggle to hold our jobs and pay our bills. Slow economic growth/ high unemployment for the young don’t faze them.

    “elite’s habit of disguising ideology as expertise”
    Conservatives have pulled governance so far to the Right, facts/ science don’t matter in public policy. Ideology/ the talking heads dominate all discussions. Deficit hawks shut down our government -twice, the Fiscal Cliff, ACA is socialist. The people’s need are completely ignored.

  126. Legalized marijuana and gay marriage would seem to disagree with your assessment. Oh and let's go ahead and throw on the pile PPACA and Cap-and-Trade.

    Looks like things aren't nearly as bad as you thought.


  127. Legalized marijuana and gay marriage are 2 narrowly focused social issues pertaining to a very small segment of our population. These social issues still not embraced by many Conservatives or the far right no matter what the people want.

    The ACA is demonized every day and has been repealed 53+ times by the GOP. Cap and Trade is dead.

    Our country is moving in the wrong direction because elites and corporations are front and center with our leaders. Everyone is last on the list and has to fight for scraps.

  128. Many are deeply ignorant of how Europe “works”. Left to themselves, European countries go to war.

    The European Union is actually an evolutionary mechanism to unify the continent, driven by Germany and France. A set of construction projects: parliament, executive, currency, etc.

    The EU is also governed by the democracies, legislated by their own parliaments. Thus there are two entangled systems: national democracies cooperating, entangled with more or less European institutions they more or less control.

    For example, France is crumbling under an avalanche of European decrees from the European Commission (EC), applied throughout the EU. Yet, most of these decrees are suggested by France!

    American progressives ought to relax: democracy is doing fine in Europe. The EU does not have millions of citizens incarcerated, as the USA does. The EU has no debt. The EU does not rule the planet with its Pentagon. The EU does not have a NSA.

    The incoherent discourses of a few nationalists who dislike each other (and often are already Euro MP) are not a threat. Even those critters agree that the European Monetary Union has to be greatly improved (and a banking union is on the way).

    For American plutocrats, the real threat is that the excellent Martin Schultz, the (French speaking, French like, and French government supported) socialist (SPD) German president of the European Parliament, will become the first elected head of the EC next week.

    That’s what this election is about.

  129. "We don't see things as they are, but as we are"
    This string of comments to Dr K's paper is a good illustration of the quote above. As is his, with all due respect, rant here.
    Yes, Europe is in a chaotic state. Yes, the € without a political structure was premature. Yes, the € hinders country by country adaptation to macro economic trends today.
    No, Europe is not in a declining trend. No, Europe is not on a course of empire growth. No, Europe is not suffering the symptoms of Rome in decline.
    It is also not ruled by a corrupt two-party system, nor by the 0,1% of the population while 10% or more are below poverty thresholds, nor is money the determining factor of its elections. No, Europe is not subject to a hegemony of politically correct thought.
    The democratic 25 of May elections are a chaotic but creative process. The results will be in the eye of the beholder, as always.

  130. If I understand your point correctly, I think that you are overly sanguine about the clear re-emergence of irredentist ideology in many European countries. As Yugoslavia showed us, everything is fine until it goes terribly, terribly wrong. The hot spots increase in number and are getting hotter: lingering post conflict conditions in the former Yugoslavia, annexation Ossetia, Abkhazia, and Crimea, red hot tensions in Trans Dnieper (or Novy Rossia, and Putin likes to call it), less hot, but still very hot is Transnistria. Now, we increasingly hear calls for a greater Hungary, and ethic rivalries in Transylvania will continue heat up. Even places we considered well-settled are starting to heat up such as Istria, and even Catalan. The Baltic states are nervous.
    Some of the tensions have a high risk of resulting in violence (e.g., Transylvania) while others can result in a substantial drag on national agendas (e.g, Catalan).
    The big difference from the past this time around is that Germany is standing above border fever. Thank goodness for that. Part of the reason for that is Germany’s commitment to European stability; that other part is the fact that I guess there are not that many Germans outside of Germany any more.
    In any event, I think that the rise in irridentism should be taken very seriously.

  131. Professor Krugman, why do you equate peace with democracy? The one country with the most wars in the last 50 years, from Vietnam, Laos, Cambodia, Libya, Honduras, Grenada, Panama, Kuwait, Iraq, Serbia, Afghanistan, Iraq again, drone strikes in 6 nations and the country that has just about outspent the rest of the world on its military is also one of the world's oldest democracies.

  132. Didn't you know? America still thinks it's a peace-loving nation.

  133. “An alarmingly high fraction of the vote is expected to go to right-wing extremists hostile to the very values that made the election possible.” Don’t know much about Europe politics, finances, racism, immigration policies, etc. Whether in Europe or America it is very troubling that right wing extremists are hostile to government. “Big” government is supposedly the issue. The hypocrisy is
    quickly apparent when any government budget cut may affect their home district. Hostility is really directed at everyone needing certain forms of help, like food stamps. In America, farmers receiving aid or unnecessary military bases are legitimate for their financial impact. Hostility is ugly what ever the reason. The very limited attack on the least powerful/influential is a troubling response. Certainly the Judeo/Christian prophets would scream against such injustice. Rejecting help to some in the name of reducing the size of government is inhuman. Hostility is a burning emotion which hopefully gains little traction.

  134. How hilarious.

    "act boldly enough against the growing threat of deflation."

    What is deflation; it is falling prices. Who, here, does not want to pay less. For anything.

