Bill Black: The New York Times’ Coverage of EU Austerity Remains Pathetic

Yves here. Bill Black shellacks a New York Times article that gives a big dose of unadulterated neoliberal propaganda supporting austerity. To give you a sense of the intellectual integrity of this piece, it including citing a Peterson Institute staffer without cluing readers in to the fact that the Institute has what is left of the middle class in its crosshairs.

Black stresses that one of the major lies behind the continuing for more, better hairshirts for long-suffereing Europeans is that the explosion in debt levels in Europe was the result of overly-generous social safety nets. In fact, as in the US, the tremendous rise in government debt levels was the direct result of the crisis. Tax revenues collapsed due to GDP whackage (and the costs continue as GDP is well below potential). And any economist worth their salt will also say that social safety nets ameliorated the severity of the damage, that those automatic stabilizers increased government spending when it was needed most, at the depth of the implosion, and prevented a spiral into a much deeper downturn.

By Bill Black, the author of The Best Way to Rob a Bank is to Own One and an associate professor of economics and law at the University of Missouri-Kansas City. Originally published at New Economic Perspectives

I have explained in depth why the New York Times’ coverage of the EU troika’s infliction of austerity on the eurozone is dishonest and routinely indifferent to the suffering of the peoples of much of the periphery who have been forced into a second Great Depression.  The latest travesty was in an article entitled “French Premier’s Push Toward Center Opens Rift on the Left.”

The article focuses on the betrayal of the people of France and his own Party by President Hollande, but you won’t learn that by reading the article.  Instead, you’ll learn that Hollande is following the pattern of Tony Blair.  Of course, the article doesn’t mention four things about Hollande’s copying Blair’s neo-liberalism, slavish devotion to big finance, his view of even the most helpful and desirable budget deficits as undesirable, and his betrayal of labor.


In the cabinet reshuffle last month, Mr. Hollande ousted Arnaud Montebourg, a populist economy minister, and replaced him with Emmanuel Macron, a wealthy former banker at Rothschild who is seen as more friendly to business.

The moves left the traditional base of the Socialist Party feeling angry and betrayed.

First, Blair was copying Bill Clinton.  Second, Clinton and Blair’s embrace of these policies ended in economic catastrophe.  Third, Blair and Gordon Brown devastated the Labor Party.

Fourth, Clinton and Blair had the immense luck of governing during bubbles that collapsed under their successors.  This meant that their devotion to austerity bit their successors.  Brown and Hollande’s refusal to fight for essential stimulus has prevented any meaningful economic recovery and discredited their Parties.  Hollande promised in his campaign to fight against austerity, but when push came to shove he purged the members of his cabinet pushing for stimulus.  He did so at the insistence of Prime Minister Manuel Valls, the greatest advocate of inflicting austerity in France, the de facto leader of France on economic matters.

The NYT article description of the purge is inaccurate, but revealing.

Hours after President François Hollande purged leftist members of his government last month for opposing his economic policies, Manuel Valls, France’s combative prime minister, climbed a stage before hundreds of cheering French executives and called for a new relationship with business to lift France from its malaise.

He admonished the left wing of the French Socialist Party to stop posturing against capitalism, then launched into a lengthy pro-business discourse that drew a standing ovation.

Actually, the “leftist members of his government” were purged for supporting Hollande’s stated economic policies that got him elected by a decisive margin.  Hollande, correctly, pronounced the troika’s infliction of austerity to be the problem and promised to stand up to the troika and demand an end to their self-destructive policies.  Valls was the leading opponent of Hollande’s stated policies.  He demanded the purge.  Hollande, who everyone considers a weak leader, capitulated to Valls’ threat to resign if the economically literate members of the government were not purged.

It is the right, which dominates the entire troika; that is insisting on self-destructive economic policies that have indisputably failed – catastrophically.  Austerity forced a second, gratuitous Great Recession upon the eurozone, forced much of the periphery into a second Great Depression, and has now thrown Italy back into a third recession.  As Paul Krugman (and we, and many others) try endlessly to explain, austerity as a response to a Great Recession makes as much sense as bleeding a patient to “cure” him of disease.  One might think that the fact that economists overwhelmingly agree that that austerity in such circumstances is criminally incompetent and the fact that the results of the “natural experiment” between (very modest) stimulus in the U.S. and the troika’s infliction of austerity are obvious would lead the NYT reporters covering the EU to at least consider the possibility in their articles that austerity was the problem rather than the solution for the eurozone.

