European model

November 20, 2012 


Several headlines and op-ed pieces continue to exclusively use the term "deficit reduction." In practical terms, this means "austerity."

The stupidity of exclusive focus on austerity has been amply demonstrated to us by the Europeans. In the United Kingdom, the result has been zero growth and the highest unemployment rate in 35 years. The European austerity hawks have driven unemployment rates above double-digit percentages. Growth and unemployment are even worse in Europe than here. Why would we want to emulate that? Perhaps it is simply Einstein's definition of insanity, which is repeating the same failed thing endlessly, each time expecting a different result.

Restoration of an economy that is hollowed out, reducing both demand and opportunity, requires a little more imagination than cutting holes in the safety net.

To use an analogy, when a patient is in perilous danger of death, the preferred treatment is not bleeding.

The way out of our death spiral is not clear. The conventional wisdom of economics is that cuts in hard times do more harm than good. But, expanding debt without a broader approach is no better.

We need a less simplistic discussion of how to restore an intact and vibrant economy.

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