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  • Aug, 2012

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    The People Don’t Dig Austerity

    No one really knows which way the global economy is headed. Predictions are not a science: one day markets rise because certain people *think* some indicators look good—only to reverse themselves the very next day. But one thing is clear: real people don’t like austerity which will influence the direction of political alignments. Take the Dutch.

    The Wall Street Journal wrings its hands today over this (subscription required):

    A far-left party is emerging as a front-runner in next month’s elections in the Netherlands, as it benefits from growing voter resentment toward the German-led austerity drive and euro-zone bailouts.

    A win by the anti-austerity Socialist Party could threaten to unravel a cost-cutting plan agreed under the current government in April, and also could derail stringent budget targets for 2013 set by the European Commission and fiercely advocated by Prime Minister Mark Rutte.

    …But recent polls suggest Dutch voters, frustrated with austerity at home and increasingly wary of bailing out Southern European governments, may reject the package. The Socialist Party, which didn’t support the austerity plan, would win the most seats in the 150-member Parliament—about 37, or seven more than Mr. Rutte’s Liberal Party, recent polls by research firms TNS NIPO and show.

    Consider the source—The Wall Street Journal—when you consider the epithet “far left” but pay close attention to this:

    The Socialist Party doesn’t shy from controversy: It wants to curtail the European Central Bank’s independence by establishing “democratic supervision” over the bank and to broaden the ECB’s mandate, currently limited to ensuring price stability, to allow it to stimulate the economy to create jobs.

    The idea that central banks—whether the Reserve Bank in Australia, the ECB or the US Federal Reserve Bank—should be more democratic and transparent, and, most important, be focused on creating jobs, not just price stability, is hardly radical. If you just pitched that to the average person, without putting the tag of “far left” on the idea, it would be a very broadly supported policy.