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Home Publications Blogs Beat the Press NPR Should Have Found Someone Who Could Think of an Alternative to Austerity In Europe

NPR Should Have Found Someone Who Could Think of an Alternative to Austerity In Europe

Friday, 31 May 2013 05:13

NPR had a useful piece on the limited retreat from austerity in the euro zone now that the policy has been shown to be a failure. However the piece likely left readers with the impression that there were/are no alternatives to austerity.

This is of course not true. The European Central Bank could have supported an aggressive policy of fiscal stimulus led by Germany and other countries with trade surpluses. This would have boosted the economies of the euro zone as a whole.

It is arguably true that such a policy was not possible for political reasons. Germans have an aversion to inflation which they regard as the root of all evil. They refuse to consider the possibility of a higher inflation rate as a way to boost growth and re-balance the euro zone in the same way that creationists in the United States will refuse to allow evidence for evolution to change their views on human origins.

This irrational approach to economics by Germany, by far the most important country in the euro, many in reality limit the political options. However this piece should have made that fact clear to listeners rather than leaving many with the impression that there is some economic reason that the people of the euro zone countries need to suffer through years of high unemployment.

Comments (1)Add Comment
written by Babeuf, May 31, 2013 10:05
Europe already has splendid infrastructure. I would prefer to see stimulus go toward mobility in the labor markets, educating young people in second and third languages and reducing constraints to movement within the community. This type of stimulus could be productive in my opinion as the unemployed tend to rest where they are while labor shortages persist in key sectors. This entails cultural change but a good beginning here would help a lot. Note: This is what Merkoland have announced recently so we'll see if they actually implement something.

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About Beat the Press

Dean Baker is co-director of the Center for Economic and Policy Research in Washington, D.C. He is the author of several books, his latest being The End of Loser Liberalism: Making Markets Progressive. Read more about Dean.