Unfortunately, the NYT reporters on the eurozone beat are made of sterner stuff – they have proved immune to the facts, sound economic theory, and ridicule.  There are two obvious truths to these reporters – the crisis is caused by leftist policies and the solution is to embrace neo-liberal economic policies plus a good stiff dose of austerity.  If that dose of austerity makes things worse the answer is to double the dose.

The article about Hollande faithfully follows this fantasy script.  It contains one phrase about the idiocy of the troika inflicting austerity on the eurozone – and even that passage is logically incoherent.

“The problem is that Hollande and Valls don’t embody anything at all,” said the French economist Thomas Piketty, whose book ‘Capital in the Twenty-First Century’ explores social inequality in France and elsewhere. “They are trying to make people believe that Germany is the only country responsible for the catastrophic austerity policy which has plunged the eurozone into stagnation.”

“But in truth,” he added, “the problem is that they are scared of any progress in terms of policy and budgetary union at the eurozone level, which would yet be the only solution to get out of the crisis,” but was likely to require future trimming of the state to meet the European Union’s requirements.

So, austerity is “catastrophic.”  One would think that would be a rather important point.  Logically, it would lead to a discussion of the critical need for Hollande to lead the struggle to end the troika’s “catastrophic austerity policy which has plunged the eurozone into stagnation.”  Actually, austerity plunged the eurozone into a second, gratuitous Great Recession, parts of the periphery into a second Great Depression, and Italy into a third Great Recession – not “stagnation.”

The NYT proceeds to ignore the troika’s austerity policies that have caused “catastrophic” harm to the eurozone and the victims of those economically illiterate policies of the right.  Instead, we have Piketty ascribing the real problem to Hollande and Valls’ unwillingness to support a eurozone “budgetary union.”  French support for a budgetary union would not produce a budgetary union.  Germany has no interest in a budgetary union.  But that is the smaller of the logic problems with Piketty’s statement, for “trimming … the state to meet the European Union’s [budgetary] requirements” would constitute austerity.  Piketty has just said that austerity caused “catastrophic” damage.

As bad as the passage quoted above – and the reporters’ failure to consider the catastrophic damage of austerity – the rest of the story is even worse.   It creates a myth that the eurozone is in crisis because of spending on social programs.

Not just in France, but across Europe, the enduring economic malaise has convulsed governments and sent the political left into a[n] existential crisis.

Even as momentum builds against the austerity policies that Germany has pushed on the eurozone, the question remains whether Europe can afford the welfare systems that have defined the left for generations and that critics blame for ushering in the debt crisis in the first place. But if the left now backs away from its ideological touchstones, then what does it stand for?

Anonymous “critics” falsely claim (without any cited factual support) that “welfare systems” created a “debt crisis” in an unstated nation or nations – presumably Greece, the only nation that even remotely comes close to that description.  Austerity, by contrast, is the product of the right wing of eurozone and it sent the entire region into a second Great Recession, parts of the periphery into a second Great Depression, and Italy into a third Great Recession.  So, why is the “existential crisis” not the crisis of the “right?”  Yes, if “the left” renounces the exceptionally effective programs that produced a superb quality of life and made their policies immensely popular, what would “it stand for?”  It would, like Clinton, Blair, Brown, and Hollande, stand for the neo-liberal practices that caused catastrophic damage to the economy, massive inequality, rewarded the most venal and corrupt members of our society, betrayed all of the left’s principles, led to crony capitalism, and caused their parties to suffer severe losses at the polls.

If, instead, the “left” held to its principles and refused to agree to austerity the existential, economic, and political crises would be occurring in the nations run by the right.  Valls and Hollande are joining the long line of neo-liberal leaders (Clinton, Blair, Brown, and Obama) that cause the existential crises by betraying their supposed principles.

The NYT journalists, cite, without any explanation to the reader, an ode to austerity by the Peterson Institute.

To shore up his Socialist credentials, Mr. Valls has taken pains to address “the French who are suffering.” But Mr. Valls is also limited in how much he can go beyond the policies already outlined by Mr. Hollande. For now, the two men are, perhaps uncomfortably, joined at the hip.

While Mr. Hollande has made clear he will not impose new austerity measures, Mr. Valls must still persuade left-leaning members of their Socialist Party to sign off on cuts of 50 billion euros, or about $65 billion, already pledged through 2017 — something that will remain a hurdle even if the confidence vote passes on Tuesday.

