Europe Protests Over Who Pays the Bill For Recovery?

(9/29/10) Anti-austerity protests swept across Europe today.  Millions of workers from doctors to bus drivers across Belgium, Spain, Greece, Slovenia and every other country in the European Union protested, marched, demonstrated and rallied to end harsh and rigid austerity measures that European governments have implemented over the past few months to try to control their escalating debts. These measures include civil service job cuts (to cut government overhead), salary and pension reductions and sales and income tax increases.

Today’s protests were organized by trade unions who feel that average workers throughout the EU are becoming victims of a global economic crisis caused by wealthy bankers and traders, many of whom were bailed-out by massive government funding for which tax-payers are bearing the burden. Earlier this year, 15 of the 27 EU member nations paid to bail-out Greece in order to protect the value of the Euro. In-turn, Greece was forced to implement deep salary, pension and benefit cuts to prevent a total collapse. Despite bitter protests, the fix was not directed at the banks nor on those who caused the problem in the first place.

On June 25, 2010, amidst fears of a double-dip recession, G8 and G20 nations gathered in Toronto to determine how and how quickly to cut growing deficits to stimulate economic recovery. The European Commission with Germany’s support held firmly that Europe could no longer afford to borrow and spend and must repair its budgets in order to rebuild confidence for growth. Also in support of the European Commission’s tough austerity plan was France and the newly elected British government. Only America asserted that draconian budget cuts could kill whatever fragile economic recovery had begun. US President Obama’s pitch for a global stimulus plan was overwhelmingly rejected.

Following the Summit, Germany, France and other EU nations opted for quick austerity measures (similar to what was imposed in Greece) in order to check rising deficits. The British deficit reduction plan was one of the most intense of all G20 countries. Since then, Spain for example has trimmed its government deficit by half, but its unemployment rate stands at 20%, and with such high unemployment, even businesses are struggling. Not all EU countries have been successful in controlling deficit spending.

Today’s protests comes as the EU Commission announces a proposal to punish EU member nations that have run up deficits by funding social programs at a time of high unemployment across Europe. The Commission’s proposal is supported by Germany who is comparatively better-off than other EU nations.

Despite the recession, Germany enjoys low unemployment, low debt, and modest (3%) economic growth, though many Germans have not had a pay-raise in 10 years. Germany is excelling despite the global recession, but their’s may not be a model to emulate. Germany’s export-focused growth may be at the expense of the other EU member states. In opposition to the EU Commission’s plan, France has proposed a more flexible approach (not based on rigid rules alone) where politicians decide on what sanctions to implement.

While today’s protesters seem to be venting over higher taxes, soaring unemployment, shrinking pensions, and an increased cost of living, they are actually protesting over who bears the burden for corporate excess, reckless speculation and massive bailouts. This is a serious debate for the EU over who foots the bill for economic reforms.  Make no mistake; this is not a rally for socialism, nor a crisis for the European Economic Union.  It is simply class warfare at its best.

By David A. Ross, J.D.

(9/29/10) Anti-austerity protests sweep across Europe, Associated Press.

(9/29/10) Anti-austerity protests sweep Europe, The Washington Times.

(9/29/10) Anti-austerity protests sweep across Europe, msnbc.com

(6/25/10) Toronto summits: Leaders divided over tackling national deficits, The Guardian.

European Union (Wikipedia)