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British Elections: The REAL Problem

By Shlomo Maital

The press are moaning about Britain’s “hung” parliament, because Teresa May did not get a majority, leaving Brexit negotiations with the EU in limbo.

   I see a different, much bigger problem. This, I believe, is the first election in which a generational war between the millennials and their parents has broken out.

   According to Bloomberg, the Boomers voted for the Conservatives, and before that, for Brexit. The millennials, first, registered to vote in very very large numbers (which they did NOT do for the Brexit referendum), and then,   voted massively in support of 68 year old Jeremy Corbyn. Their support for Corbyn was exuberant and high-energy.  Many of the young people voted for the first time.

“Brexit, along with spending cuts and paying for pensions, pitted the generations against each other. Young once apathetic Britons rallied behind Corbyn’s leftist battle cry and propelled the anti-May anthem “Liar, Liar” to the top of the pop charts with 2.6 million YouTube views.  “I wanted to see Theresa May get a bit of a kicking,” said George Hames, 20, who voted for Labour in London. “The way Corbyn has been able to paint a contrast between himself and May: He’s given people something to vote for, not just pragmatically, but because they think it can change the world.”

     Why is this a big problem?   In normal times, the older generation, which has wealth and power, acts to create a better world for the younger generation. So both generations have a common interest.

     Today? In many countries, young people no longer believe at all that this is the case.

       Civilized society is based on trust, on faith, on values, and on an orderly transition in which power and wealth are handed from one generation to another.

       In societies where this is not the case — young people may leave (in droves),   or create social unrest and hung parliaments, as in Britain.

       Brexit is a problem. But finding common ground between old and young is a far more pressing problem, and a far tougher one.   Brexit means bargaining with the EU, an external force.     Millenial wars mean finding internal agreement between young and old – and that is far harder.  

       I wish Britain well.   Other countries may soon experience similar Millenial wars.  France, in contrast, may have cracked the problem by electing a 39-year-old inexpericnced President. So far it seems to be working.

 

 

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History Repeats Itself: Europe & the Extreme Right

By Shlomo  Maital

 Farage Nigel Farage, UK

 History DOES repeat itself.

  After WWI (whose centenary,  1914-2014, will soon be observed), the victors (Britain, France)  punished the losers (Germany) with outrageous demands for ‘reparations’, at the Treaty of Versailles.   J.M. Keynes was there; he warned, in a book The Economic Consequences of the Peace,  that the ruinous reparations would lead to a new war.  It did.  To pay the reparations, Germany simply printed marks. This destroyed the economy through ruinous hyperinflation, and led to the rise of the Nazis and Hitler. 

Today, Europe has adopted a misguided policy of austerity, forcing Greece, Spain, Ireland, and to some degree Italy, to adopt stringent spending cuts and tax hikes.  True, these countries overspent.  But the right way to emerge from excessive public debt is to grow the economy so the debt shrinks and so tax revenues help pay for it.  The wrong way is austerity – shrinking government demand, when consumption and investment and exports are all declining.  You cannot grow an economy by shrinking demand.  Yet many economists support ruinous austerity.   Did we forget what Depression did to Germany?  Well, it is doing similar bad things to Greece, Spain and other countries. 

   Now, it is time to pay the Piper.  The European Parliament elections have brought a huge victory for parties on the extreme right – Euroskeptics, neo-Nazi, anti-immigrant, and anti-Semitic.  It was inevitable.  When times are bad, people look to those who have simple remedies – blame the foreigners, the Jewish people, and Brussels.   

    I’m embarrassed and ashamed to admit I am an economist.  Not only do we economists fail to grasp reality, we have also forgotten history, and the warnings of the man who invented macroeconomics, J.M. Keynes.    

   If the neo-Nazis have risen in Europe, we have nobody to blame but ourselves.  

Blog entries written by Prof. Shlomo Maital

Shlomo Maital
May 2019
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