“It’s politically tough to do when you have a left wing of the Socialist Party that want no cuts of any kind in the social welfare state,” Mr. Kirkegaard said. “That’s where Valls’s main political fight will be.”

The incoherence of these paragraphs is total.  The journalists claim that Valls has taken “pains” (unintentional humor is the best) to “address” “the French who are suffering.”  Valls has thrown the French poor to the wolves and his purpose in demanding the purge of rival ministers was to be able to do far worse to the poor.  “Address[ing]” the poor is cheap talk – providing stimulus is what is needed and Valls is a fierce opponent of stimulus.

Why “must” Valls “persuade left-leaning members of [the] Socialist Party to sign off on cuts of … $65 billion”?  Those cuts represent “catastrophic” austerity.  It is insane for France to inflict that austerity on those “who are suffering.”  They are the ones suffering the real “pains.”  There should be a substantial expansion of spending on social welfare programs to relieve those real “pains.”  There should be substantial increases of spending on infrastructure, health, and education in France.  Such spending would simultaneously directly reduce the pains of those who are suffering and stimulate the general economy in a manner that would help the entire nation.   In short, Valls is the problem that is harming France and his Party.

The NYT article identifies Kirkegaard’s employer, but not the nature of his employer:  “Jacob Funk Kirkegaard, an economist at the Peterson Institute for International Economics in Washington.”  Readers deserve to be informed that Pete Peterson is the Wall Street billionaire whose institute is dedicated to spreading the claim that austerity must be the world’s paramount policy.  Peterson thinks austerity should lead to the privatization of Social Security so that Wall Street can “earn” hundreds of billions of additional dollars annually.  As Krugman (and my colleagues and hundreds of other economists) keeping attempting to explain, there is an overwhelming economic consensus that inflicting austerity in response to a Great Recession is a “catastrophic” policy.  Peterson, of course, hires those with unassailable faith in austerity.

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  1. John

    Flogging the austerians is becoming old.

    What is often missed by economist is the local psychology, the thinking by the man on the ground. Many Europeans believe in balanced budgets and we can spend only what we have. The reason for this is the lack of active discussions on federal deficits and social programs in the public dialogue. Economics education is out of the question. News outlets, just like the NYTimes, point out only right wing talking points. And just like in the USA, if a right-winger utters some nonsense, the media are all over it, even if right-wingers are a minority. Naturally, we tend to fall in step with rightie thinking.

    However, something else is more ominous here in Europe when discussing economics. If you steer from the eurozone talking points, you are a nail which must be hammered in. Folks like Arnaud Montebourg are rare and for a reason: whenever they speak their mind they are pilloried, drawn and quartered and the carcass is left to rot.

    We need European political elites to speak out against austerity to make a difference. Without that we are stuck.

    1. Ignacio

      We need European political elites to speak out against austerity to make a difference

      Sit down and wait patiently. Political elites are, by definition, “elites” which implies little empathy, conservatism, and cronyism. I am quite sure that they won’t speak out against austerity unless the masses revolt. An EU breakup is more likely than a U-turn in political elites.

  2. H. Alexander Ivey

    “austerity as a response to a Great Recession makes as much sense as bleeding a patient to “cure” him of disease”

    Actually, the metaphor is bleeding a patient when the patient is ill from loss of blood. Removing blood (money) from an patient (economy) when the patient is suffering from low blood pressure and low volume (economy has too little money flow and not enough money) results in the patient (economy) going into a coma (going into a recession or depression).

    How did the patient lose blood (the economy lose growth) in the first place you ask? By being robbed at gunpoint by a crook (business kleptocrates – control fraud actors – and their government enablers, and treated by main stream economists – fedual age medicos.

  3. timotheus

    How will these commentators respond if Marianne Le Pen takes power next round and immediately engages in deficit spending, to the delight of the old Socialist-Communist base?

    1. proximity1

      Well, Sarkozy and, before him, Chirac, (both “UMP” party members (i.e. “Conservative”) ran deficits. Mitterrand (PS) (sort of, kinda, mildly “Leftish”) ran deficits. If elected, Marine is probably going to run deficits, too. And her father would, if he were in her place. What’s the alternative? Raising taxes on the rich?

    2. NotTimothyGeithner

      They will be very shrill. Tomorrow, the NYT will probably be smug and predict a mad max like situation if Scotland votes “yes” today.

  4. cnchal

    Can we have some honesty from the New York Times?

    They could change their fatuous “All the news that’s fit to print” to “Written by liars for idiots”

  5. Worker-Owner

    When I grow up I want to be just half as smart as Bill Black or Michael Hudson.

