May 11th, 2012
02:42 PM ET

Fareed's Take: Is democracy part of Europe's economic problems?

Editor's Note: Be sure to catch "Fareed Zakaria GPS" on CNN every Sunday at 10 a.m. and 1 p.m. ET.

By Fareed Zakaria, CNN

Everyone is looking at Europe these days as economic and political protests mount across the continent.

The downward spiral has produced a great debate about the virtues of "austerity," the idea that governments with large budget deficits must reduce these deficits -– mainly by cutting spending. If they don't get their budgets in order, so the idea goes, they won't be able to borrow money and will face a fiscal nightmare of ever-rising interest rates.

The problem is that as these governments cut spending in very depressed economies, it has caused growth to slow even further -– you see government workers who have been fired tend to buy fewer goods and services, for example -– and all this means falling tax receipts and thus even bigger deficits.

So, economists like Paul Krugman urge: abandon the austerity program, spend more and get budgets in order once the economy has recovered. The problem, in the mind of Keynesians like Krugman, is that European elites, particularly in Germany, have embraced the wrong economic doctrine.

Now, having been in Europe briefly earlier this week, I don't think Europe's elites -– especially German elites -– have really embraced some alternative view of economics. Most do understand that cutting spending during a recession slows down the economy further.

But here is what motivates them: They don't believe at all that any of the governments in question would ever get their budgets in order once the economy recovered. They believe that many of these countries in trouble have economies that are uncompetitive, hobbled by bad regulatory and tax frameworks and also by large and inefficient governments, with ever-increasing entitlements doled out to their citizens. The crisis provides an opportunity to start wholesale reform. Markets have signaled that they will not lend to these governments unless they take measures to get their houses in order, so this is a golden opportunity to get this reform process going.

Many Germans and northern Europeans I have talked to do seem to understand that, economically, the smart thing to do might be to spend now and to cut later. But many in Europe, especially in Germany, believe that later will never come.

In reality, governments spend in bad times and then spend more in good times. So the disagreement may not really be over economics, but over politics.

This is a sad state of affairs because what many people are worrying about, at root, is whether democracy has become part of the problem. After all, politicians have gotten elected over the last four decades in the West by promising voters more benefits, more pensions and more health care. The question is, can they get elected offering less?

That's what stops many Europeans from abandoning austerity and embracing another round of stimulus spending. And I think these worries are shared by many in the United States as well.

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Topics: Economy • Europe • Fareed's Take • Politics

soundoff (473 Responses)
  1. Kathryn Dumke

    Take a look at the austerity measures of the Chretien and Paul Martin government in the 1990. That was clearly a government that was able to explain those kind of measures to it's voters. They got re-elected four times I think.

    October 6, 2012 at 6:45 am |
  2. Pauly

    Democracy, Communism, Fascism, whatever! They all come to power, erode and eventually fail by promising the people endless propserity!

    October 7, 2012 at 2:46 am |
    • jonat

      What is your proposal then? What do you bring to the table beside defeatism?

      October 11, 2012 at 12:34 pm |
  3. jonat

    Europe moved towards socialism years ago and the nations that went the farthest to the left are the ones in financial problems. Fareed can't be much of a brain not to know that

    October 11, 2012 at 12:33 pm |
  4. Timothy Devinney

    I guess we are lucky Fareed did not spend more than a few days in Europe. If he did, then it would have been quite hard to be so superficial.

    October 14, 2012 at 7:41 am |
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    October 15, 2012 at 11:21 pm |
  6. Sally

