Click amount to donate direct to CounterPunch
  • $25
  • $50
  • $100
  • $500
  • $other
  • use PayPal
Keep CounterPunch ad free. Support our annual fund drive today!

The Insanity of Austerity


Nightmare and insanity are akin.
Mysterious and involuntary states that skew
and distort objective reality
One wakens from nightmare.
From insanity there is no awakening.

“Let Your Life Be a Friction to Stop the Machine”

While the unelected fonctionnaires working for the European Union (EU) in Brussels have their Nobel Peace Prize to keep them warm this winter, the citizens of Europe, on the other hand, have only their furniture to burn. Almost 4 years after the official end of the worst financial crisis in 80 years, things are not going well in the EU. The euro-zone (the 17 EU countries that use the euro as their currency) fell back into recession in the third quarter of 2012 according to Eurostat, the official statistics gathering arm of the EU.

The European Commission believes that the euro-zone will contract, with Gross Domestic Product (GDP) falling by 0.3% this year as compared to last. As recently as this past November, growth was predicted to be 0.1% (with even that tepid number being nothing to brag about). As a result, unemployment is expected to rise to 12.2%, a revision upward from a previously dismal forecast of 11.8%. Youth unemployment levels in Spain and Greece are well over 50%. In Ireland, the percentage of people considered as long-term unemployed rose from 29% to 63%, the largest increase of any OECD (Organization for Economic Co-operation and Development) country. Things are so bad that even the newspaper “The Economist” is asking that Ireland be given “a helping hand” by the Germans in order to leave their punitive bail-out program.

And what does the (unelected) President of the European Commission, Mr. José Manuel Durão Barroso, have to say about all of this? The former student Maoist (and host of the infamous Azores summit of 2003 where President Bush II, Prime Minister Blair and Prime Minister Aznar of Spain set the stage for the invasion of Iraq) in a letter dated March 11, 2013, said that while he was “painfully aware that economic activity over the past year has been disappointing” and that there are still “unacceptably high levels of unemployment” somehow, beyond all logic and reason, Mr. Barroso feels that the “reform efforts [i.e. austerity] of Member States are starting to bear fruit.”

The amount of self delusion and complete disregard for the suffering of other human beings needed to make that statement simply boggles the mind.

Even more troubling is a recent paper from the IMF (Eyraud and Weber 2013) which basically argues that the effect of European governments imposing austerity and budget cuts in order to get their debt levels down will be to, paradoxically, increase their debt to GDP ratios.

A complimentary paper by De Grauwe and Ji (2013) provides further support to the argument that austerity has been a complete and unmitigated disaster. They argue that the poorly thought out “panic induced” austerity programs that have been imposed upon the citizens of the southern euro-zone countries have only exacerbated the financial crisis.

De Grauwe and Ji found that the countries that had imposed the strongest austerity measures were the ones that also experienced the greatest declines in their GDP. Furthermore, the more intense the austerity, the larger the subsequent increase in the debt-to-GDP ratio of the respective country. This is almost exactly what was argued in the IMF paper.

The austerity programs that were imposed on the people of Europe not only resulted in (predictably) severe recessions, these programs didn’t work. They only resulted in the unnecessary suffering of the millions of people who lost their jobs (more than 26 million are out of work in the EU).

For his part, French “Socialist” President Francois Hollande has said that the “only priority” is to find fresh ways to boost growth and get people back to work. This from a man who curiously had no trouble finding a way to provide militarily aid to an unelected government in Mali (at an estimated cost to the French taxpayer of $3.6 million per day) and who said that France is ready to “take its responsibilities” and supply weapons to the rebels fighting to overthrow Syria’s secular (if unelected) government, completely ignoring the blowback received from overthrowing the secular (if unelected) government of Libya in 2011 (at an estimated cost to the French taxpayer of $2.1 million per day).

Disturbingly, there is already talk of a “European Spring” and growing popular resistance to more self inflicted pain through directives from unelected officials in Brussels. In recent Italian elections an anti-austerity party won 25 percent of the vote.

And the EU’s response to all of this? After a European Council meeting held on March 14-15, guidelines regarding economic priorities for 2013 were issued for the member states. The European Council stressed “the need for fiscal consolidation [i.e. austerity] while at the same time ensuring economic growth.” Something that it calls “growth-friendly fiscal consolidation.”

This can only be described as “Unicorn Economics 101.”

Albert Einstein supposedly said that insanity was doing the same thing over and over again and expecting a different result each time. By that definition, the leaders of the EU are clearly insane. They will only have themselves to blame when their cherished project ends in tears.

Tom McNamara is an Assistant Professor at the ESC Rennes School of Business, France, and a Visiting Lecturer at the French National Military Academy at Saint-Cyr, Coëtquidan, France. 


