Friday, October 2, 2009

The End of European Socialism?

By Douglas Kohn

Europe, especially since the financial crisis, has made a drastic turn to the right. In all of Europe’s big powers the right is in power or the left is in retreat. Italy, France and Germany are now firmly in the hold of Center Right coalitions. In Spain and Britain, Center Left governments are under increasing pressure. In the case of Britain, the Labor government is a lame duck before the new government has been formed, and Britain’s Labor party, one of the two large parties, is now in third place behind the Conservatives and Liberal Democrats for the first time since 1982.

All over Europe the left is in disarray and it is quite paradoxical. In every poll of European public opinion, business is viewed with contempt and suspicion. In spite of these views, pro business parties have been thrust into power. This is partially because Europe’s immigration policies for the last 10 years have brought with it the problem of Islamic extremism within their own midst.

In Germany this past week, Angela Merkel was reelected with surprising results. Germany’s two main parties are Merkel’s Christian Democratic Union and the Social Democrats. Since 2005, the two parties have ruled together in an awkward coalition. Their intrinsic differences made it nearly impossible to implement proper economic reform to enable Germany to function in today’s increasingly interdependent world economy.

The election results have thrown the coalition to the wind. The new ruling coalition government will be between Merkel’s Christian Democrats and the smaller third party, the Free Democrats, led by Guido Westerwelle. The German left is in disarray, the Socialists, Communists and Greens have been left out to dry by the electorate, in spite of an overall anti business sentiment.

The Free Democrats are the most pro business party in Germany and now have a large coalition partner to help implement their ideas. Germany, like much of Europe, needs to free up its labor market, making it easier to hire and fire workers, and lower its overall tax burden, especially on businesses. Red tape also needs to be cut in order to make it easier for service sector businesses to develop, as Germany’s manufacturing sector is a disproportionately large sector of its economy that made it more vulnerable to the collapse in world demand for manufactures in the recent economic crisis.

This bodes well for Europe and the world. Freer markets in Germany will spur the rest of Europe to reform their economic and social policies and allow for greater growth in the future. Socialism in Europe has been dealt a devastating blow, country by country. The next will be Britain, where Gordon Brown’s sick joke of leadership will be crushed in the forthcoming election.


Anonymous said...

Nice piece, Doug. It's amazing how it seems the entire world- Europe, China, etc.- all realize that the way to build wealth for them and their citizens is to free up their economies. And for the most part they're doing that. Yet here in the USA we're moving more to the left in defiance of common wisdom. Amazing.

Patrick said...

Excellent post Doug. This further proves that the majority of uninformed voters think that by changing parties, everything will get better. The US economy faltered under a conservative president, so the electorate went left. The European economy faltered under liberal leadership, so the electorate is moving right. I can't follow the logic in that.

DSKohn said...

Well everything has to be kept in perspective. One of the reasons why the right is winning elections so overwhelmingly in Europe is by pledging to defend most aspects of the welfare state and reduce immigration. One of the striking things about the most recent European elections is that many smaller third parties have been thrust into the spotlight. In Holland the Dutch Freedom Party has won a massive share of the vote and the Liberal Democrats in Britain have their strongest showing. Germany is no exception with both of the large parties losing a large share of their vote to smaller parties. The Communists in Germany actually had a larger turnout than in quite sometime but overall parties on the right had the strongest showing.

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