Skip to main content

Could austerity be the right cure for Europe's hangover?

By Alex Castellanos, CNN Contributor
June 7, 2012 -- Updated 1145 GMT (1945 HKT)
Protesters gather in the rain for a demonstration against austerity measures at the Greek parliament in Athens in February .
Protesters gather in the rain for a demonstration against austerity measures at the Greek parliament in Athens in February .
STORY HIGHLIGHTS
  • Commentators are placing the blame for Europe's spending woes on government austerity
  • Alex Castellanos says Europe hasn't really embraced austerity yet
  • He says the binge in government spending can't go on forever
  • Castellanos: Asking whether austerity works is like asking a drinker if sobriety works

Editor's note: Alex Castellanos, a CNN contributor, is a Republican consultant and the co-founder of Purple Strategies. 

(CNN) -- I never imagined we would find a no-win question to displace the genre's champ, "Have you stopped beating your wife?"  Now, there is contender: "Does austerity work?"

Fareed Zakaria tells us it doesn't, faulting it for Europe's constriction.  The problem is not a borderless European financial system, unable to quarantine nations sick with public and private debt.  Oh, no, Zakaria writes, "The larger failure, shared across Europe, has been too much austerity." 

In the Washington Post, Ezra Klein notes unemployment is "skyrocketing" across Europe and he contends the fault lies in shrinking budget deficits brought by spending cuts and tax increases.  Klein tells us this is what austerity looks like "and it can be expected to reduce economic growth." 

Alex Castellanos
Alex Castellanos

As the UK slides into a double-dip recession, economist Paul Krugman blames David Cameron's austerity. Borrowing from John Maynard Keynes, he tells us, "The boom, not the slump, is the right time for austerity."

Never mind that spending in Britain is virtually unchanged and other nations in Europe are spending more. Neal Reynolds writes that "austerity," as practiced in Euro27 countries, has actually increased government spending from 46% to 51% of Europe's GDP from 2006 to 2010. 

Greece, where rioters protest "austeros," increased its public sector expenditures from 45.2 % of GDP to 50.1% tin he same period.  As the Richmond Times-Dispatch noted, in 2011, 23 of the EU's 27 nations jacked up their spending levels. This year 24 will. Apparently, it is not austerity itself that constricts economies.  The mere thought of austerity is enough to choke the eurozone to death.

Austerity seems to be working just fine for the masters of the practice, the Germans:  We are counting on them to bail out the entire eurozone.  Let's ignore that, however. Instead, let's assume Europe had not only contemplated austerity but also actually imposed it: cutting spending, raising taxes and shrinking its public sector.

Even then, "Does austerity work?" would be the wrong question.  Let's view the occasional need to embrace responsibility through a more familiar, though equally unpopular lens: Does "sobriety" work? 

Immediately, it wouldn't seem so.

When we engage in "sobriety," after a long period of over-indulgence, its effect is much like "austerity;" our heads hurt, our tongues get fuzzy and our vision blurs.  I would invite my friends in journalism, dedicated to the rigorous pursuit of truth, to join me in extended study.  We might conclude, through the crusty eyes of another morning, that drinking alcohol does not cause hangovers; stopping drinking alcohol causes hangovers.  Sobriety does not work, it seems -- and governments feel no better when they sober up from a binge. 

When an economy stops borrowing money from its future, well, there is less money in that economy in the present.  Post-indulgence discipline is painful.  Yet we do not blame the glutton who ordered the meal for this poverty, just the fool who pays the check. We fault austerity.

Wouldn't we all feel better if we lifted our glasses and had another round?  We are persuaded to drink our way through our drunkenness, even if we have to borrow the money. Why shouldn't gratification be instant and eternal?

Life, we are eager to believe, should be frictionless.  We are happy to hear that we are not required to suffer penalties for stupid economic decisions.  Our leaders, godlike and high above, tell us their brilliance can protect us from the consequences of our poor choices.  Spend what we don't have, they urge:  The same euro, dollar or pound that is invaluable when we put it in to stimulate an economy will not be missed when we pull it out. 

The same journalists who laugh at the idea of perpetual motion embrace the voodoo of perpetual prosperity. They twist modest Keynesianism into an arrogant declaration that we are above the cost of our excesses.  No longer must God ask Moses to walk the desert to reach the Promised Land.

On June 17, the world will come to an end, as it often does.  Ripples from Europe's unraveling will begin traveling to America.  Greece will have an election.  Greeks will vote to make Germans work until they are 67 so they can retire at 50.  They will vote to make someone else pay their bills, fund their holidays and support their benefits. 

They will be lectured about this by an American president who asks his own nation to make China pay its bills, fund its holidays and support its benefits.  We can only hope he does it from the Hellenic state of California, which has also attempted to outsmart austerity.  Remarkably, it hasn't grown jobs, just debt.

Paul Krugman is a noble man.  If he could, with his bright mind, he would free us from the costs of our foolish economic decisions, many of which he has recommended.  He is the blackjack player, deep in debt, who knows he can outsmart the house. 