    Bill knows that neo-liberal austerianism is a roaring success for those who want it imposed. He is a bit too polite to be quite so frank all the time, over and over again. This restraint is a quality I admire … but unfortunately do not completely share.

    Those who make loans that they know the recipient will be unable to repay do the borrower no favors. When the creditor makes assertions and blandishments that work to convince the borrower it is all going to be OK and that the outcome has to be better than is possible in any known rational universe, it is committing fraud. And most of tis debt that the various countries are being squeezed for is either the result of shenanigans of the financial community or of the shenanigans of its elites (buying and, possibly, using expensive weapons and toys that didn’t improve the lot of the underlying nation). Social welfare for the citizens is sacrificed on the cross of war-debt. Education for the creation of productive future citizenry is sacrificed on the cross of the profit-greed of the business elite. Etc.

    So, what Bill Black is too polite to point out is that the New York Times wants to remind its intended audience, the elites and pseudo-elites of the globalist Wall Street (City of London) universe that all is well with the world when the financiers convince the politicians to toe the line and pay off all that phony debt.

    Remember, it was created out of thin air with the press of a key.

  6. Teejay

    I see from the Baseline Scenario “About” page that Simon Johnson is a senior fellow at the Peterson Institute for International Economics. All of the talks or interviews or panel discussions I’ve heard him participate in he never came across as an ideologue. What should I make of this?

  7. Lune

    I agree that Prof. Black is being too kind by attributing to incomptence what is better explained by malice. Pro-austerity folks never batted an eye when govts around the world opened the spigots to save the banks (and continue to do so now). They’re not incompetent policy idealogues, they’re vicious class warriors. Austerity just happens to help their class and subjugate the ones below them. What’s not to like?

    That said, to the European readers of this blog: I’m curious: what do you think will happen to leftist parties in Europe when they embrace neoliberal policies? See in America, much of a party’s political support is still based on racial and other identity politics plus a host of social issues (abortion, etc.) such that both parties can run counter to the economic interests of their base without losing much support (they’ve been locked at 50/50 now for a few decades, at least since the 1994 House Republican takeover).

    Does this happen in Europe too? Or are economic issues more important to determining a party’s support? I ask this because I’m not sure I buy Prof. Black’s assertion that Clinton and Blair’s embrace of neoliberal policies devastated their parties. In Britain, although they lost the PM office, Labor still remains quite popular. And in America, Clinton’s triangulation is widely credited with building a new Democratic coalition including college educated suburbanites who were traditionally moderate Republicans. This has led to Democrats occupying the Presidency for 16 of the last 24 years (assuming Obama isn’t impeached :-), a dominance not seen since FDR’s days (although they have lost the house this is mostly due to gerrymandering: dems won the popular vote in house races in 2014) . Indeed, in the U.S., if there’s a party that is risking destruction, it’s the Republican party, and that too, not based on economic policies (there’s very little difference with the Dem party on that one), but a radical social agenda that is alienating wide swaths of the electorate.

    So if you can have your neoliberal cake (implement the policies) and eat it too (enjoy wide support among those whom you’re financially destroying), then it’s not incompetence, it’s sheer brilliance.

    1. John Hope

      As a citizen of the UK I have to tell you that Blair was never a socialist or a democrat . Blair was and is an opportunist . He found his niche in politics because he was unable to find it in rock music . He and his wife met the Clintons at the start of Blair’s premiership and from that moment their heads were turned; they wanted to be the Clintons , but the UK is a very different place to the USA and we don’t revere people who move up the greasy pole just because they do and we began to get wise to Blair and when Bush turned up and Blair clung to his coat tails we were convinced of Blair’s opportunism and began to hate him and have gone on hating him . We don’t have a socialist party in the UK any more than you do in the US the only difference is that we are a pale imitation of what you are . Our elites are fully paid-up members of the neo-liberal agenda and all the unawake populace believe there is no alternative . But there is ALWAYS an alternative and no-one knows at what moment that alternative will appear to enough people for them to say ‘ Off with your heads ‘ , but that moment is coming it cannot fail to come because ANY elite that becomes so cut off from the society within which it dwells ( gated or not ) becomes paranoid and then becomes incapable of defending the indefensible and so down comes the wall .This WILL happen in the US, the UK and throughout the western world just like it did in the USSR .