  135. Frank, if you do not understand how terribly disasterous deflation is to an economy, you probably shouldn't post on the topic. Deflation leads to consumers to stop spending and hoard their cash in the belief that goods and services will be cheaper if they just wait. When everybody starts spending less, with that belief, the economy craters.

  136. Please, please someone show me where is this "deflation"?

    I sit here on Memorial Day weekend and gas prices (Midwest) are $4 a gallon. Milk? $3.79 a gallon. Hamburger? $4.29 a lb.

    Real estate? anywhere you'd actually WANT to live, the prices are accelerating and sales are brisk. It is so fast, it has all the hallmarks of a new bubble.

    My local taxes are way up, my utility costs are way up. The cost of eating out, the cost of buying clothing -- all way up.

    If something is "deflating", please please tell me what that is.

  137. Let Europe be a warning to those who throw red meat to paranoid populists by blaming all our ills on an American oligarchy.

  138. "Modern Europe is built on a noble idea..."

    Modern Europe is built on a fiction: That you can have everything you want, and later generations will pick up the check. That worked as long as the population was growing, because it was a classic Ponzi scheme - the suckers that came through the door behind you (your kids and grandkids) would pay for your cushy retirement and "free" healthcare.

    But now Europe is shrinking, and the swelling ranks of grouchy old people are beginning to realize that the carousel is grinding to a halt. At the same time, young workers are realizing that there won't be a carousel for them when they get older - they'll work till they drop, and that's if they're lucky enough to find a job (youth unemployment in Southern Europe is running about 25%.)

    Paul Krugman's "elites" can't hold their Big Lie together anymore - with less people entering the workforce every year, the whole thing is falling apart. Europe is about to find out that Vladimir Putin is not their biggest problem - their biggest problem is Reality.

  139. Silly Decent Guy -- don't you know that Europe is always better than the US? Everything is FREE in Europe -- health care, day care, even college. Minimum wage is $20 US an hour, and there are no poor people.

    All we need to do to enjoy such a paradise is agree to 65% income taxes and a 25% VAT on everything! oh -- and to elect only very lefty wing Democrats.

  140. No one in Europe thinks they have free health care. Only Americans think Europeans have free health care. Britain has health care that is free at the point of service but everyone knows that this is paid for via a payroll tax. There is no illusion that it is free. This arrangement is dramatically different from other countries in Europe which all have different models most of which are based on insurance, some state provided others privately provided but non profit and mandatory coverage requirements. There are as many models as there are countries in Europe. We all know we pay but we also know that we pay far less than Americans with better outcomes. We also know that the better off subsidise the poor and not only are we fine with this, we are proud of it.

    Pensions are a problem but this is true everywhere. But just because you move to a defined contribution system doesn't mean you solve the problem. You just take the liability off the balance sheet and stick your head in the sand. When we see the resulting mass poverty of seniors when the pensionless retire, we will be forced to admit we did nothing to solve the problem. Unless, of course, we are willing to let our parents and grandparents starve or freeze to death or live on the streets.

  141. The answer to that problem, of which the symptom is not only an aging, but in some countries also a declining, population, is to open immigration a little more.

  142. And now the good news.

    Early returns show that Geert Wilders' right wing Freedom Party did poorly in the Netherlands, dropping 5 points compared to the last European elections. Let's hope that Monday brings more pleasant surprises.

  143. One swallow does not mean it's spring. The far-right will do well in these elections, because of the protest vote.

  144. Krugman is too pessimistic about Europe. They're doing much better politically then the US. Recently in an election, (after he wrote this) a fascist Dutch party did much poorly then expected. Nowadays when fascists get close to power their world gets smaller.

  145. It's always a pleasure for me to read a commentary written by Paul Krugman, since his analysis & opinions always makes sense, not to mention his comments on economics & politics also educates & generally amuses me at the same time.

  146. Yeah, Paul we know - you're peeved because Europe hasn't followed your advice and trashed its Euro. They haven't decided to steal from savers and encourage spenders. Bummer.

    The result is an increased standard of living thanks to the stronger Euro vis-a-vis the dollar which is now near an all-time low. Their oil is cheaper than ours, all their imports are cheaper than ours. Northern European countries are the least corrupt of any in the world; the U.S. is 19th and probably falling.

    Democracy? Not in the U.S., surely. A country ruled by the ultra-rich 1000.

    It's just amazing how you know so much better than they how to run their own economies. Just amazing.

  147. In comparing the politics of the US and Europe, one should bear in mind that the two are not really comparable, because the US is a political union under a single constitution. Europe is only a monetary union, like the US was during the brief period after independence from Britain and the writing of its constitution.

    There is very little chance that the US will break apart, and the strong states are obligated to help the weak ones.

  148. An increased standard of living? did you even read the article? Many European nations have Depression-era standards of unemployment! how is that an "increase" over our relatively low 6.3% unemployment?

    Also I hardly think there is some verifiable "source" than can rank the "corruption" of nations accurately.

  149. 'how is that an "increase" over our relatively low 6.3% unemployment?'

    The other day there was a commenter here from Rhode Island who finally confessed - that the US unemployment numbers would be more than double -(if measured the European way?) - but perhaps you should keep on believing in homeland fairy tales - if it makes you feel more superior?

  150. Most polls show we think the euro is a fantastic advance but first the banks then the national states didn't allow it to work properly; more subsidiarity and federalism are needed to get things back on track - the fact that both left and right reject this show its truth!

