Over on the AEI blog, Lee Harris explains why the revolt in Greece is likely to prove only the first of many to come in Europe--and why, at least by comparison, the United States is still doing just fine. An excerpt:
During periods of economic recession, Americans will naturally grumble and many will blame the president or the party that happens to be in power during the downturn. They may even vote a president out of office. But that is pretty much the extent of the political damage. Not so under the European model, where austerity programs have led to mass riots, street violence, and government paralysis, as in Greece. There is a reason for this difference that has little to do with hot Latin blood: It is the unavoidable consequence of the European model.
Free markets “impose” austerity in the form of unplanned economic slowdowns and recessions. At such times, people may ask for the government to intervene in order to stimulate the economy, and they may get angry when it fails to do this, or when it does it unsuccessfully, as in the case of the Obama stimulus package. But no one seriously argues that the period of austerity (i.e., recession) was the deliberate policy of this or that administration. But the European austerity programs are the deliberate policy of the governments that have imposed them, and this is a fact that every citizen forced to tighten his belt is perfectly aware of....
The problem with centralized planning is not that it makes bad decisions. The problem is that, even if it makes good decisions, these decisions will be made by a group of centralized planners and not by anonymous market forces. When these decisions demand austerity, loss of wages, higher prices, and cuts in social benefits, the people will resist them. And if the people get angry enough, they can bring down the government that has tried to impose an austerity regime on them, leading to both increased economic distress and political instability.
Greece, the warm-up act for Spain, Italy, and maybe, the way things are going, for France.
A tip of the hat to Dartmouth econ prof Meir Kohn.