V oters in France and Greece registered their displeasure with their leaders’ economic policies over the weekend. How that might affect this country is not entirely clear, but it does point to an interesting comparison between the U.S. handling of the Great Recession and Europe’s.
In what was widely seen as a reaction to cuts to government spending and benefits, Greek voters rejected both of that country’s two major parties. Expressing a similar sentiment, French voters turned out the incumbent president, Nicolas Sarkozy, and elected the Socialist candidate, Francois Hollande.
It is the French case that has the most chance of wider effects. France has the European Union’s second-largest economy and a major international presence. It is also a key partner in Europe’s political leadership.
Together with German Chancellor Angela Merkel, Sarkozy has been crucial in forming and driving the E.U.’s policy of austerity – the very policy French and Greek voters appear to have rejected. Indeed, the two leaders have been so closely tied that they have often been referred to – sometimes derisively – as “Merkozy.”
How that Paris-Berlin alliance holds up will be crucial for the European Union’s future. Merkel quickly said that “Francois Hollande will be welcomed with open arms here in Germany by me. We will work together well and intensely.”
That, however, was widely taken as her attempt to downplay any differences with the new French president. Hollande has said he means to give “a new direction to Europe” by altering Europe’s focus on reducing debt and adding more emphasis on stimulating growth.
On that, Merkel has shown less enthusiasm for working with the new French president. The German chancellor has said that the fiscal agreement she and Sarkozy worked out is “not negotiable.”
Hollande seems to think it is. He has said, “Austerity need not be Europe’s fate.”
All of that matters to Americans for two reasons. One, of course, is that the world is connected, and what happens in Europe affects the United States. A worsening of the European economy could hurt United States exports and generally unsettle world markets. Then, too, the U.S. could benefit if international investors flee Europe’s troubled economy and put their money instead in this country.
More interesting is what this says about our politics. Beginning with the Bush administration, the U.S. reaction to the financial crises in 2008 was to stimulate the economy with federal spending, tax cuts and the Federal Reserve’s policies. The British and European Union answer was austerity.
The U.S. economy is recovering. Growth here is too slow and jobs are still lacking, but the numbers are all in positive territory and trending upward.
Britain has just sunk into a double-dip recession. And parts of Europe have unemployment rates not seen in this country since the 1930s.
Beyond simply objecting to cuts, French voters may have noted those disparate outcomes. Besieged by politics posing as economics in an election year, U.S. voters might consider them as well.