  151. Paul, there you go again, searching for a problem that does not exist. Your ideology drives you to places only unicorns inhabit. The problem in Ukraine is massive corruption that results in poor economic performance. Ideology has nothing to do with it, as any clear thinking economist could tell. Until you eliminate government/corporate corruption, all democratic values are just a joke.

  152. This is not unusual, we went through eh same thing after all the civil rights laws were passed,and the war on poverty efforts; we had the conservative revolution. That was a bout 40 to 50 years ago and we are now living with the rend results of that revolution.

  153. The elites of Europe are like the "elites" of the US. Vain, greedy, and pretty much mostly wrong on policy. They spend their time talking their book, and even worse use their cash to buy influence. I am not naive enough to think money didn't buy influence in the past, but now it simply owns it. This will be the lesson Dr. K speaks of which is playing out in Europe. Unfortunately, we don't like the image in the mirror and ask the mirror to tell us something different.

  154. "The elites of Europe are like the "elites" of the US." No actually the elites of Europe (outside of the UK anyway) tend to be more public-spirited. I think this is what bothers PK the most: unlike himself and other American elites, who are pigs feeding at the trough, their counterparts in Europe have a sense of moderation. And that hurts his self-image.

  155. Europeans have recognized that to continue completely out of control and unaffordable government spending in countries like Greece is not a wise long term strategy. For recognizing reality they are criticized by Krugman of supporting austerity.

    If only the Europeans could be more like the US where will never recognize out of control and unaffordable government spending for what it is and just pretend that the solution to long term debt problems is piling on more debt.

    Then the world would be a happy place.

  156. Dear Mr. Krugman, "It's hard to imagine war in today's Europe".
    That sentence could have been written in 1910, when Europeans were enjoying, for the most part, prosperity yet were always on the brink of war and, indeed, there were little wars fought mostly in the same areas we read about today. Europe appeared to "sleep walk" into WW1 which begat WW2 and the Cold War (one could argue the "War on Terror" is a child of WW1 as the lines creating Iran, Iraq, etc. were drawn by the victors at Versailles with no regard to the inhabitants of the region).
    Logic and warfare do not make good bedfellows. I would point to Mr. Putin and his "land grab" as an example of what happens when a leader decides to behave somewhat "irrationally" (invading Iraq might constitute another example of such misguided behavior).
    And it appears "economics" might be part of the issue but not the whole; I would posit that the possession of a nuclear stockpile is all that holds back a full fledged, winner take all, war and the world has just been lucky enough to avoid this "Mutually Assured Destruction" up to now.
    Given Western Civilization's history, however, it seems just a matter of time before someone steps too far over the line. Remember, it was fairly stable just prior to "The Guns of August" yet the "economic" stability had no bearing on the declarations of war. The fellows in the fancy uniforms back then were missing nuclear devices, gas being their favorite WMD.
    It seems little different now.

  157. Yes, the rise of right wing views including anti-immigrant sentiments, expressed through national politics, is on the rise in Europe. Certainly poor economic performance seems to supply a nurturing ground for such beliefs. It all sounds familiar and we don't have to go as far as Europe to see this familiar and frightening scenario.

  158. As one who despairs at the current direction of public education I was struck by the parallels between the "education reform movement" and the movement to place Europe under a single currency. If one substitutes "the Common Core" for the Euro, the principles of "school reform" for the principles of "austerity", and "the privatizers" for "Europe's elite" the narrative is identical. Like "the European elite", today's privatizers disguise ideology as expertise and prevent "what it wants to do must be done"… and like the austerity movement there is no evidence whatsoever that what passes for "reform" will do anything to improve education for children… and like the austerity movement, the beneficiaries are the economic elite who are now making a profit at the expense of taxpayers.

  159. Thomas Piketty is right: we need an annual, progressive, global tax on wealth. But we cannot get all (or even most) of the world's nations to do that just now, so individual nations should establish annual, progressive taxes on wealth.

    If we had more knowledgeable politicians in the United States and Europe, we would be able to establish annual, progressive taxes on wealth where all the revenues are retained by the individual national governments, and the same tax rates would be used by the cooperating nations. The increased revenues would fund infrastructure, research and education, and thereby create millions of new jobs.

  160. The issue of Ukraine is not black and white. Why did the US and the EU advance NATO and the EU right up to the border of Russia? That was an outrageous affront to Russia at a very low point in its history.

  161. It is ridicolous when an American lectures Europeans about democratic values. A country which abducts, tortures and kills without judicial control, where making public its atrocities and undemocratic methods is prosecuted as high treason and which spies - stasi-like - on everybody in the world (and sure enough the intelligence gathered is used to blackmail, just like the stasi did).

  162. "an American" ? Do all Americans think alike? No, they do not. Not only that, we express views that differ from each other. Some of us are as appalled at the behavior of our "leaders" to justify torture etc. as you are. We are in trouble. Congress has been bought so this is no longer a democracy. My vote doesn't always count. Say Al Gore. He won but only 9 votes counted in that election. It was stolen from U.S. the real citizens as opposed to the misnamed citizens of Citizens United.

    Do all Austrians think alike?

  163. Right wing groups in Europe and America( yes The Tea Party) live off heat and passion, their politicians have always known how to trigger and use the rage to get it's people out to vote. Liberals instead always appeal to people's rational minds and as healthy as that is, there is a lack of passion which keeps people at home rather than out voting. So we end up having crazy people in charge.

