Wednesday, July 18, 2012

Growth policies should matter

"So I would say the recipe for the new European economy is to be as competitive as possible"

- Jean-Claude Trichet 

An interesting comment from the former central banker on the European economy. The policies that have been followed by the EU countries have not focused on competition. In fact, in places like France, the policy moves have been to reduce competitiveness through increasing taxes. In Greece, the move top privatization has not occurred. The same can be said about Italy and Spain. The near-sightedness of solving the fiscal problem has led to a focus on taxes and spending cuts and not pro-growth policies. The classic multiplier will be negative when spending is cut and taxes raised. There also is little talk about cutting regulation. When will pro-growth be tried?

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