It’s been said in the past – indeed, it used to be conventional wisdom – that unlikely right-wing governments were more likely to make peace, because they enjoyed credibility and a tough reputation. More obviously, conservatives long enjoyed a reputation for “fiscal credibility”, which supposedly helped them to control inflation by giving the impression that they would either be willing to sit on the money supply, or trade-off unemployment for inflation along the Phillips curve.
Curiously, with what is commonly taken to be a swing to the Right in Germany and France, we’re seeing the opposite. One of Angela Merkel’s first acts on taking office was to announce a future rise in consumption taxes, which isn’t very much different in terms of public perception to cutting them in the meantime. Nicolas Sarkozy has since announced that he’s going to have a pause in the reduction of the national debt – read, reflate the economy somewhat. Specifically, as he’s promised to hand out a â‚¬20 billion “fiscal shock”. But nobody appears to be very worried. It’s a big contrast to five minutes ago, when modalities of the Eurosystem’s breakdown were a regular topic on AFOE..
Compare the keenness of the SchrÃ¶der, Jospin, and de Villepin governments to stick to the script of the Stability Pact, come what may. (No, de Villepin wasn’t a social democrat, but Sarko certainly campaigned as if he had been.) There’s a non-trivial argument that the pact was a serious economic mistake. It would certainly be interesting if it only survived because the Left was paranoid about seeming over lefty, and especially if the continental economy’s uptick had something to do with the Right being able to let it ride.