  164. This piece is a beautiful example of Krugman's self referential world. Making many references to his own writings as if they could validate his opinions, he paints a picture of heroic economic technocrats and completely ignores the thousands of years of history that have made Europe a checkerbord of languages and ethnicities. As if Krugmanomics could account entirely for human behavior. What narcissism!

  165. Democracy was described by Ben Franklin as "Two wolves a sheep, deciding what to eat for dinner." Mr. Franklin understood wjhat many today do not, and certainly the author of this piece, democracy is evil in that it targets various groups by the majority. Whether that group is technocratic elites, whatever that may mean, or the very poor, or Muslim factions, or Christian religionists, it matters not. When someone is targeted, like in former NAZI Germany, we can see where that leads. I agree with Friedman that there are scary people in Europe, but no government in Europe can rightly be considered 'right wing' as the author notes, because both major factions there are leaning to the left, whether they be Democratic socialist, hardcore communists, or National Socialists. Will European Union quell nationalism? I wouldn't count on it.

  166. Who is Friedman?

  167. Such an interesting article, full of parallels to our situation here. I know we are one United States still surviving as such after nearing 250 years, but so many actions and reactions are similar, revealing that human nature is--well--human nature.

    I was particularly struck by Dr. Krugman's observation that the wealthy intelligentsia, the elites, have widened the economic gap between "haves" and "have nots" in the interests of fiscal purity: "By closing ranks, the elite has in effect ensured that there are no moderate voices dissenting from policy orthodoxy." .

    And so, as often happens in Europe, into the void step demagogic elements, stirring up xenophobia and racism to win adherents to their side. LePen and others capitalize on the economic malaise caused by the drive to get all countries to play by the same economic rules to win power in an eerie similarity to our Tea Party.

    The part about investors in effect raping and pillaging poorer southern countries like Greece and to some extent, Italy, again calls up parallels with our banking class during the toxic mortgage crisis.

    The US would do well to study European history as well as what's happening now. The US took the best from the best of Europe to form this country, to avoid the mistakes of their past. But it "ain't over" and we have a living laboratory to assess as we try to resolve our own economic woes.

  168. Paul,

    Your analysis of the ideologues holding the strings of political power and blocking economic policy beneficial to ordinary citizens applies equally to conditions in the United States. More and more, we live in a world where power elites are handmaidens to corporations and wealth who have the deep pockets of petty cash to finance the high cost of running campaigns. And if you have the temerity to go against the grain, these same groups will plow unlimited money into handpicked candidates to oppose these rabble-rousers that won't play ball: accepting legislation drafted by the lobbyists in exchange for big cash donations aka Bribery.

  169. This almost reads like Keynes' book, "The Economic Consequences of the Peace" and it is hard to contemplate that we may be making the same kinds of mistakes that turned the 1920s and 30's into an era of rearmament. What do the elites think they will achieve if they are rich but live in a world collapsing from political suicide?

  170. Europe has always been governed by the same entrenched elite: the 400 families who owned France since the time of the Crusades, and in Germany, the barons of the 19th century industrial era. World Wars I & II did nothing to effect a substantial redistribution of wealth and the creation of the post-war welfare state with its higher withholding merely gave a few generations of chartered accountants a chance to amass their own fortunes. Classism is at the root of Europe's economic malaise, along with a steep demographic decline as all over the continent people chose to use birth control and have two or fewer children. Resentment boils up in the inchoate far-right political movements who react to these conditions, but no innovation appears to alleviate Europe's sinking into senescent torpor.

  171. You are so correct. The entrenched elite (those with inherited wealth), no matter what country you are talking about, will continue to always come out on top in any conflict or upheaval. Oligarch's have been further amassing their wealth for centuries all the better to control the unwashed by having them fight amongst themselves for the few scraps tossed out for the many. The big question is what form would revolution take to alter this? I believe that revolution needs to take place is in the minds and hearts of the majority of us so that it would not require violence to change the status quo. better the ballot box than the barrel of a gun.

  172. It is all a disturbing development, especially the rise of right wing groups and their strange affinity with the left (in some cases.) Then there is Russian proper. Putin's Russian action in the Crimea looks eerily like Hitler's in Austria and Czechoslovakia before WWII and his talk of "Sudetenland."

    One has to wonder if Putin's Russia sees all this as opportunity, but probably not for physically going back into regions lost to the old Soviet Union in the 90s, but to push to influence the pro-Russian politics and for Russia itself to try to weaken the EU.

    It shouldn't surprise. The West, especially America played the dissolution of the Soviet empire very badly by treating the Russians like a defeated enemy (or so some radio commentary had it on Pacifica Radio's Ian Masters show.) The Russians did not see themselves that way and the ultimate result now is the Putin phenomena.

    The big arena or world politics to watch is definitely Europe.

  173. @PK "The immediate problem is poor economic performance."

    Step back. What if the immediate problem isn't poor economic performance, but rather *why* better policy is not being enacted? It's not as if there are not folks who know that stimulus is appropriate following a fiscal crisis. Why are they not being listened to? Why is austerity followed instead?

    Is it *really* ignorance, or is it malice? Who profits? Who loses? Who gains?

  174. In the Fifties, fresh from the war, there was an idea to make the circulation of goods & people easier and less costly in Europe.

    In the Eighties, with the above accomplishes, politicians put their heavy hands on the EU and made it the go to place for politicians defeated in their elections. Salaries were fat, Brussels was cheap living, and it was a fun place to grow one's power. Corruption was a significant possibility. All of this extended far down the bureaucratic ladder.

