Europeâ€™s brain-dead right - Columns - livemint.com Europeâ€™s right-of-centre leaders came to office on the perception that they are better economic managers than their left-of-centre counterparts Readers presumably understand that Europeâ€™s economic crisis is also the crisis of social democracyâ€”of the idea that markets must be made to coexist with high levels of taxation, regulation, unionization, welfare spending and subsidized healthcare and education. Eutopia may be nice in theory; it may even work for a while. But eventually social-democratic policies will lead to economic stagnation, policy paralysis and national bankruptcy on the continental scale we are witnessing today. So, naturally, Germanyâ€™s Social Democrats romped to a 13-point victory in Sundayâ€™s elections in North Rhine-Westphalia, the countryâ€™s largest state. â€œAll politics is local,â€ goes the clichÃ©, and it would be tempting to read the German result that way, too. The state had long been a Social Democratic stronghold before tipping into the hands of Angela Merkelâ€™s Christian Democrats in 2005. Merkel remains broadly liked as chancellor and doesnâ€™t face an election until next year. And the German economy is the envy of Europe. And yet Merkelâ€™s party keeps losing state elections. Are Germans doing so well that theyâ€™ve decided to become politically flippant about their prosperity? Would Christian Democrats be doing a bit better politically if the economy were doing a bit worse? The resurgence of the Social Democrats in Germany is of a piece with the strong showing of Labour Party last month in Britainâ€™s local council elections. Itâ€™s of a piece with the pathetic showing this month of Greeceâ€™s centre-right New Democracy, and of the resurgence there of the hard left. Itâ€™s especially of a piece with FranÃ§ois Hollandeâ€™s improbable rise to the French presidency, on the strength of economic ideas whose intellectual sell-by date was sometime in the mid-1970s. Have the gods gone crazy? No. But maybe thereâ€™s a message here for Europeâ€™s joy-fearing conservatives, who seem to have convinced themselves that managing an economy should be like running a 19th century nunneryâ€”an exercise in the stern suppression of animal spirits. Take euro-conservative tax policy. In France, Nicolas Sarkozy responded to the euro zone crisis by increasing some VAT rates to 21.2% from 19.6%, introducing a 3% surcharge on high incomes and raising the effective capital gains tax to 32.5% from 31.3%. In Britain, David Cameron raised VAT to 20% from 17.5% and kept the top marginal rate at 50% (now coming down to a still-exorbitant 45%). Germany? Tax cuts Merkel promised when she was re-elected never materialized, though corporate rates have come down. The new conservative Spanish government of Mariano Rajoy is raising the top marginal rate of income tax to 52% from 45%. In Holland, the right-of-centre government increased the top VAT rate two percentage points to 21% and doubled the countryâ€™s bank tax prior to its sudden collapse last month. Italyâ€™s technocratic administration of Mario Monti has imposed new levies on property, luxury goods and repatriated wealth. No wonder the natives are stirring. Europeâ€™s right-of-centre leaders came to office on the perception that they are better economic managers than their left-of-centre counterparts. What theyâ€™ve mainly shown is that they are just as incompetentâ€”only a lot more severe. Raising consumption taxes in an otherwise flat-lining economy is especially galling if itâ€™s joined to the perception (accurate or not) that the government plans to lay off government workers. Why should Europeans be made to sacrifice on an altar of austerity whose benefits have so far failed to materialize, except perhaps as a slightly more palatable debt-to-GDP score? Just who is this thing called â€œthe economyâ€ meant to serve? The astonishing political result is that it is now the left that has captured the language of growth. Never mind the precise formulas: blowout deficit spending, loose monetary policy, millionaire surcharges, a Tobin tax, euro bonds financed by anybody who can turn water into wine, a â€œmildâ€ dose of inflation. At least the left is talking growth, not redistribution. Thatâ€™s a mark of political progress. Hereâ€™s something else the European left seems to be recapturing: the language of sovereignty and democracy. For years, it was the right that had a corner on that particular market, with its suspicion of all things Brussels. But Merkel and Sarkozy undercut that reputation with their serially ill-fated efforts to broker grand bargains for â€œsavingâ€ the euro zone. Their prescriptions were rubbishâ€”does Greece look like itâ€™s been rescued? Has Merkelâ€™s fiscal pact held up?â€”but their arrogance was worse. Nobody wants their economic future dictated to them by leaders they didnâ€™t elect, in languages they probably donâ€™t understand. Yet thatâ€™s exactly what â€œMerkozyâ€ sought to impose. Now itâ€™s gone, and good riddance too. The French will probably soon come to regret Hollande, but itâ€™s unlikely Sarkozy will be missed. Nobody should be surprised if voters also give Merkel, Rajoy and Cameron the boot at the next ballot. At its best, the right should stand for the idea that the purpose of government is to allow people to flourish, mainly by getting out of their way. Todayâ€™s European right stands instead for imposing penalties on people in order to atone for the sins of government. Thatâ€™s a right that deserves to lose, and will, until it learns that voters want freedom, not chastity.