    As a german I would agree with Martin K.'s posting.
    The ministress of education wrote a doctoral thesis in the early eighties about consciousness. Now there are accusations of plagiatism and somebody read the whole thesis and compared every footnote with the exact source of it and put it in the internet. You can see that she just took the same sentence not out of the original literature, but out of other secondary literature and turned it around. For Example: The soup is green, in her version it is: Green is the soup! She often didn't even mentioned names and original text.
    Now she thinks, this has nothing to do with the way her consciousness works and that it is enough, that her Doktoral adviser, (Doktorvater) thought, she was an honest person. As ministress of Education she works for the christian democratic party (CDU) and is a close private friend to Angela Merkel. The university was soon after this out-come, accused of being left-wing and influenced to harm her and she said, she would come back with her lawyers! It is more on stake here, not only her reputation and probably that she never knew how to quote properly. I would say Germany is losing the freedom of science. Politics with a hidden religious influence (she quoted Pope Ratzinger and the christian interpretation of consciousness) are disclosing their structures of underlying lobbyism. Germany goes theocratic like Iran and countries in the middle east! Tss

    October 18, 2012 at 2:16 pm |
  7. Bill

    The conclusion or concluding question for this article is obviously flawed. How can "democracy" be the question? The synario outlined in Europe occures as citizens continue to vote for and expect more from the govenment in exchange for taxes paid. Fareed foolishly assumes that "democracy" will result in this as the default choice by the electorate. While this has certianly been true in Europe there is an other choice. Wheras I share a pesimistic view of masses being able to choose well, it is possible at least in theory and sometimes in practice.

    October 22, 2012 at 10:38 am |
  8. Alexander Tyler

    1887 Alexander Tyler :

    "A democracy is always temporary in nature; it simply cannot exist as a permanent form
    of government. A democracy will continue to exist up until the time that voters discover
    that they can vote themselves generous gifts from the public treasury. From that moment on,
    the majority always votes for the candidates who promise the most benefits from the public
    treasury, with the result that every democracy will finally collapse over loose fiscal policy,
    which is always followed by a dictatorship."

    October 23, 2012 at 3:17 pm |
    • tremain2004

      As true now as when first said
      The founders hoped that people were better than that

      The proof is, they are parisites

      October 29, 2012 at 2:00 am |
  9. lweba

    And as Shakespeare would have said, 'National Economics and Politics are strange bed fellows'.

    October 24, 2012 at 2:42 pm |
  10. ruth

    You can not blame FDR,what WAS suppose to be very good for the elderly and the the very poor,remember we have not had this many people on welfare, ssi ,food stamps and every other free thing this president is giving away. People are not poor ,they have plasma tv's ,cars,they buy cigarettes,they have 5 ,6,7,8, children they neither support or take care of .Black or White makes no difference.In the sixties no one had no more children than they could afford to take care of.I can not remember in the 60"s going to school where parents had more children than they could take care of. Parents were married,they worked at any job ,they made do with what they had,they did not go on vacations if they could not afford it,they made house payments,their furniture lasted a lifetime,so did their appliances.They did not live rich and they did not have credit cards.This is now a soft generation,they want immediate satisfaction no matter what it is they want, and they went into debt themselves,no one twisted their arms to buy a house they couldnot afford....and if people keep buying this crap from China they deserve what they get.There was 6% of people on welfare in the 60"s.this is a 3rd generation of welfare,and 22 year old kids on ssi and living on medical marijuana.This is made mostly of people that do not want to work, will not take a job that is beneath them ,my God this generation does not even cook,they eat out.I can go on the main street of my town and all the restaurants are full.I must be the only person alive that still cans ,grows our own vegetables and cooks every day.grow up America

    October 25, 2012 at 7:44 pm |
  11. tremain2004

    Public workers are a drain, produce nothing
    Private workers can support only so many deadbeats

    Public workers are masters of consumpsen

    Pittiful production

    The workers cannot support so many parisites

    Parisites with high wages and fantastic retirements that no private worker gets

    So no, the democracy of voting yourself money does not work

    It brings everyone down

    October 29, 2012 at 1:48 am |
  12. Joao

    I'm pleased that even an individual that looks out for the "greater good" (Fareed Zakaria) can see the sense in limiting democracy to budgets and consumption-based taxes.

    I would like to save for my family, not the government.

    October 30, 2012 at 5:17 pm |
  13. nodoubt

    yes,they have no idea what it is.

    October 31, 2012 at 7:04 am |
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