    In the Nineties the Euro was added for a series of hidden reasons. It caused prices to soar uniformly by 15/20% for the public which was denied by phony EU statistics.

    So the EU and its constituent parts became expensive, expansive, debt ridden, for the rich, corrup and disinterested in the ordinary citizen. And it crashed. And it veered off to the extreme right as a "populist" movement.

    What Krugman, ever the American, fails to see is that Europe has followed America to the letter for the last 70 years. For 50 of the 70 I have split my time between the two. It has been fascinating to watch. "The strength of Europe is its diversity, not uniformity," I'd say. "Oh, no, we're countering America", the Europeans insisted.

    They were misled by their politicians - just as we were!

    The French used to say that at about the time America discovered that a policy didn't work, France would adopt it.

    THAT, Mr. Krugman is why America & the EU are both in their respective economic & political disasters.

  175. And how different is this from the tea party antics, elections dominated by racism and class conflict here? The EU and the euro are merely window dressing to the main event here, that it is human nature to scapegoat especially if the responsibility for it can be scuttled.

  176. Re the discussion of American vs European elites below, there is a reason why American elites are worse: Americans believe widely in the myth of equality of opportunity. So an undergraduate at Stanford, or a professor at Princeton, or a reporter at the New York Times, will believe their elite status demonstrates they are superior because they deserved it. They therefore have no moral compunction to crush those below them. European elites are a little more modest.

  177. With some obvious tweaking, Mr. Krugman's points could be applied to the current state of the US; our political system captured by a wealthy elite is driving the same kind of inequality, lack of opportunity and decay described by the article. We have our own version of corporate fascism on the march. Our politicians in both parties have become mere puppets and pawns of those who pay them. The Roberts SCOTUS decisions on corporations and voting rights; the power of the NRA, the failure to rein in big banks and speculation presented as investment are just a few indicators of the rightward drift here. All's we need is an explosion of inflation and we're in a 21st century version of the Weimar Republic. In a country where there are guns for everyone, the only question is at whom will they be pointed.

  178. Throughout Western history there have always been the haves and the have mores. The rest of us rusticated at the bottom of the hill while those in power tried to teach us that they deserved their exalted positions. After all they were born to wealth and, therefore entitled to run roughshod over us. Think back to the earlier economic times in America when a new class of haves were being born. Once wealth was achieved, many of them went to Europe seeking a title through marriage, or any means they could get one. The words title and entitled are blood brothers. They separate the guy with the Mercedes from the guy with the Chevy. It's even manifest in the manner of the drivers of those luxury cars. To any casual observer it would appear that the class structure of drivers is obvious. Expensive cars are entitled to hog roads, parking lots and largely ignore most traffic controls. Why? Because they can! To them democracy is all well and good if it doesn't interfere with the privilege that wealth has bestowed on them. While they fancy themselves as job creators, you know the makers; they are, in fact the takers. Medical care for everyone - no good. A livable wage - no good. Feeding poor children - no good. Equality for women - no good. Concern for the environment - no good. Sounds like the haves of America and the haves of Europe are constant and loving bedfellows. The rich end up rich even after world wars. That's why they don't care about anyone but themselves.

  179. A "deficit of legitimacy." Boy, that sounds familiar. That applies here in America as well as in Europe. Even the possible solutions, if any exist, seem to be in the hands of the wrong people. There is a huge deficit. Who counters the elite?

  180. It would be an awful idea to try to break the European Union because of current dysfunction. There must be a way to satisfy the appointing them to submit their ideas as to what should/could/ought to/must be done to improve the Union. If the 'elites' seem divorced from their people's needs and, even, from reality, there must be a way to anoint 'new blood' to cut this gordian knot. But to lose the benefits of a lasting peace in Europe by destroying the Union is a step in the wrong direction, dangerous as well.

  181. The EU was marketed as a trade bloc to compete with Nafta at the time and Asia. The beneficiary's are German and French exports to member nations, paid by a new funny money called the euro. Now Putin has to get his model on the field.

  182. So I come back from lunch with a bunch of European students - who love to trash the silly American -(me) - and the first thing I read -(when I checked back the comment section) - is yours.

    Can't you go out with these students from now on?
    -(they would have soo much fun!)

  183. Me thinks the Brits have it right. Stay out of the need to diminish the value of your neighbor. That is and has always been the problem of continental Europe; hatred of the "others", even if they are a few kilometers away or across the street.

  184. As always Krugman sees the problem to be unwillingness to go into stifling debt, high taxation and profligate spending as a problem. He should just can his essays and speeches so he could save time writing his columns. And of course the creation of Rightist Nationalist organizations is either the source of the problem or the product of it depending on what ax he's grinding for the day. It's never the extremist elements on the other side that may be the problem. Maybe it's time for him to write another economcs text book for the college students. Maybe he could $300 for this one instead of the $177 he gets now. He still hasn't convinced enough students to give up their lives for the cause of indebtedness and fealty to the state.

  185. What we are seeing in the US and Europe is the rise of authortarianism, as an assault on equality, opportunity, and democracy. It is occurring at two levels.

    1 The oligarchs & elites are/have been in a frenzied power grab, attempting to gain a choke hold on wealth and political power. The needs of society and democracy mean nothing to them, and are a viewed as major threats to their fortunes and status. Determined to make all the decisions and have the politicians work for their narrow interests, they push for policies such as austerity and balanced budgets, and block any number of efforts that would help working people & families, and speed up economic recovery. Why? Because they are doing very, very well, thank you, by not sharing, and they can call the tune in a lousy job market (lower wages, undercut unions, fight taxes, etc) & gain more $ & power

    2 The downward mobile middle & working classes are frightened about economic instability, worried about cultural change and the loss of tradition (religion, gender-sex relationships), and angry about an influx of ethnic groups taking jobs away from them, rising in status, and "contaminating" "their" culture. Many of the principles of democracy are what they do not want: equality, social justice, tolerance for differences. Cultural fears trump their own weak economic status.