“Charlemagne: Meet the president” February 17, 2005, The Economist. Accessed at:

“Eurozone unemployment reaches new high” January 8, 2013, BBC News. Accessed at:

“Flash estimate for the third quarter of 2012” Eurostat News Release No. 159/2012, November 15, 2012. Accessed at:

“Ireland and the euro crisis: Dawn in the west” January 5, 2013, The Economist. Accessed at:

“Jose Manuel Barroso’s call for EU banking union threatens national sovereignty and economic freedom” by Nile Gardiner, June 12, 2012, The Telegraph. Accessed at:

“Leaders endorse EU’s economic priorities for 2013” Statement by the European Council, March 15, 2013. Accessed at:

“Leaders wrestle with austerity as EU jobless fears rise” March 15, 2013, Accessed at:

“Letter from President Barroso to the Members of the European Council” by President José Manuel Barroso, Reference: MEMO/13/195, March 11, 2013. Accessed at:

“Long-term unemployment” February 23, 2013, The Economist. Accessed at:

“Mali costs France $3.6 million per day” February 8, 2013, UPI. Accessed at:

“Panic-driven austerity in the Eurozone and its implications” by Paul De Grauwe and Yuemei Ji, February 21, 2013, VOX. Accessed at:

“Prodi Says Europe Hurt by Too Much Austerity Amid Very High Euro” By Indira A.R. Lakshmanan and Kasia Klimasinska, March 15, 2013, Bloomberg. Accessed at:

“The Challenge of Debt Reduction during Fiscal Consolidation” by Luc Eyraud and Anke Weber, March 8, 2013, The International Monetary Fund (IMF) Working Paper No. 13/67. Accessed at:

“The Greek election could be the start of a European spring” by Costas Douzinas, May 1, 2012, The Guardian. Accessed at:

“The IMF on the Austerity Trap” by Dr. Paul Krugman, March 10, 2013, The New York times. Accessed at:

“The Nobel Peace Prize 2012 – Press Release” October 12, 2012, The Norwegian Nobel Committee. Accessed at:

Tom McNamara is an Assistant Professor at the ESC Rennes School of Business, France, and a former Visiting Lecturer at the French National Military Academy at Saint-Cyr, Coëtquidan, France.

More articles by:

2016 Fund Drive
Smart. Fierce. Uncompromised. Support CounterPunch Now!

  • cp-store
  • donate paypal

CounterPunch Magazine


October 20, 2016
Eric Draitser
Syria and the Left: Time to Break the Silence
Jeffrey St. Clair
Extreme Unction: Illusions of Democracy in Vegas
Binoy Kampmark
Digital Information Warfare: WikiLeaks, Assange and the US Presidential Elections
Jonathan Cook
Israel’s Bogus History Lesson
Bruce Mastron
Killing the Messenger, Again
Anthony DiMaggio
Lesser Evil Voting and Prospects for a Progressive Third Party
Ramzy Baroud
The Many ‘Truths’ on Syria: How Our Rivalry Has Destroyed a Country
David Rosen
Was Bill Clinton the Most Sexist President?
Laura Carlsen
Plan Colombia, Permanent War and the No Vote
Aidan O'Brien
Mao: Monster or Model?
David Swanson
Barbara Nimri Aziz
Less Than Two Weeks
Victor Grossman
Suicides and Hopes and Fears
October 19, 2016
Dan Schiller – Shinjoung Yeo
The Silicon Valley Candidate
Mike Whitney
Trump Unchained
Paul Buhle
Criminalizing the Struggle: Incarceration and the Rise of the Neoliberal State
Linn Washington Jr.
Abusing the Abused: Philly Police Abuse Case Typifies All-Too-Common Misconduct by US Prosecutors
Terry Tempest Williams - Brooke Williams
Rejected by the BLM
Binoy Kampmark
Neither War Nor Peace: Shimon Peres, Israel and History
Patrick Cockburn
This Battle for Mosul Will Not Be the Last
Joyce Nelson
Trudeau Bullying on Trade Deal
Thomas Mountain
Revolutionary Islam and Regime Change in Ethiopia
Serge Halimi – Benoît Bréville
The Limits of Eloquence: the Failures of Barack Obama
Mel Gurtov
America’s Dangerous Moment
Jerry Kroth
Questions for Obama Before Leaving Office
Michael Garrity
America is a Nation of Laws: Collaboration and Its Discontents
October 18, 2016
Srećko Horvat
The Cyber-War on Wikileaks
Zoltan Grossman
Stop the Next President From Waging the Next War
Jim Kavanagh
Hillary’s Hide-and-Seek
Robert Fisk
After Mosul Falls, ISIS will Flee to Syria. Then What?
Ted Rall
The 4 Things Hillary Could Do To Close the Deal Against Trump
Pepe Escobar
Why Hillary Clinton is a Bigger Concern for China than Donald Trump
Colin Todhunter
World Wide Fund for Nature: Stop Greenwashing Capitalism, Start Holding Corporations to Account
David Macaray
Whiskey Workers Go on Strike: I’ll Drink to That
James A Haught
After the Election, Back to Important Things
Arturo Desimone
How a Selective Boycott Can Boost External Support for Palestinians
Russell Mokhiber
If Chris Wallace Asks About Street Crime He Should Also Ask About Corporate Crime
Mark Kernan
Moloch in Paris: on the Anniversary of COP21
Carol Dansereau
The Hillary Push: Manipulation You Can Believe In
Andre Vltchek
Will They Really Try to Kill the President of the Philippines?
Sean Joseph Clancy
The Wreckage of Matthew: Cuba and Haiti
October 17, 2016
Paul Street
Pick Your Poison? Presidential Politics and Planetary Prospects
Patrick Cockburn
US Allies are Funding ISIS (and Hillary Knew All Along)
David Swanson
What Hillary Clinton Privately Told Goldman Sachs
Fran Shor
A Rigged System?