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- Peter Martino: Europe's Wrongheaded Austerity Policies
- Raymond Ibrahim: Voting in Egypt as "Holy War"
Europe's Wrongheaded Austerity Policies
by Peter Martino
May 22, 2012 at 5:00 am
May 22, 2012 at 5:00 am
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The irony
is that the austerity policies of the past years have been imposed at the
behest of the unelected, leftist authorities in Brussels on center-right
governments in the EU member states. The electorates are punishing their
center-right governments by voting in center-left politicians who promise to
end the austerity policies and "tax the rich" – a course that will
make matters even worse.
Austerity -- what governments are currently
experiencing in Europe – can be a bad thing. It is a well-known basic economic
theory that when politicians try to slash the government budget by taxing
citizens rather than by cutting government expenditure, they only harm the
economy, which results in less tax income and worsens the situation. In the
early 1970s, economist Arthur Laffer visualized it by drawing a curve on a
napkin, indicating that from a certain point on, higher taxes result in less
government income. When taxes are raised even further, the economy begins to
contract.
A typical example can currently be seen in the
Netherlands. The country's economy has not grown in the last three quarters.
Pressured by the European Union, austerity policies were introduced in 2010.
Last April, the government fell when the Freedom Party of Geert Wilders refused
to back a new austerity package of €11.5 billion, of which only €4 billion was
to come from cutting expenditures and €7.5 billion was expected to come from
raising taxes. The new austerity round was nevertheless imposed by the EU,
which insisted that the Netherlands trim its budget deficit to 3% of BBP in
2013. Geert Wilders was right to have refused to go along with the latest
plans. Not only will the amount of €7.5 billion in new taxes in all likelihood
not be reached, but the Dutch economy will be hampered even more.
Last January, Standard & Poor's warned the
Netherlands that its credit rating could be lowered if its growth kept
declining. S&P warned that the Dutch austerity policies risked
"becoming self-defeating, as domestic demands fall in line with consumers'
rising concerns about job security and disposable incomes, eroding national tax
revenues."
Geert Wilders' party is expected to do well in
next September's general elections. The electorate agrees with his rejection of
the austerity package. Like Mr. Wilders, it blames the EU authorities in
Brussels for imposing these policies on the Netherlands.
The same phenomenon can be seen all over
Europe, with electorates in revolt against EU-imposed austerity everywhere. The
rising unpopularity of governments that are trying to cut back their deficits
has worried the IMF. Earlier this month, IMF Managing Director Christine
Lagarde said that the IMF is aware that fiscal austerity holds back growth and
that the effects are worse in an economic downturn. This is, however, only a
half-truth. As no one, not even the state, can indefinitely continue to spend
more money than he receives, cutting government expenditure – hence austerity –
is badly needed. The problem is that the austerity policies are targeting not
the institution which is living beyond its means -- namely the government --
but the taxpayers. As Europeans are already suffering tax levels that are
almost twice as high as those in the U.S., it is only natural that the voters
are in revolt.
The irony is that the austerity policies of the
past years have been imposed at the behest of the unelected liberal, leftist
authorities in Brussels on center-right governments in the EU member states.
The electorates are punishing their center-right governments by voting in
center-left politicians who promise to end the austerity policies and "tax
the rich" -- a course that will make matters even worse.
The Dutch are lucky to have Geert Wilders; but
the French, who lack an equivalent of Mr. Wilders, quite understandably voted
President Nicolas Sarkozy out because they disagreed with his austerity policy.
However, they voted the Socialist François Hollande in, who will undoubtedly
only heighten the problem.
The same phenomenon can be witnessed in the
United Kingdom. Two years ago, the Conservative David Cameron managed to oust
Labour. Today, polls predict that if elections were to be held now, Labour
would beat the Conservatives with a margin of 10%. David Cameron is fortunate
that Labour leader Ed Miliband is unpopular or the margin might be even larger.
What did Cameron do wrong? He, too, made tax
payers pay for austerity. One of the first things Mr. Cameron did was to raise
Britain's top tax rate to 50%. The result was that the tax revenue from
Britain's highest income group fell. Another thing Cameron did was to raise
sales taxes. VAT – or Value Added Tax – rose from 17.5 to 20%, the highest
level ever, as part of Cameron's effort to bring down the country's budget
deficit.
