The Icelandic Model

By Katie L. Wallace

The European Central bank.

“People, fight, they’re drinking your blood,” chant protesters in Greece.  These stark words offer a glimpse into the grim reality faced by people throughout Europe as further proposals mandating increased austerity measures go before the parliaments of several nations. The European fiscal crisis will, for the foreseeable future, continue to be an uphill battle filled with high unemployment rates and skyrocketing taxes.

Citizens are taking to the streets in protest and frequently violence erupts.  Nations on the brink of economic collapse have found themselves chastened like naughty children who overspent their allowance and who require lessons on fiscal responsibility.  Media outlets spotlight the fragile nation-states as hostages to the demands of international lenders and financial institutions. They also speculate on the likelihood of a country’s financial fall with apocalyptic warnings of worldwide financial doom.

In the deeply emotional issue of nation-state austerity, it must be asked if this is the right measure for economic growth.  The practice of increasing revenue and decreasing expense may be the tried and true methodology to remedy an economic downturn, but it should not be at the expense of the people housed within that system.  The media continue to reflect the story that the governments and people of the economically distressed nations are in trouble due to their own profligacy, even though some economists believe this not to be true.

Media reaction to the crisis in Europe has not only led to divergent national views of European unity and of the European Central bank, but to sweeping changes as citizens choose to elect national leaders with differing ideological views.  Greece’s parliamentary election resulted in the dismissal of the mainstream parties, which created greater political division inside and outside of the nation.  The election of French President Francois Hollande of the Socialist Party in May 2012 was seen by some analysts as a way to stave off the domino effect of economic decline from hitting France. President Hollande also ushered in the possibility of a differing EU recovery model, but to-date there have been no changes regarding the management of austerity measures. Both elections indicate the European people are tired of austerity with no real plans towards a steady recovery for the eurozone.  There is another option.

After its financial collapse of 2008, Iceland created a more innovative path.  Iceland citizens banded together to dismantle their corrupt government, create a new constitution, arrest the bankers responsible, and forgive the debts of their citizens. Iceland has shown itself to be a nation that is prepared to make the sweeping changes necessary to recover economically without putting a stranglehold on its citizenry.   Icelands slow and steady recovery should be a restoration model touted as a standard to other nations on the precipice of economic fall and, possibly, violent revolution.

Photo from Flickr, through a Creative Commons license.

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