    Group 1 manipulates and uses Group 2 to its advantage, and both groups are more comfortable with authoritarian rule than with democracy. Bad sign

  186. These same dynamics have been pressing on the United States for over 200 years, we have found our way through before and will again. Europe has no tradition other than war to solve its problems. Europe has not learned how to create a new skin, here in the United States we swap out our elites every generation or so.

  187. I think the problem is that "Europe" has always been more an elite than a mass phenomenon. The institutions are not really democratic, and the continent as a whole is governed by what Beppe Severgnini calls "respectful tribalism." It's not too late, but it will take political as well as economic change to clean things up.

  188. I will agree with Dr. Krugman that, in the past twenty years or so, the enlargement of the EU has been largely driven by political, rather than economic considerations . Weaning Southern Europe from the "dangers" of Atlanticism , and providing a home to the Baltics and some of the Balkans is what motivated the core European countries to increase, unwisely so in my opinion, the Union's membership.

    But, once again, Dr. Krugman lays all the blame for the current - but improving - economic conundrum plaguing Europe on the Euro, thereby absolving from blame the national governments whose economic and fiscal policies made it inevitable that, when the tide of good times receded, the sick boats would not be able to float anymore .

    AS to the significance of the European Parliament elections, let's remember that said Parliament is little more that a debating society for political wind bags, deprived of any significant power . These elections usually generate levels of abstentionism never seen in national elections . No political leader of any major party, and practically no leader of even the marginal parties, has ever sat in the European Parliament .

    Where the political "rubber hits the road", i.e. in national elections , the electorates in practically all European countries, gravitate towards the center because they know that this is where governing takes pace . Grandstanding is what takes place in the European Parliament . Strasbourg is the place for
    empty rhetoric .

  189. It seems as if the idea of personal debt responsibility and austerity trumps the counter-intuitive fixes to national economies that require more spending and borrowing.

    People I speak to are rather insistent on this point: they want governments to behave like households when it comes to spending and budgets and no amount of well-reasoned and evidentiary coherent arguments (of the kind Krugman offersin just about every column) will convince them.

    Tipping the world economy further and further towards major catastrophic events or toward the catastrophe of generational, lingering degradation of people's personal quality of life only seems to strengthen the nostalgia for some glorious ( and non-existent) past where governments and economies ran like the family farm. Or some other fantasy. Hence the rise of the resentful, racist Right across Europe and here in the U.S.

    Perhaps over time, the "just-okay ness" of the status quo will be enough to discredit and dissipate the scary people who will hopefully get old and die while they are waiting in the wings.

  190. America's economists have no leisure to lecture Europe about the social order. Fix this one, first. After you've done that, then you can offer advice.

  191. Krugman's forecasts that the Euro was doomed having proved premature he's now falling back on gloomy predictions about the state of democracy in Europe. In fact it doesn't seem in much worse state than it does here. The fact is no one takes the European parliament very seriously because everyone realizes that real power lies with member governments who negotiate with each other over the real issues. Thus turnouts are low and a fair number of whackos get elected to what is essentially a talking shop. Krugman attributes his incorrect Euro predictions to a failure to understand the strength of its political support and yet is here giving us a lecture about politics in Europe. In fact the Euro's survival, which was never really in doubt, and widening adoption, is much more a matter of economics than political, legal and institutional forces important though these are.

  192. I have been to Europe all of twice. Once for business, once for pleasure. At a conference I heard a member of the European Parliament speak. He saw no use for promoting energy sources that were not green and believed society would have been well-served if people made regular visits to wellness centers. Someone is paying for this guy to go to Brussels. I am not making this up.

  193. Paul is consistent. More debt, more subsidy and taking from those who have to support those who gave theirs away is the answer. He can't admit that continued and expanded social programs are at the heart of Europe's demise. Look at the exceptions like Germany.

    Paul is right on one point. The decline has occurred over a century. He is wrong about the fix.

  194. 'He can't admit that continued and expanded social programs are at the heart of Europe's demise. Look at the exceptions like Germany.'

    BUT dude - Germany has one of the MOST amazing expanded social programs!!

    Why doesn't that get into American heads?!
    -(because dear Prof. didn't tell'ya?)

  195. This American in Florence would like to be hearing from a lot more Europeans like Andres in Spain & now pieceofcake in Germany because I've been spending a lot of time in Italy recently to escape the unbearable commercialization, consumerism & unending sense of exceptionalism & self-righteousness in my country. But I'm paying a high price in my passion for European civilized culture because of the American Elite's keeping the dollar so low to benefit their exports at the same time they kill the ability of Europeans to export their classy goods to us and cripple our travel here. And, by the way, Prof .Krugman, who was it that all but melted down the whole world's economy in 2008? I seem to remember that it was the American "Masters of the Universe" with their too-big-to-function banks, their hedge funds, all of those bad mortgages & phoney financial products. It is the Europeans who've been preserving Western Civilization, human values & democracy in spite of us. Yet they've been victimized by American Cowboy Capitalism. I would appreciate our Nobel Professor of Economics analysis of how our US economy & culture is dehumanizing its own people at the same time it is harming our European cousins and how we can heal ourselves instead of blaming our best friends. Democracy? when only 16% of the folks in my state of NC voted in this month's primary all while the Regressives are dragging it back into a Civil War. And you think Europe has problemsF?!?

