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Jonathan Portes on Olli Rehn

Johnatan Portes has a fabulous post in the Financial Times (link to the Brad deLong blog as that’s unrestricted unlike the FT), a graph with data on employment growth in the Baltic countries has been added (below):


The EU commissioner for economic affairs brings us good news:

Since last spring, Greece has demonstrated a remarkable commitment to economic stabilisation – one certain to yield lasting returns. Spain is now also pursuing a broad reform agenda…. Europe’s recovery in the real economy has taken hold and is becoming self-sustaining.

So the commission’s strategy is working, it seems.

Except those quotes aren’t from Olli Rehn’s most recent article on your Comment page (“Austerity is working – Europe must stay the course”, December 11, 2012). They are from his article of two years ago: “New reforms can break Europe’s debt cycle”, January 11, 2011.

In this week’s piece, he said:

There is light at the end of the tunnel … confidence is returning … we need to stay the course …

What about the realities of actual economic developments in the eurozone over the last two years? If Mr Rehn had changed a couple of dates, he could probably have saved himself the trouble of writing a new article and simply resubmitted the old one.

What has actually happened in the intervening period? Unemployment in both Spain and Greece has risen to over 25 per cent. Even in Latvia, the commission’s favourite “success story”, where growth has returned, the falls in unemployment (from a very high level) have largely been the result of mass emigration; employment in Latvia remains about 20 per cent below its pre-crisis peak.

To quote Tacitus: “Solitudinem faciunt et pacem appellant.”


Source: Eurostat

  1. Lucy Honeychurch
    December 12, 2012 at 5:46 pm

    In the EU, the idea of austerity seems to me rooted in a very childish perception of a world driven by an unproductive fixation on crime and punishment.

    The underlying idea being – if you do something bad, you should be spanked. The spanking is supposed to deter the bad behavior in future. The bad ‘result’ (the spanking) is intended to teach the child about cause and effect, ie. you do something you’re not supposed to do, and you get a bad result, ergo always do what you’re told is ‘right’

    However, when a Prince does something bad, his surrogate gets spanked. So it is with Politicians.

    So it is when politicians do what they’re told is ‘right’ by bankers (ie. leverage the hell out of your tax base, so we can make profits for our companies, and bonuses for ourselves) – they do it – because from childhood they’ve been trained to jump when people in authority tell them to jump.

    The result being, the politicians’ actions cause the ‘spanking’ of their surrogates – the public – and the actual VALUE of the spanking be dammned because the country (as embodied by their Princes/Politicians) did something wrong, so now they must be punished, so they don’t do it again.

    Whether this ‘spanking’ results in an improved economy or not, is not a part of the crime and punishement equation. Yet, we are suprised when spanking the surrogate (taking away the ability to make a living of millions of members of the public) to punish the Princes (politicians and banks, who continue to get goodies while the public endures the punishment for their misdeeds) doesn’t result in a good economy. Because, dammit, we’re spanking as hard as we can!

    Anyone else think this is just ridiculous?

    In the US (which is more individualistic), we personalize the experience, ie. G has debt, and when MY household has debt, I have to ‘tighten my belt’, ergo G must tighten IT’S belt. Forgetting the fact that no household has a money tree growing in the back yard like G does.

    Still, yet another ridiculous incarnation of a childish fixation on crime and punishment – actual economic effects be dammed.

    … and we think this will improve our global economy why?

    • December 13, 2012 at 7:39 am

      “Anyone else think this is just ridiculous?”

      Yes, I do! This sparks the thought of Britain’s early Protestant monarchs fearing all dissidents were Catholics and endevouring to dissuade them by fines and confiscation of property. There is certainly, anyway, a Puritan reversion at this time from Catholic New Testament forgiveness to Old Testament focus on the fallenness of man. I put it down to the printing of the Bible with the Old Testament first. Naive readers become brainwashed with the wrong idea and thus misconstrue (if they ever get so far as) the right answer.

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