The Mercatus Center’s Veronique de Rugy shows here that despite all the wailing and howling over “austerity” measures in Europe, there’s hardly been any austerity at all. The governments of Greece, Spain, Italy, France, and the United Kingdom have curtailed their spending a little since 2008, but significant spending cuts are nowhere to be seen. Thanks to these half-measures, the eurozone’s bloated welfare states are flirting with fiscal disaster.
By contrast, Sweden and Estonia have implemented real reforms to reduce expenditures and shrink government, and both countries’ economies are stronger for it. Last year Sweden’s economy grew 4.4%; Estonia’s grew 7.9%. By contrast, Spain, Italy, France, and the UK averaged just 1% growth. Greece’s economy contracted 6%.
Americans can learn a great deal from these developments. In order to secure future prosperity, the United States must get its fiscal house in order now. This means both significant cuts to federal spending and real market reforms, not the band-aids and further regulations Congress and the Obama Administration have been pushing since day one.
