Austerity: an international backlash against the wealthy is reshaping politics from Europe to the US to China

The well-off in Europe invest in bonds issued by banks, property companies and states, like Ireland, Portugal, Greece and Spain, which offer attractive rates of interest. In so doing, they have financed ill-judged investment on an enormous scale – the construction of housing and motorways that remain unused and other foolhardy infrastructure projects – that these countries would never have been able to undertake on their own.

As it stands, the sole purpose of the bridging loans provided by eurozone bailout funds is to aid states and their banks to remain solvent so that they can continue to pay their debts to misguided investors. As a result, we now have a situation in which it is not a matter of Germans, or the Dutch or the Finns etc, being obliged to bail out the Greeks, the Irish and the Spanish, but rather of middle class European taxpayers being forced to provide the funds required to save the fortunes of Europe’s wealthiest citizens.

As it stands, the EU debt collectors are urging crisis stricken countries to cut social services and increase taxes on the middle classes, while Greek shipping tycoons, Irish property barons and the Spanish super-rich pay hardly any income tax and invest their money in tax havens.

The priority for those who wish to save the euro should be to fight against such dysfunctions. If they do, the representatives of the unpopular European troika might still be perceived as heroes.

It is a mistake to portray the French Hollande administration as Socialist dinosaurs. The truth is that the new French government is at the extreme end of a new global trend: an international backlash against the wealthy that is reshaping politics from Europe to the US to China.

US President Barack Obama has been making political capital ahead of the November election with his pledges to tax “millionaires and billionaires”, while branding his Republican rival Mitt Romney as representing of the tax-dodging elite. Eventually that kind of shift is liable to spark a political backlash.

Western politicians, from Barack Obama to François Hollande are seeking to capture and channel this new mood... If this new mood hardens, it could mark the end of an era of lower taxes, deregulation and rising inequality that began in the late 1970s, with the rise of Margaret Thatcher and Ronald Reagan in the west and of Deng Xiaoping in China.

EU-Digest