Deflating Europe:  The Simple Truth

By Shlomo Maital

 Pope EU

  Pope Francis has quickly become one of my favorite role models, even though I am Jewish.  He has taken on the moribund Vatican establishment and turned it upside down.  His speeches are thoughtful and tackle the key issues of our day.  And recently, last Nov. 25, he addressed the European Parliament – and told the Europeans some very very hard things they needed to hear, that their own leaders dare not say.  

He told the Europeans bluntly: “Europe seems to give the impression of being somewhat elderly and haggard, feeling less and less a protagonist in a world which frequently regards it with aloofness, mistrust and even, at times, suspicion….. Men and women risk being reduced to mere cogs in a machine that treats them as items of consumption to be exploited, with the result that – as is so tragically apparent – whenever a human life no longer proves useful for that machine, it is discarded with few qualms, as in the case of the terminally ill, the elderly who are abandoned and uncared for, and children who are killed in the womb.”

   Elderly and haggard.   Right on.

   Pope Francis has deflated Europe. And he does so, while Europe itself has sunk again into deflation, with prices now falling for the first time since 2008.

   What’s wrong with falling prices? Put simply: there are two kinds of deflation (falling prices):   a) the kind caused by higher productivity and lower costs, and b) the kind caused by falling demand. Europe suffers mainly from the latter. And it is an evil. Because it is accompanied by higher unemployment, stagnation and inequality.

   And the problem is, Europe’s deflation is largely man-made, caused by the wrong-headed principle of austerity and budget cuts, partly imposed by Germany on Greece, Spain, Portugal and other “spendthrift” nations. And now Germany’s economy too is paying the price, because when Europe sinks, Germany does too.

   Kudos to Pope Francis for deflating deflated Europe. Black marks to economists for selling Europe on the wrongheaded austerity policies. Why does it take a Pope to try to set Europe in the right direction?