Here we go again

While the American administration is trying to convince us that the only cure for our "great recession" is a spending OD, European leaders are in a race to win the 2010 Deficit Hawk Award. It started with the Greeks, who woke up one morning only to discover that government welfare is as sustainable as any other Ponzi game under the sun---in order to win, you have to enter early, ride the wave, and die before the long run presents you with the bill. Bulgarian Prime Minister Boiko Borisov recently told his Cabinet to use the subway instead of the limousines so generously donated by the taxpayers. His Italian friend Berlusconi intends to shrink his government by $30B. Spain wants to cut public sector salaries by 5 percent. Portugal considers privatizing its airlines. Merkel has plans to send 15,000 German bureaucrats to find useful occupation in the private sector. Medvediev is putting his administration on a diet until the Russian fatso loses 20 percent of its weight. The new conservative-liberal coalition in the United Kingdom, facing debt problems of American proportions, has decided to try budget cuts. How refreshing. Even the French have realized that they need to work a bit harder to pay for all that wine and cheese.

Having learned nothing from the stagflation of the 1970s, two Nobel-winning economists have recently lambasted the draconian austerity measures in Europe. Stiglitz calls it "deficit fetishism." Krugman: "utter folly posing as wisdom." Why do they foam at the mouth when they have the next best thing to a new social laboratory experiment for testing their retro-Keynesian ideas? Max Weber, a German institutional economist, author of The Protestant Ethic and the Spirit of Capitalism, and one of the founders of modern sociology, was teaching at the University of Vienna in 1918. One day he met at a café Joseph Schumpeter, the most colorful member of the Austrian School of economics. Their discussion turned to the civil war in Russia. Weber called the socialist experiment a crime that would surely "lead to unheard-of human misery and end in a terrible catastrophe." The future author of Capitalism, Socialism and Democracy expressed satisfaction that Lenin's regime would finally provide economists with "a good laboratory to test out theories." And it did. Pity that such lessons can only be learned the hard way and only one generation at a time. . . .

So, America, brace yourself, and let's sing with Ray Charles:

I've been there before

And I'll try it again

But any fool knows

That there's no way to win

Here we go again

She'll break my heart again

I'll play the part again

One more time