Krugman Nails It

In accordance with Euro Zone requirements, France is taking steps to reduce its deficit.

The people who most strongly argue for "expansionary austerity"^*, are criticizing Frances steps, and Paul Krugman rightly takes them to task:

Simon Wren-Lewis looks at France, and finds that it is engaging in a lot of fiscal austerity — far more than makes sense given the macroeconomic situation. He notes, however, that France has eliminated its structural primary deficit mainly by raising taxes rather than by cutting spending.

And Olli Rehn — who should be praising the French for their fiscal responsibility, their willingness to defy textbook macroeconomics in favor of the austerity gospel — is furious, declaring that fiscal restraint must come through spending cuts.

………

But the larger point here, surely, is that Rehn has let the mask slip. It’s not about fiscal responsibility; it never was. It was always about using hyperbole about the dangers of debt to dismantle the welfare state. How dare the French take the alleged worries about the deficit literally, while declining to remake their society along neoliberal lines?

It should be noted that Robert Mundell, known as the "Father of the Euro", is also a big figure in supply side economics (aka Raganomics).

The Euro's academic and intellectual roots are dominated by people who have the dismantling of the social safety net as one of their important goals.

It is therefore no surprise that they are prosecuting their agenda by using austerity as a tool to do this, but the people who have to live in the Euro are their victims.

^*Much like sparkle ponies that sh%$ M&Ms, expansionary austerity does not exist.