Krugman: this is a depression
Source Louis Proyect
Date 11/12/12/14:39

NY Times December 11, 2011
Depression and Democracy

Itís time to start calling the current situation what it is: a
depression. True, itís not a full replay of the Great Depression,
but thatís cold comfort. Unemployment in both America and Europe
remains disastrously high. Leaders and institutions are
increasingly discredited. And democratic values are under siege.

On that last point, I am not being alarmist. On the political as
on the economic front itís important not to fall into the ďnot as
bad asĒ trap. High unemployment isnít O.K. just because it hasnít
hit 1933 levels; ominous political trends shouldnít be dismissed
just because thereís no Hitler in sight.

Letís talk, in particular, about whatís happening in Europe ó not
because all is well with America, but because the gravity of
European political developments isnít widely understood.

First of all, the crisis of the euro is killing the European
dream. The shared currency, which was supposed to bind nations
together, has instead created an atmosphere of bitter acrimony.

Specifically, demands for ever-harsher austerity, with no
offsetting effort to foster growth, have done double damage. They
have failed as economic policy, worsening unemployment without
restoring confidence; a Europe-wide recession now looks likely
even if the immediate threat of financial crisis is contained. And
they have created immense anger, with many Europeans furious at
what is perceived, fairly or unfairly (or actually a bit of both),
as a heavy-handed exercise of German power.

Nobody familiar with Europeís history can look at this resurgence
of hostility without feeling a shiver. Yet there may be worse
things happening.

Right-wing populists are on the rise from Austria, where the
Freedom Party (whose leader used to have neo-Nazi connections)
runs neck-and-neck in the polls with established parties, to
Finland, where the anti-immigrant True Finns party had a strong
electoral showing last April. And these are rich countries whose
economies have held up fairly well. Matters look even more ominous
in the poorer nations of Central and Eastern Europe.

Last month the European Bank for Reconstruction and Development
documented a sharp drop in public support for democracy in the
ďnew E.U.Ē countries, the nations that joined the European Union
after the fall of the Berlin Wall. Not surprisingly, the loss of
faith in democracy has been greatest in the countries that
suffered the deepest economic slumps.

And in at least one nation, Hungary, democratic institutions are
being undermined as we speak.

One of Hungaryís major parties, Jobbik, is a nightmare out of the
1930s: itís anti-Roma (Gypsy), itís anti-Semitic, and it even had
a paramilitary arm. But the immediate threat comes from Fidesz,
the governing center-right party.

Fidesz won an overwhelming Parliamentary majority last year, at
least partly for economic reasons; Hungary isnít on the euro, but
it suffered severely because of large-scale borrowing in foreign
currencies and also, to be frank, thanks to mismanagement and
corruption on the part of the then-governing left-liberal parties.
Now Fidesz, which rammed through a new Constitution last spring on
a party-line vote, seems bent on establishing a permanent hold on

The details are complex. Kim Lane Scheppele, who is the director
of Princetonís Law and Public Affairs program ó and has been
following the Hungarian situation closely ó tells me that Fidesz
is relying on overlapping measures to suppress opposition. A
proposed election law creates gerrymandered districts designed to
make it almost impossible for other parties to form a government;
judicial independence has been compromised, and the courts packed
with party loyalists; state-run media have been converted into
party organs, and thereís a crackdown on independent media; and a
proposed constitutional addendum would effectively criminalize the
leading leftist party.

Taken together, all this amounts to the re-establishment of
authoritarian rule, under a paper-thin veneer of democracy, in the
heart of Europe. And itís a sample of what may happen much more
widely if this depression continues.

Itís not clear what can be done about Hungaryís authoritarian
slide. The U.S. State Department, to its credit, has been very
much on the case, but this is essentially a European matter. The
European Union missed the chance to head off the power grab at the
start ó in part because the new Constitution was rammed through
while Hungary held the Unionís rotating presidency. It will be
much harder to reverse the slide now. Yet Europeís leaders had
better try, or risk losing everything they stand for.

And they also need to rethink their failing economic policies. If
they donít, there will be more backsliding on democracy - and the
breakup of the euro may be the least of their worries.

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