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Keynesianism Fails in Europe.

Written by Gary North on May 17, 2013

Europe is in a recession. France is in recession. Greece has been in recession for six years. Cyprus has been in recession for three years. Germany just barely pulled out this month. Spain has 27% unemployment.

It’s getting worse in Europe. Yet this is where Keynesianism is supposed to work best. There are welfare states. This is where the welfare state was invented: Germany in the 1880s.

The fact that Europe cannot get out of recession points to the failure of Keynesian economic analysis. European national governments run deficits. It does not help.

If Keynesianism does not work in Europe, what is the practical defense of this system of analysis? If European economic planning cannot restore prosperity, where is it supposed to work?

Central planning failed in the Soviet bloc. That experiment died in 1991. So, that left Keynesianism as the fall-back position of those who proclaim state regulation as the source of both stability and growth. But now there is stability and contraction. Who wanted that?

This does not lead Keynesians to abandon their position and adopt Austrian economics. They hold their views for ideological reasons: faith in state planning. They used to invoke economic growth to prove their case. They cannot do this any longer in Europe.

Young adults’ faith in their economic future is fading in southern Europe. That means faith in Keynesianism is fading. Region by region, the religion of Keynesianism is losing core support. Skepticism is moving north. France is in recession. Young people are burning cars, a way to protest. The rate so far this year is close to 50,000 burnings. This does not point to rising optimism in France.

Keynesians run the show. The show is increasingly negative. Keynesians cannot blame anyone else, the way they could in 1936. They are holding the bag.

Continue Reading on www.telegraph.co.uk

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9 thoughts on “Keynesianism Fails in Europe.

  1. Larry the W. says:

    The religion of central state planning is failing one more time. Funny how that happens, time after time after time after time after time after….

  2. The kind of faith people have for Keynesian economics is amazing

  3. I read somewhere that the Soviet Union was an economic failure but a political success. The same thing applies to Keynesianism. The political class and bureaucracy are not going to willingly give even an inch on their power, perks, pensions, etc, no matter how bad things get, until the whole system collapses.

  4. Yup. It's like a religious cult. No matter how many times it fails, no matter how stupid it is they STILL want to believe it. Either that or these pathetic little monsters are too arrogant to admit they were full of crap.

  5. standtallall says:

    When someone consciously pushes a system that is failing everywhere in the world, you would have to doubt their good intentions. Obama policies continue to put a burden on the American way of life and that is capitalism. Our freedoms are being taken from us each day in little ways and then some big ways and the media stares blankly at their lord and master awaiting with baited breath his next royal decree.

  6. Mike Warren says:

    Obama supports Keynesianism because he has never worked and has no idea about how the Free Market system works. Bush was just hell bent on collapsing the US economy. We are now 6 years into a BS recession with 25% true unemployment. Obama is a Treasonous failure and an illegal immigrant.

  7. Joe from Long Island says:

    You people actually believe this? The reason why Europeans are in an extended recession is because their political leaders abandoned Keynesian economics for massive, deep austerity cuts demanded by the IMF and the World Bank — who have since said "whoops, we were wrong." It's not that Keynesian economics failed in this recession, but rather that they weren't tried at all. Please note: Iceland (whose leaders rejected the austerity cuts) is doing just fine. I wonder why.

  8. Seymour Kleerly says:

    In the USA. it was unbridled Capitalism that failed. Yes the welfare state is bloated and hurts our progress, but there's far too much wealth in the hands of the very few. They still light their cigars with $100 bills!

  9. Seymour Kleerly says:

    They probably don't have Talk Radio and Fox News to dumb their people down.