Listening to the media heavy breathers—a bipartisan group ranging from Gore Vidal to Glenn Beck—one gets the distinct impression that our democracy has become flabby and distracted, trundling toward a socialist (to be used interchangeably with communist or Tsarist) or fascist (to be used interchangeably with Nazi) future. For every absurdity emanating from the Bush White House, there existed a blogger, pundit, or politician ready to compare it to the "Night of the Long Knives"; every power grab from the Obamaites foreshadows an American Lubyanka.

In the United States, such nonsense could be corrected without the aid of turgid academic books explaining late 19th century revolutionary movements in Imperial Russia or the collapse of Weimar democracy. The comparisons would be embarrassing to anyone who has watched films such as The Lives of Others, Katyn, or The Soviet Story. (Hollywood, incidentally, has yet to produce more than a handful decent anti-communist films; we have ceded this responsibility to those who actually suffered under the Soviet boot heel.)

I often wonder what the Germans think of these media-induced Nazi-Red panics. It is, after all, the country that perfected the most genocidal form of fascism, only to be replaced, in half of the country, with the brutal Moscow-directed (but distinctly indigenous) form of East German communism. In a country that can be accused of periodically backsliding into old ideological habits (specifically, a rose-colored view of its recent communist past), the hyperventilating politician warning of resurgent fascism or communism is rare.

In last week's Bundestag elections, the Left Party, heir to the East German state communist party and still stocked with representatives of the old dictatorship, managed an impressive 12 percent of the vote. Distressing, say pundits inhabiting the sensible enclaves of the German left, but nothing to get too alarmed about. Indeed, despite the current global economic downturn, which countless American pundits suggested would be a boon for European socialist parties, it is now a coalition of Angela Merkel's right-of-center Christian Democrats (CDU) and Guido Westerwelle's libertarian-leaning Free Democrats (FDP) running the show in Berlin. The Social Democrats—utterly bereft of new ideas—suffered their greatest defeat since the Weimar Republic.

Our comrades on the American left, beating the drum for a type of social democracy in retreat across Europe, insist that this is nothing to worry about. At the popular left-wing blog Obsidian Wings, readers are informed that "Merkel's coalition would be considered fairly liberal Democrats on America's political spectrum." Blogger Matt Yglesias declares that his are "right-of-center views relative to German politics," but also writes that by voting for the FDP/CDU coalition, voters in Germany could be diagnosed as suffering from false consciousness by "underestimating the extent of the economic problems it's facing." In The New Yorker, Hendrik Hertzberg explained that German conservatives weren't at all like the troglodyte American variety—German conservatives all support the welfare state and are rather civilized when it comes to social policy.

Well, not exactly. On the continuum of ideology, the German right is surely less conservative than the American right. But the Western European right has successfully chipped away at the welfare state in the last 25 years, with every country lowering tax rates, deregulating labor markets, and forcing the privatization of state companies. The story of the welfare state in the past quarter century is one of contraction, not expansion.

So what to make of Westerwelle, Germany's new foreign minister and influential coalition partner?

The Daily Telegraph called him an "arch-Thatcherite," a politician who recently declared that the deeply entrenched German labor unions are a "plague on our country." The Independent grumbled that he was "a man obsesssed with tax cuts," excoriating the German welfare safety net as "pay for laziness." Westerwelle told supporters that "there is no such thing as democratic socialism; it's like talking about a vegetarian abattoir." Der Spiegel succinctly described the FDP's politics as advocating "open markets, less stringent hiring and firing rules, an effective competition policy, help for small enterprises and, most importantly, lower and simpler taxes."

But American liberals want you to know that, because Westerwelle is openly gay and the CDU (but not its Bavarian partner, the CSU) have gradually toned down the social conservatism, victories for the European right are much the same as victories for mainstream American liberalism.

Yet this is a narrow definition of what it means to be "of the right" in Western Europe. Of course, most of the right-wing parties in Germany accept the existence of the welfare state—it is popular; once people start receiving benefits, like long state-mandated vacations, it is difficult to take them away—though most privately wish for even greater cuts. (There is a reason that one always finds young members of Swedish, English, Norwegian, and German right-wing parties in Washington, DC, attending training seminars put on by conservative groups like the Leadership Institute.) Nor would I expect Yglesias, Hertzberg, and other American liberals to deem Irving Kristol, the godfather of neoconservatism, a fellow traveler for his embrace of the so-called conservative welfare state.

And what about Germany's far right parties? Do American liberals accpet them as fundamentally liberal "in an American context"? Set aside the semi-literate grumblings about the mongrelization of the fatherland; parties of the extreme right in Europe are almost uniformly in love with the welfare state, dubious of free markets, and fanatically opposed to American foreign policy. Indeed, a look through the suggested reading page on the website of Junge Freiheit, a far-right newspaper popular with the NPD crowd, one will find books by Noam Chomsky, Arundhati Roy, and Chalmers Johnson.

But there is much more to Germany's rightward swing than economics. In a paper reprinted in Der Spiegel, American liberal academics Matt Browne, Ruy Teixiera, and John Halpin offered a bland diagnosis of what ails European social democracy and provided this bafflingly vague remedy: "If social democratic parties are to recover, then they must move to a new phase of progressive governance."

Curiously missing from their account of the SPD collapse—and missing from most liberal analyses—is any mention of immigration, a subject constantly raised in private conversation but approached with extreme caution by mainstream parties. (On a trip to Europe last month, I witnessed countless discussions about immigration policy and heard frequent mentions of Christopher Caldwell's controversial new book on Muslim immigration.) Social democratic parties in Western Europe are widely seen as unserious on immigration, offering platitudes about the benefits of multicultural society instead of addressing the growing problems of the urban immigrant underclass. A 2006 poll in Germany found that a staggering 60 percent of respondents thought Islam was "incompatible with Western democracy."

Or consider the case of Wolfgang Clement, a Social Democrat who served as former Chancellor Gerhard Schroeder's economy minister. In an advertisement in the right-leaning tabloid Bild, Clement announced that he was voting for Westerwelle's Free Democrats—a rejection of the economic populism of the German left. It is doubtless a concern of moderate German voters that the SPD will, in the interest of survival, drop their long-standing resistance to working with the extremists in the post-communist Left Party.

Now that she has been liberated from her "grand coalition" with the opposition socialists, Merkel, and her new ally Westerwelle, have a chance to rein in powerful labor unions, slash punitive taxes on both individuals and businesses, and deregulate an overregulated labor market. If American fans of European social democracy believe this is in line with their own agenda, we should welcome them to the libertarian side.

Michael Moynihan is a senior editor at Reason magazine.