Why Reagan Still Matters to Europe

By Alberto Mingardi

He helped Europeans understand how a free society fosters more opportunity.

ROME, Italy — This past Fourth of July, the Ronald Reagan Presidential Foundation unveiled a statue of President Reagan in London’s Grosvenor Square, on the occasion of his centennial. Thousands of people attended, and social media was abuzz with sharply divided polemics about Reagan, as if it were 1981 and not 2011. The debate was especially vigorous among Americans, but also among Europeans, as Reagan remains an important influence among us too.

Politics is about policies, but it is also about symbols. Americans debate Reagan’s legacy and accomplishments, whether he really shrank government, and the indictment of Keynesian economics during his presidency, but for the rest of the world, Reagan is largely a symbol. His persona and rhetoric remain, reminding us what the American Dream is all about. He helped Europeans understand how a free society fosters more opportunity than the government planning that still enjoys good press in our continent.

Reagan was optimism embodied. He entered politics to encourage people that our better days were still ahead. Few Western politicians offer such a positive message.

People may at first have been skeptical of an actor turned politician, the sort of combination that can provoke contemptuous humor (“Is there really a difference?”), but Reagan overcame their doubts. He was optimism embodied. He entered politics to encourage people that our better days were still ahead. Few Western politicians offer such a positive message.

As he fought communism, he returned the public conversation to first principles and made room for a more critical reading of institutions in the West. By stating in a plain, commonsensical way what struck many as incendiary thoughts—such as “government is not the solution to our problem; government is the problem” or “the nine most frightening words in the English language are ‘I’m from the government and I’m here to help’”—Reagan instilled in the minds of many a skepticism towards establishment Keynesian economic thinking.

Reagan instilled in the minds of many a skepticism towards establishment Keynesian economic thinking.

For Europeans, here was the most powerful man in the world, the president of the United States, of the most almighty states of them all, preaching caution against confidence in the almighty powers.

Those in Europe who dared to question the pervasive state intervention typical of continental economies found in Reagan the words they lacked. He supplied them with the needed vocabulary, imagery, and confidence. Those who defended European social democracies perhaps despised Reagan but were forced to check their principles.

His persona and rhetoric remain, reminding us what the American Dream is all about.

Political parties, think tanks, and organizations that openly embrace the free market are still rare in most of continental Europe. However, those who brought them about got from Reagan’s years an unbreakable confidence: the United States was indeed the bright light to look to as they searched for freedom-generating economic policies. That confidence is shaken today, for the legacy of both President Obama and President Bush cannot foster a sense of allegiance to the venerable principles of free markets and limited government.

Winston Churchill famously said that America will always do the right thing, but only after exhausting all other options. After the bankruptcy of Keynesianism in the 1970s, Reagan’s emphasis on the principles of limited government seemed to be precisely the right choice, after all the others were tried. Lessons are learnt the hard way in politics, in Europe as well as the United States. Let us hope this centennial celebration could at least remind us that the right choices may still be embraced, at least after others have failed.

Alberto Mingardi is the director general of Istituto Bruno Leoni, Italy’s free market think tank.

US: Greek Crisis Is A Warning To Europe, U.S.

US: Greek Crisis Is A Warning To Europe, U.S. – Investors.com

Supporters of the Greek Communist party take part in a rally against austerity measures at Omonoia square in Athens Thursday. A string of parliamentary resignations on Thursday threatened to thwart Greek Prime Minister George Papandreou's plan to reshuffle his cabinet and pass austerity measures needed to save the nation from default.

As heavily indebted Greece continues to implode, threatening to drag Europe down with it, Americans should remember one key fact: Repeated bailouts don’t work, only fiscal responsibility does.

Make no mistake: Greece’s wounds are self-inflicted. The socialist government of George Papandreou has been chronically unable to agree on badly needed cuts to push the country onto a sound fiscal path.

Now, Papandreou is fighting for his political life, trying to reshuffle his cabinet and win support for austerity reforms that will bring more European Union bailout money, even as he faces riots in the streets and demonstrations against his government’s austerity.

Problem is, Greece’s debt is unsustainable, yet the public — which voted an economically inept socialist government into office — seems to believe the welfare state gravy train never has to end. But it will. It must.

Greece owes close to $240 billion to European Union governments and banks that it can’t pay. Roughly half of that is owed to France and Germany, and right behind Greece are some much bigger debtors that really scare the Eurocrats. They include Ireland ($870 billion in debts), Italy ($1.4 trillion), Spain ($1.2 trillion) and Portugal ($290 billion).

This is why the EU has decided to throw good money after bad, doubling the size of its bailout fund from $1 trillion to more than $2 trillion. It fears political chaos, widespread bank failures and a collapse of the euro.

The bailout must be big enough, notes European Central Bank governor Nout Wellink, “to frighten the market and to convince the markets that governments are prepared to really defend, to the end of their days, Europe as it is and the monetary union.” That’s panic.

But what, really, are they defending? The Greek government’s right to spend far more than it takes in? Or the Greeks’ pathetic refusal to understand that other Europeans won’t pay for their welfare state?

As the Financial Times noted, “Even if Greece successfully raised ($45 billion) from privatizations, met all its tight budgetary goals and grew in line with the optimistic official forecasts, its government debt would still equal about 150% of gross domestic product in 2014.”

Seen in that light, the bailout really isn’t about Greece’s economy at all. It’s about saving the EU from financial contagion and political chaos. Unfortunately,bailouts merely replace old debt with new. Studies show that cutting spending, not raising taxes, is the way to fix a nation’s finances and get its economy growing.

Time’s running out. At a minimum, the recent crisis means the EU’s cradle-to-grave welfare state is dead.

In its place, Europeans need to restore a sense of self-responsibility, hard work and market discipline, and pare back their demands from government.

As for the U.S., we can neither ignore this crisis nor gloat about it. If we don’t do the same, we’ll be next.