  196. - and reading some of the newer comments I perhaps should relay what some students from France, Italy, Poland, Brazil, Sweden and yes - also from China had to say about the 'Eurocats' - Firstly they think they are pretty fluffy - but unpretendable - that's true -(but whats crats aren#t fluffy and unpretandable?) - and especially the dude from China is very thankful that he doen#t have to pay for the 'Elite' University of Konstanz -(because 'Elite' it has to be!) - or the dude from Brazil wouldn't have shown up at all - and 'Samba' dear Prof. -


  197. I used to believe in the EU, until the advent of the Euro.
    The reason is, that EU was meant to be an union among equals. From the negotiations for exchange rate to Euro, to the location of the Central Bank in Frankfurt, I saw the relationship among countries change. Since the Euro arrived, Germany kept on growing in status, like a "First among equals". Then, came the duo Sarkozi-Merkel, dictating to other leaders what to do. My eyes were open: this was not the Europe of the people, but the Europe of the "winner takes it all". We are not pleased.

  198. Pondering the E.U., we're always struck that the parties can't seem to remember the mistakes made with the Versailles Treaty.

    Things become more clear when we hear authors like Micklethwaite and Wooldridge, editors at The Economist, lauding Cameron and holding up 19th century government as ideals Western governments should return to:

    since it becomes apparent that the VSPs are not pursuing economics, favoring super-committees of elites over inconvenient democracy.

    In YURP, as over here, it seems things with the VSP's are about ideology, not economics and empirics.

    Bush 41 explained in 1980 that trickledown economics is voodoo - so it has been and so it will be, no matter on which continent.

  199. The answer to economic ills is elimination of socialistic programs by governments and currency stability based upon sound conservative principles. When both are applied, human nature to take the easy way out is discouraged and people must be inventive to survive. This is the problem with most of Krugman's ideas, the Socialist utopia he advocates just never factors in human nature. The latest crisis in big government running things is the VA, the perfect example of why the government can never run health care.

  200. Even the government loving NYTs has stated on numerous occasions that government is ALWAYS inefficient and OFTEN corrupt. Yet it continues to call for bigger government and higher taxes to pay for it.

  201. This lament about Europe's failure to meet democratic ideals is a tedious extension of the stream of critical columns that Mr. Krugman has devoted to Europe, europeans, and the euro. Europe has survived so many crises, and they will survive the present one; they may even prosper. Mr. Krugman's specialty seems to be gloom-and-doom prophesies about the european economy and society, which have an uncanny resemblance to his persistent handwringing about the American economy and society. Mr. Krugman, please give us a column about the bright side of something!

  202. Although so powerfully correct in so many economic areas, Krugman stumbled badly when he aped NATO's anti- Russian stance: "Some of the biggest winners in Europe’s election will probably be people taking Vladimir Putin’s side in the Ukraine crisis.", thereby linking anti-Euroites to an unfounded and militarist Russian antagonism.

    Paul: Stay out of international politics, or first learn their histories and compositions.

  203. Ideology is the enemy of truth.

  204. What is needed in Europe, as well as in this country and for that matter around the world, are governments that don't just coddle the rich elite at the expense of everyone else.

  205. I see similarities between the Japanese culture and European culture: they are both built on family connections between elites. WWI may have freed Europe of their direct connection to political power – with the fall of the Kaiser and the dissolution of Austria – but the elites pull the strings. WWII had a similar effect on Japan; try as he could, MacArthur could not stamp out the Samurai. The elites still rule that country making rules that benefit the elites and tie up the lion’s share of money in capital. In Democratic countries, voters have power. They must learn to challenge the elites to force them to pull that money out of the shadow banks and into investments. Robert Reich had a few good ideas in his 2011 book “Aftershock.”

  206. Elections may be held to vote in members of Parliament, but the EU has taken control away from voters, and this is the cause the rise of "right-wing extremists".

    Martin Schultz, European Parliament President: elected by members of European Parliament.

    Jose Manuel Barroso, European Commission President: appointed by EU countries or Heads of State.

    Herman Van Rompuy, European Council President: appointed by EU countries or Heads of State.

    Mario Draghi, President of the ECB: from the World Bank to Goldman Sachs to Governor of the Bank of Italy, and then appointed to current position.

    Karolos Papoulias, President of Greece: appointed by Parliament - not by popular vote.

    Bureaucracy to the hilt! The EU has a Parliament President, a Commission President and a Council President. None of the 'Presidents' are voted into power by the common citizens. Fiscal, economic and trade agreements that impact people's lives are all decided from the crony elite power structure that the citizens have no voice over.

    As far as taking Vladimir Putin's side, readers should check out
    John Pilger's 'Break the Silence: a World War is Beckoning'

  207. I fear Krugman has missed the point on this one. Most European voters who support the so-called extreme right wing parties are not voting against democracy but against the democratic deficit at the heart of the European project. The elites have mismanaged the response to the financial crisis and are now pushing for 'ever closer union'. Most Europeans don't want that, but have no mechanism within their own countries' democratic systems to vote against it - essentially all mainstream political parties have bought into the European myth. Voting for one of the 'extreme' parties in the European elections - elections which have no consequence whatsoever - allow the sending of a powerful message to the mainstream parties. What Europeans really want is a free market in goods, services and labour, but not a European super state and not a currency union.
    In the UK for example, the massive vote for UKIP should send the message to the Labour and Conservative parties that the electorate wants Labour and Conservative to fight out the running of the country but to do it outside the EU.