    2. Oregoncharles

      “they’ve been locked at 50/50 now for a few decades”
      No, it’s more like “30/30” – though the Dems run a little over, the Republicans a little under 30%. And their total has been plummeting; at this point,well over 40%, a solid plurality (our elections run on pluralities, not majorities), are “independents” of various stripes, including “3rd” parties. Bill Clinton won the first time with just 42% of the vote.
      Furthermore, major-party loyalty is still falling; when the “independents” pass 50%, we won’t have major parties any more. That day is not far off.
      When will people start voting that way? Nobody knows. But the level of frustration and anger is already very high.

    3. Robert Dudek

      Some libertarians did bat an eye. They called for no bank bailouts, no stimulus and a general liquidation.

  8. jfleni

    RE: The New York Times’ Coverage of EU Austerity Remains Pathetic

    Peterson is a jumped-up, deranged billionaire, who has whole platoons of shills and buttkissers to shout for him, as he screams “Let them eat cake”! Judging by the results, the time is very near when the clamor will be “Let him eat !

  9. kevinearick

    Labor, Rent, Time & Parenting

    The idea that government could build cookie-cutter rural communities, with replication of global city values, automating best business practice of objective-based management, should have screamed stupidity, to somebody, somewhere in the banking system, but systems closed by peer pressure cannot see beyond themselves.

    If you want to increase production relative to consumption, to build wealth, you want rent inflation in the global city and rent deflation in the rural community. Automatically increasing rents in rural communities, controlled by absentee landowners in the city, is a recipe for economic disaster, because it shorts out the economy.

    You have natural resources, capital stock, and labor on the margin, all of which is labor, in different event horizons, most of which is non-human. Those natural resources have to be processed and delivered, in a symbiotic system. Embedding global city value systems, in the form of regulated rents, into rural community production costs is a great way to produce real estate inflation, at the cost of lost purchasing power.

    As the big city majorities become increasingly myopic, they strangle themselves. Cradle-to-grave government is much more forgiving than nature, and yes, love and respect is the best way to raise children, but what does the global city know about loving and respecting nature?

    The point of currency is consumption, money to money, gravity. The point of labor is production. As a laborer, you measure in time and make the currency translation to implement the discount, by event horizon along the always bankrupt credit gradient. There is much more land in rural communities than people to put it into effective production, so rural land prices to producers should be falling precipitously, to bring it back into production.

    As a laborer, you can get timbered land and build a home in three months, at near negligible cost, under real economic conditions. Under Civil Law, rent is $800/mo plus rapidly inflating utilities, and you make $10/hr, chasing 20% inflation. A mortgage means that you are promising to pay an increasing percentage of your time in rent to landlords, who would otherwise starve.

    The landlords cannot do the math because they have armies of voters willing to impel themselves and become part of the road, to empire. Europe telling parents in rural America, Scotland, or anywhere else, how to raise their children, thinking that there is always cheaper labor in China and Africa to exploit, based upon majority consensus in global American cities, with media built around football franchises building $2B stadiums to impoverish their own children, is a really, really stupid process, but that is what you are looking at.

    When the critters want the elevator fixed, they will get the f* out of the way, a price will be struck, and Family Law will be disconnected. Until then, you have much better things to do than watch a five-thousand-year-old war, among consumers.

    A dog knows more about economics than the derivative, supply-side, ivy-leaguers bred on consumption at the Fed. And Congress can only tax what it sees, which is why it is so busy building a fascist surveillance system, cutting its own throat, as it becomes increasingly blind accordingly. Digital money solves nothing; it just translates the baseline, solving stupid with stupid.

    Regardless of breadth, depth and diversity of busy-work, feudalism is feudalism; it’s monetary and fiscal systems can only be arbitrary, capricious and malicious, because they operate in a positive feedback loop, creating a closed system. It’s just an extension of gravity.

    Don’t chase empire money, passive aggressive consumers educated by the empire to exploit natural resources, disconnecting themselves from nature for short-term gain, regardless of denomination, with your increasing time, and expect a happy outcome.

  10. Oregoncharles

    “First, Blair was copying Bill Clinton. Second, Clinton and Blair’s embrace of these policies ended in economic catastrophe. Third, Blair and Gordon Brown devastated the Labor Party.”

    Why was the Democratic Party not similarly “devastated”? Granted, it lost control of Congress, twice, and 8 years of the Presidency (which we can expect to happen again.)

    In fact, if Nader really caused Gore to lose in 2000, that would have been a completely appropriate response to Clinton=Gore’s betrayal – which is what Nader campaigned on. (In reality, it was Gore throwing the election, or as good as.)

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