Episode 27 - EU Parliament Member Johan Van Overtveldt on The Icarus Curse
It isn’t every day you get to talk to one of the 720 members of the European Parliament, one of the two legislative bodies of the European Union. For me, it has happened once: a week ago, when I spoke to Johan Van Overtveldt, now in his second five-year term representing Belgium in the Parliament and serving as chair of the Parliament’s budget committee. Van Overtveldt, who previously served as Belgium’s Minister of Finance, their version of America’s Secretary of the Treasury, is a conservative: at home, he’s a member of the New Flemish Alliance, and in Parliament, a member of the European Conservatives and Reformists Group.
European and American conservatives have their similarities, but the match isn’t perfect. I asked Member Van Overtveldt how he would categorize himself in American terms and I’ll let him speak for himself, but for now, think a generous Reagan, but supportive of gay marriage and concerned about climate change.
Prior to transitioning into politics, Van Overtveldt worked in banking, he worked in finance, and he spent decades as an economic journalist. There’s a reason he was minister of finance and is now chair of the budgetary committee—he really knows his stuff, and he has the industry connections and pragmatic approach you’d expect of someone who spent a career outside politics.
Van Overtveldt has also written a number of books. His first came from his dissertation—he received his PhD in applied economics from the University of Antwerp—which he wrote on the Chicago School of Economics—Milton Friedman, George Stigler, Ronald Coase, and so forth.
I spoke to him about his most recent book, The Icarus Curse: How Western Democracies Derailed and How to Get Back on Track. The basic premise is that western democracies, very much including the United States, have been living beyond their means for generations, and are reaching a point of true policy exhaustion. What started as John Maynard Keynes’s innovation of deficit spending to stimulate aggregate demand when demand fell—like during a financial crisis—became an excuse for politicians to make promise after promise after promise—without, it should be noted, ever fully delivering what people have now come to expect of their government. In 1964, 77% of Americans trusted their government to do the right thing just about always or most of the time; by 1979, that was 27%, and it hasn’t exceeded 24% since before President Obama took office. Only part of that is about the mismatch between what people have come to expect of their government and what the government can actually deliver, but it’s a real part.
This isn’t one party’s fault. On the one hand you have Democrats: happy to spend, but ultimately uncomfortable with raising taxes; on the other, you have Republicans: happy to cut taxes, but less good at actually cutting spending, and there’s a strong argument to be made that what they are trying to cut—it’s not just fraud, waste, and abuse—is exactly the sort of public investment spending you shouldn’t be cutting. President Trump and congressional Republicans argue that the Big Beautiful Bill will stimulate the economy so much that tax revenues will eventually wipe out what the Congressional Budget Office projects as an additional $2.4 trillion on the deficit side of the ledger over the next ten years, but how confident are you that’s actually the case? I’m not an economist, I’m not an actuary, and I’m not a politician, but it sounds more like wishful thinking than real math.
Ultimately, the pied piper is going to come calling. There will come a financial meltdown, or a war, or a series of natural disasters that we don’t have the borrowing capacity to simply paper over. So what do we do? How do we gird ourselves against the unpredictable crises to come? Well, those questions are why I wanted to talk to Johan Van Overtveldt.
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