  208. Debtor nations include Italy, which has a huge problem as the receiving port of desperate immigrants from Africa and the middle east. The EU isn't doing much to help there either.

  209. I doubt Europe can restore growth to decent levels regardless of what policies are adopted. The population of that continent will be shrinking due to birth rates insufficient to replace the population. If GDP is a function of per capita GDP times population, you have to boost the per capita rate substantially just to stay level when not only do you have less people, but far fewer of them are working as they age out.

    Lower expenditures to educate the young who aren't there will be overtaken by increased health care and other needs of the booming numbers of the elderly. Less infrastructure needs would be counterbalanced by spreading the costs of maintaining what is already in place over fewer taxpayers. Business would find fewer customers and so might not expand.

    Some might say that this trend is good long term, but it seems indisputable that the demographics of Europe mean, relative to the rest of the world, it will be hard put to avoid decline anyway.

  210. Dr. Krugman:
    First, is hard to imagine Europe back in a war, then may winners be on Putin's side in Ukraine... war (you can call it "crisis" that is a very useful word).
    To understand Europe is not easy even for us, but from Princeton it could be really difficult.
    If the Euro is so "shadowy" and lacking of economic sense as you say often, how coul it be valued as high as it is against the US$? Are the financial analists crazy people, beyond any rational expectancy?
    Thanks anyway for your brilliant analysis that I do follow as much as I can.

  211. Much of Profs. Krugman's analysis can be applied to the U.S. as well as the EU. Though the signs of fracture are more pronounced in the EU and though the EU, because it is composed of very different nations, is more fragile, the U.S. and EU are afflicted by the same crises of failed political/economic effectiveness and, thus, failed legitimacy.

    And those crises flow from the same set of causes: The dogmas and ideologies of the Right and the Left are in irreconcilable conflict, with each group unwilling, perhaps unable, to accommodate the other's legitimate differences of values and policies, and with each group eschewing resort to reason, facts, and epistemologically verified knowledge to determine whether their respective dogmas and ideologies are false and whether their respective policies are sound, whenever those dogmas, policies, ideologies, and/or values are central to their respective identities or are necessary to their pursuit of power and/or wealth. Instead, on such occasions of defending their political--dare I say tribal--identities and interests, each group takes any opportunity to seize the levers of power to compel the other to conform to its dogmas, whether or not those dogmas are true.

    Obviously, this cannot long endure. And we here and in the EU shall either learn to politically accommodate the legitimate difference of Right and Left, rich and poor, and use reason and knowledge to determine the truth and resolve fundamental disputes, or we are lost.

  212. The argument against austerity is problematic. Greece, the ice that the European union originally slipped on, is a profligate state where the citizens see taxes as immoral and government spending as an ever-producing fruit tree. The real issue in Europe is not elitism, although I'm certain antisemitism is alive and well. Rather, the real issue is that some countries have over-stimulated socialism.

    There is a maximum amount of socialism that any one country can endure. Greece hit its limit and Spain may be close behind. Even France, the second largest economy in Europe is having socialism over-stimulation issues.

    Republicans in America will cite Europe's economic issues as evidence against social programs and taxation in America. But this is a case of apples and oranges. America would be fine if not for the Reagan tax cuts of the early 1980's, the repeal of the Glass-Steagall Act and the collapse of our housing market and banks due to the madness of deregulation.

    So maybe austerity is the right thing for some in Europe. How else do you get profligate states to fall in line? You have to address the culture. And we have to address ours; a culture addicted to goods and services provided by underpaid workers whose efforts get them nowhere. We need austerity here, too, but ours should be applied to the mega-rich.

  213. The robber baron class is even more entrenched in the corridors of power in Europe than it is here in the U.S., where it is quite bad enough, thank you very much.

    You have to understand, from the point of view of these robber barons, whose hands control the levers of power, austerity is almost perfectly self-serving. By reducing government expenditures in the name of tax advantages, it is directly so. And by depressing employment, thus making it easier to "get good help cheap," it is indirectly self-serving.

    But the key remains that austerity gives the robber baron class even more of an upper hand than they enjoy in times of prosperity. They like it that way (if you were them, wouldn't you?), and so those are the policies they advocate and have the power to implement regardless of the effect those policies have on society as a whole.

  214. 'The robber baron class is even more entrenched in the corridors of power in Europe than it is here in the U.S'


  215. You think not? I believe they have merely made some wiser social decisions, but that their power is genuinely supreme.

    Noblesse oblige is a stronger sentiment among the robber barons of Europe than it is in the U.S.

  216. 'You think not?'

    I know 'not' - because I Iive both places - and NOBODY beats the US 'robber barons' -(as you call them) in greed. -(or look at the Inequality index!)

  217. EU leaders may not be facing an existential threat now. Yet the way they dealt with the Euro crisis does have political ramifications. Some of them are to blame for fomenting anti EU sentiments, when they were not honest about their countries' problems, that they needed a total shake up. Instead they insisted austerity measures were dictated by Brussels, making it look as if the EU itself were the cause of tensions. Some leaders were totally inept to deal with their countries' social and economic problems. They had disconnected themselves from their electorates. Now the EU itself is facing some grim political consequences of this idiocy.