Paul Johnson

Paul Johnson

5/16/2012 @ 6:00PM

Thank God An American Recovery

There are unmistakable signs that the U.S. ­economy is recovering from recession, and I strongly believe it will be ­charging ahead by the end of the year.

This is a natural recovery, not one produced by government intervention. A large capitalist economy operating in a free country has an inherent propensity to work its way out of a recession, provided the people in charge of the country dont do anything particularly foolish to prevent it.

President Obama can take no credit whatsoever for this. Nothing hes done has promoted growth, and his actions may even have held it back somewhat. Fortunately his presidency has been so weak, his hesitations so various and prolonged and his changes of mind so frequent that the White Houses actual impact on the workings of the economy has been trifling. Had Mr. Obama been a stronger and more determined man, its likely that given his views his interventions would have been destructive, and the U.S. economy would now be in dire distress. The inactivity–or impotence–of the White House is thus, for once, welcome.

The outlook in Europe, however, is discouraging. The British economy, though technically now in a double-dip recession, is actually fairly sound and should be showing distinct signs of growth in the second half of the year. But Continental Europe is digging itself deeper into a hole with its ideological and dogmatic efforts to preserve the euro and retain all its euro zone members. The euro is clearly at the root of the southern tiers continuing weakness–and the weakness is spreading.

Keeping the euro intact has made for necessary austerities, cuts and savage reductions in spending budgets. Chancellor Angela Merkel of Germany–the one major European economy that has a natural propensity to recover if left alone–has been using her power to ­insist on these austerities, which has contributed to prolonging the crisis.

The cuts are bitterly resented and grossly misunderstood by the public, with widespread belief that theyre ­imposed generally to protect the banks and the propertied classes. This misperception is having an electoral impact thats likely to increase as the months roll by with no sign of a respite.

Popular fury at the way things are being run may not matter so much in Greece or Portugal, or even in Italy, which now has a nondemocratic government of experts and civil servants. But it could have sinister consequences in Spain, where unemployment is over 24%. Nearly a quarter of Spains workers are out of a job, with half of those in the 16-to-25 age range out of work. We must prepare ourselves for a possible explosion there, one that could sweep away the existing regime and replace it with a dictatorship.

As the malaise has spread northward it has overthrown the Dutch ­government and led to huge increases in the extremist vote almost everywhere. The media tend to refer to such votes as far right, but as the voting in France showed, many of these angry voters are comparatively poor, and they are just as likely to bring to power left-wing ideologues with soak-the-rich tax programs as they are to benefit anti-immigration fascists.

Indications are that Continental Europe is heading for a profound political and spiritual crisis, provoked by the mishandling of its economic one. To be unemployed is a terrible privation, one that eats at the soul and spirit as well as the body. Mass unemployment is a corroding disease that can transform a normally sensible and well-conducted nation into a source of fearful trouble.

The danger is that one of the EUs members will freely choose a government that then opts for a nondemocratic solution in bringing unemployment down sharply and rapidly. This is, of course, exactly what happened when Adolf Hitler came to power in the 1930s. Mass unemployment killed the Weimar Republic, but Hitlers policies of public works and rearmament restored full employment to Germany, the only country in the 1930s where this happened.

Chancellor Merkel is a well-meaning woman, who is desperately anxious not to use Germanys undoubted economic power for political purposes and thus invite odious comparisons with the past. This is why shes so intent on preserving the euro, hiding Germanys power behind it. But in so doing, Merkel may be making a fatal error, one that will lead to the rebirth of extremism in Europe.

This is one reason that the resurgence of the American economy is so welcome. I look forward to its continuing and intensifying so that the U.S. will be in a position to balance any egregious follies Europe might commit.

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