Austerity, Where Art Thou?

One day I decided to run a 440 for time. My goal was a personal record. Mind you, sprinting is not my strong suit, but I knew that setting a PR would be a fun accomplishment even if it never saw the interior of a real record book. I warmed up a bit, and then started around track. At the first turn, I felt like a million dollars. (This was the 70’s, when a million was a lot.) Coming around the second turn, I could feel my lungs starting to heat up a little, but I was going strong. The backstretch reminded me that this would be a challenge and the third turn brought on that heavy feeling runners get when muscle exhaustion is coming on. Yet for all this, I was still determined to break my PR.

As I hit the fourth turn, the wind, which had up to that point been undetectable, became an in-my-face gale like one usually only reads about in tales of North Atlantic voyages. My lungs, which had happily supplied oxygen up until that point, set themselves on fire in protest. My legs felt like burlap bags full of wet concrete. And then it hit me.

“Is it really that important to set a new PR?”

As France ushers in a Socialist President and voters pound Greek leaders with a repudiation of austerity measures, let us pause to consider where Europe is in its brief sprint toward fiscal sanity. Voters, visibly annoyed, have decided that maybe this austerity thing is not such a great idea. So much so that the French have elected an avowed Socialist.

Just as my fitness goal’s importance seemed to wane with each step, so does the goal of giving Europe a sound financial footing over the next few decades wane with each government goodie withheld. What I was tempted to give up on that fourth turn would have resulted in a loss to me, but one that would have occurred in the future–not being fit. Flaming lungs have a way of inserting themselves into one’s here-and-now, and so tend to override longer-term considerations. Diminished public sector paychecks and benefits have the same effect.

So Europe must ask itself, “Is financial discipline really that important?”

If the Mayans are right, probably not. Europe will likely survive until late December no matter what the EU does. Ironically, the numbskulls who believe in a Mayan Apocalypse are cut from the same cloth as those who believe they can spend their way out of their fiscal problems. Belief in the latter will result in a self-inflicted version of the former.

Imagine what we would say to an obese friend who managed his/her diet well for 24 hours. Stepping on the scale and seeing no apparent weight loss, our friend tells us it did not work. Hopefully, we would diplomatically suggest that years, not hours, are required to achieve major weight loss. Did anyone really think Europe’s diet would have it ready for the beach by now?

The problems facing Europe are embedded deeply into their social institutions. Europe has seen fit to make government a huge part of daily economic life, and it feels good. Real good. So good, in fact, that anyone threatening to take away the dessert tray is going to be clobbered on the head with it. Nevermind that the whole garden party is about to get rained out.

Schumpeter, among others, noted that democracy will collapse when there are a sufficient number of people benefiting from government largess to vote themselves wealthy. We have come to the End Time. Either Europe stays on its diet or it implodes.

I predict that howls of austerity outrage will be met with paper-thin resolve on the part of European leaders. It is far too easy to continue to spend and give people the illusion that they didn’t really need to finish the challenge after all. Fat and slovenly, they will be stepped on and crushed by economic forces they denied existed. And the US? We’d better start training.

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About Terry Noel

I am an Associate Professor of Management and Quantitative Methods at Illinois State University. My specialty is entrepreneurship.
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