U.S. editorial excerpts -3-.
Selected editorial excerpts from the U.S. press:
EUROPE'S PHONY GROWTH DEBATE (The Wall Street Journal, New York)
Growth or austerity? That is the choice facing Europe these days -- or so the Keynesian consensus keeps saying. According to this view, which has dominated world economic councils since the 2008 crisis began, ''growth'' is mainly a function of government spending.
Spend more and you are for growth, even if a country raises taxes to pay for the spending. But dare to cut spending as the Germans suggest, and you are for austerity and thus opposed to growth.
This is a nonsense debate that misconstrues the real sources of economic prosperity and helps explain Europe's current mess. The real debate ought to be over which policies best produce growth.
In the 1980s, the world learned (or so we thought) that the way out of the malaise of the 1970s were reforms that encourage private investment and risk-taking, labor mobility and flexibility, an end to price controls, tax rates that encouraged capital formation, and what the World Bank now broadly calls ''the ease of doing business.'' Amid this crisis, Europe has tried everything except these policies.
If Ronald Reagan or Margaret Thatcher are too declasse for Europeans to invoke, how about Germany? Throughout the 1990s and the first years of the last decade, Germany was Europe's hobbled giant, with consistently subpar growth rates and unemployment that in 2005 hit 11.3 percent, nearly at the top of the Organization for Economic Cooperation and Development chart.
Germany's resurgence might have been even stronger if Chancellor Angela Merkel and her coalition partners had not reneged on their tax-cutting campaign promises. Europe is lucky that its largest economy remains strong and creditworthy.
Another European spending spree is unsustainable in any case. Debt levels have climbed dramatically across the developed world since the crisis began in 2008, and that debt and the current dreary recovery (or double-dip recessions) are all there is to show for the great Keynesian spending blowout.
Other than an inflation that will create new problems and bring its own crisis, economic growth is the only way out of Europe's debt morass. But it has to be private growth driven by reforms in taxes, labor markets, regulation, pensions and more.
Europe's voters have already swept several governments from office, and they seem ready to sweep out more. But what really needs to be swept away is the dominant and debilitating consensus that government spending can conjure prosperity.