The VAT rise, the government said, was a tough,
but necessary step in getting Britain back on the road to economic recovery.
The Dutch government has just announced it will raise the VAT from 19% to 21%,
a measure which Mr. Wilders, who wants to lower it to 18%, vigorously opposes.
Earlier, German Chancellor Angela Merkel, too, had raised the VAT in Germany
from 16% to 19% as part of her efforts to fill holes in public spending; Mrs.
Merkel is also expected to fare badly in next year's general elections.
Early this month, the British Conservatives
suffered widespread losses in local elections as voters punished the party for
austerity measures and a stalled economy. A poll among members of Cameron's own
party revealed that they see the tax rises on ordinary families as one of the
biggest barriers to Cameron's reelection. Ever so often, Mr. Cameron expresses
his approval of taxing people even more. "Taxes must rise to reform
elderly care," he said. "Green taxes must increase in order to
protect the environment."
Austerity policies, which consist mainly of
extra taxes, not only keep the European governments from finding long-term
solutions to their overspending, while worsening the economic situation; they
also make these government increasingly unpopular. Almost 40 years after Arthur
Laffer drew his famous curve on a napkin, one wonders why European politicians,
keep closing their eyes to an evident truth, and put in place incentives for
growth. But then even their American colleagues often do not want to see this
truth.
President Obama's efforts at the G8 meeting
last Saturday to help Merkel and Hollande reach a consensus on how to proceed
will not help. Merkel and Hollande do not need to reach a consensus on how to
proceed; they need to reverse course.
Related Topics: Peter Martino
Voting
in Egypt as "Holy War"
Its Only Value, to Empower Sharia
by Raymond Ibrahim
May 22, 2012 at 4:00 am
May 22, 2012 at 4:00 am
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If the
non-Islamic candidates win, it will only be "by cheating," at which
point "the Islamist organizations" will resort to "armed
action" and such presidents will suffer the same fate as Anwar Sadat
[assassination].
Despite the fact that some in the West portray
Islam and democracy as being perfectly compatible, evidence continues to emerge
that many countries in the Middle East, democracy
and elections are various means to one end: the establishment of a
decidedly undemocratic form of law—Islamic, or Sharia Law.
An Egyptian cleric, Dr. Talat Zahran,
proclaimed that it is "obligatory to cheat at elections, a beautiful
thing" -- meaning that voting is a tool, an instrument, the only value of
which is to empower Sharia.
Another cleric, Hazim Shuman, who has his own
TV program, issued
a fatwa that likened voting for Islamist candidates to a "jihad,"
or a holy war, adding that paradise awaits whoever is "martyred"
during the electoral campaign.
Similarly, according to Al-Wafd,
last Friday, May 18th, Yusuf al-Qaradawi, one of if not the most
authoritative clerics in the Islamic world, "called on all Egyptians to
vote for one of the Islamist candidates." He specifically named the three
Islamists, Muhammad Mursi (candidate of the Salafist party), Abd al-Mun'im Abu
al-Futuh (candidate of the Muslim Brotherhood's political wing), and Muhammad
al-Salim al-Awwa. Qaradawi described them as "best for Egypt" because
they will "apply the Islamic Sharia and achieve justice." Further,
during his Friday sermon, Qaradawi said that it is "mandatory for every
Egyptian to go and vote for the presidential elections," calling it a form
of "obligatory testimony" on behalf of Islam, and quoting Koran 2:283
as proof: "and do not conceal testimony, and whoever conceals it, his
heart is surely sinful; and Allah knows what you do."
Sheikh
Osama Qassim, however, a member of Egypt's notorious Islamic Jihad, which
also seeks to install Sharia law, focused on the non-Islamist candidates—he
specifically named Ahmed Shafiq and Amr Mussa—saying that if they win the
presidential elections, it will only be "by cheating," at which point
"the Islamist organizations" will resort to "armed action"
[code for Jihad], adding that such presidents will suffer the same fate of Anwar
Sadat [assassination], but that this time, the struggle will see "the
Islamists achieve complete domination" in Egypt.
Raymond
Ibrahim is a Shillman Fellow at the David Horowitz Freedom Center
and an Associate Fellow at the Middle East Forum.
Related Topics: Egypt
| Raymond
Ibrahim
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