By Richard W. Rahn
“Denial is leading to collective economic suicide in Europe and the United States. The French on Sunday elected a socialist president who wants to raise taxes on those elusive rich and keep spending as if there is no tomorrow.
Many on the left, including European socialists, the New York Times and its economist Paul Krugman, are falsely claiming that Europe and even the United States are being saddled with austerity. Their claim is that governments are not spending enough to reduce unemployment. They want higher taxes on the most productive plus bigger government. They suffer from a collective memory loss. Don’t they remember that socialism did not work? Every time the big-government “solution” has been tried for the past two centuries, it has failed, but those on the left seem to be incapable of learning.
When the current economic crisis began — largely caused by a government-created housing bubble — we were told that if the government spent an extra trillion dollars or so and ran up the deficit, all would be well. Did it work as advertised in the United States? No. In the United Kingdom? No. In France? No. In Italy? No. In Spain? No. And not even the left wants to talk about Greece. The accompanying chart shows that rather than the austerity the left is whining about, government spending has risen as a share of gross domestic product (GDP) in all of the major economies. Again, the left said unemployment rates should have come down by now, but the opposite is happening. The U.S. unemployment rate has come down slightly, but the percentage of the labor force at work continues to decline, so the real unemployment rate is approximately 15 percent.”