Well, that was fast. In a continuing sign of the swiftness of political change in the world's democracies, right-leaning leaders in Greece and France were replaced Sunday with left-leaning ones. The results have important implications for the euro zone, and thus the U.S. economy, and they will amplify a debate in the United States between those who believe austerity is the key to economic recovery and those who favor greater government investment.
The debate in Europe is made more complex and less relevant to the U.S. debate due to the split interests of the “haves” — basically, Germany — and the rest of Europe. Still, it remains interesting to monitor not only for its impact on the U.S. economy but also on our politics.
What we are seeing today is the beginning of a more open battle between capital and labor: between the financial markets, who are demanding drastic debt reductions and fiscal austerity, and “labor” — not only of the organized kind but more generally the unemployed and underemployed — who are demanding change. The “people” may have won yesterday, but the markets are taking their revenge today. Indeed, the new president of France, Francois Hollande, said in his victory speech that his main opposition is the markets.
All of this may sound very Marxist to American ears, but here is the relevance: There is a debate in this country about what to do about our economic slump, a debate I referenced in this morning’s post, which may gain greater currency after what just happened in Europe.
We currently have no real “left wing” to our political debate when it comes to the economy. We have varying degrees of fiscal conservatism and allegiance to the markets. Perhaps that is why our political dialogue on the economy seems so flat. Perhaps what just happened in Europe will be a spur to a more vigorous conversation about how to help the 12.5 million people in the United States who don't have jobs.