On our behalf, with his infallible system, he'll keep doubling his bet every hand until he wins back our money -- unless he hits the house limit or a run of bad luck empties his pockets first.  That is not an uncommon fate for the adversaries of austerity. 

Genuinely bright people built Las Vegas on the arrogance of such men.

Follow @CNNOpinion on Twitter

Join us at Facebook/CNNOpinion

The opinions expressed in this commentary are solely those of Alex Castellanos

ADVERTISEMENT
Part of complete coverage on
December 13, 2014 -- Updated 2108 GMT (0508 HKT)
The NFL's new Player Conduct Policy was a missed chance to get serious about domestic violence, says Mel Robbins.
December 16, 2014 -- Updated 1740 GMT (0140 HKT)
The slaughter of more than 130 children by the Pakistani Taliban may prove as pivotal to Pakistan's security policy as the 9/11 attacks were for the U.S., says Peter Bergen.
December 17, 2014 -- Updated 1600 GMT (0000 HKT)
The Internet is an online extension of our own neighborhoods. It's time for us to take their protection just as seriously, says Arun Vishwanath.
December 16, 2014 -- Updated 2154 GMT (0554 HKT)
Gayle Lemmon says we must speak out for the right of children to education -- and peace
December 17, 2014 -- Updated 1023 GMT (1823 HKT)
Russia's economic woes just seem to be getting worse. How will President Vladimir Putin respond? Frida Ghitis gives her take.
December 17, 2014 -- Updated 0639 GMT (1439 HKT)
Australia has generally seen itself as detached from the threat of terrorism. The hostage incident this week may change that, writes Max Barry.
December 12, 2014 -- Updated 2020 GMT (0420 HKT)
Thomas Maier says the trove of letters the Kennedy family has tried to guard from public view gives insight into the Kennedy legacy and the history of era.
December 15, 2014 -- Updated 1456 GMT (2256 HKT)
Will Congress reform the CIA? It's probably best not to expect much from Washington. This is not the 1970s, and the chances for substantive reform are not good.
December 15, 2014 -- Updated 2101 GMT (0501 HKT)
From superstorms to droughts, not a week goes by without a major disruption somewhere in the U.S. But with the right planning, natural disasters don't have to be devastating.
December 15, 2014 -- Updated 1453 GMT (2253 HKT)
Would you rather be sexy or smart? Carol Costello says she hates this dumb question.
December 14, 2014 -- Updated 2253 GMT (0653 HKT)
A story about Pope Francis allegedly saying animals can go to heaven went viral late last week. The problem is that it wasn't true. Heidi Schlumpf looks at the discussion.
December 14, 2014 -- Updated 1550 GMT (2350 HKT)
Democratic leaders should wake up to the reality that the party's path to electoral power runs through the streets, where part of the party's base has been marching for months, says Errol Louis
December 13, 2014 -- Updated 2123 GMT (0523 HKT)
David Gergen: John Brennan deserves a national salute for his efforts to put the report about the CIA in perspective
December 12, 2014 -- Updated 1426 GMT (2226 HKT)
Anwar Sanders says that in some ways, cops and protesters are on the same side
December 11, 2014 -- Updated 1439 GMT (2239 HKT)
A view by Samir Naji, a Yemeni who was accused of serving in Osama bin Laden's security detail and imprisoned for nearly 13 years without charge in Guantanamo Bay
December 14, 2014 -- Updated 1738 GMT (0138 HKT)
S.E. Cupp asks: How much reality do you really want in your escapist TV fare?
December 11, 2014 -- Updated 1828 GMT (0228 HKT)
Rip Rapson says the city's 'Grand Bargain' saved pensions and a world class art collection by pulling varied stakeholders together, setting civic priorities and thinking outside the box
December 13, 2014 -- Updated 2310 GMT (0710 HKT)
Glenn Schwartz says the airing of the company's embarrassing emails might wake us up to the usefulness of talking in-person instead of electronically
December 12, 2014 -- Updated 2233 GMT (0633 HKT)
The computer glitch that disrupted air traffic over the U.K. on Friday was a nuisance, but not dangerous, says Les Abend
December 12, 2014 -- Updated 1740 GMT (0140 HKT)
Newt Gingrich says the CBO didn't provide an accurate picture of Obamacare's impact, so why rehire its boss?
December 13, 2014 -- Updated 0040 GMT (0840 HKT)
Russian aggression has made it clear Ukraine must rethink its security plans, says Olexander Motsyk, Ukrainian ambassador to the U.S.
December 12, 2014 -- Updated 0046 GMT (0846 HKT)
The Senate committee report on torture has highlighted partisan divisions on CIA methods, says Will Marshall. Republicans and Democrats are to blame.
December 11, 2014 -- Updated 1833 GMT (0233 HKT)
It would be dishonest to say that 2014 has been a good year for women. But that hasn't stopped some standing out, says Frida Ghitis.
ADVERTISEMENT