That was a good answer Stephen Harper gave to Peter Mansbridge theother day. Asked how Europe, as it seeks a way out of its currentcrisis, could have both austerity and growth at the same time, the prime minister rightly denied there was a contradiction. Bothare necessary, and both are possible. Certainly austerity, or what he preferred to call fiscaldiscipline, was unavoidable: You can t borrow your way out ofa debt crisis. But more growth was not synonymous with morepublic spending, as in the simple Keynesian model that dominatesmedia thinking about economics. Rather, he prescribed a range ofmeasures to increase the growth capacity of the economy:expanded trade, more flexible labour markets, higher productivity. The prime minister, in short, was endorsing the pre-crisisorthodoxy, that the business of macroeconomics, fiscal and monetarypolicy, is stability that is, keeping demand for goods andservices growing in line with the economy s capacity to supplythem. Growth, on the other hand, is best thought of as a questionof microeconomics: finding and removing the barriers, regulatory orother, that prevent markets from allocating productive resourcesefficiently, with a view to expanding capacity. This is the core truth in supply side economics, minus thegold-standard/tax-cuts-cure-everything mumbo-jumbo: merely juicingdemand, in the absence of increases in supply, produces not growthin the long run, but inflation. Alas, the latter approach is rathermore difficult to pull off politically: one man s regulatorybarrier is another man s cherished privilege. In the push and pullof politics, between change and the status quo, the generalinterest and the narrow interest, it is usually no contest,especially when voters are told the alternative is simply to pull alever on the wall marked stimulus. This sort of magical thinking has proved particularly damaging incoming to grips with the crisis in Europe. Getting into theircurrent fix required the Europeans to enact a spectacularlyperverse mix of policies, foremost among them the imposition of asingle currency on a continent made up of vastly different economicand political cultures a risky enough proposition even had theybacked it with any of the usual accoutrements of monetary union,from a common borrowing (and taxing) authority to a common bankingregulator. Instead, the Maastricht Treaty tacked on a few fairly arbitraryfiscal targets member states were expected to observe deficitsno greater than three per cent of GDP, a debt-to-GDP ratio nogreater than 60 per cent and hoped for the best. And it mighthave worked out at that, had the financial crisis of 2008 notintervened, at which point all the structural weaknesses in theeuro project were cruelly exposed. What had previously beentolerable the assortment of regulatory constraints, notably inlabour markets, known as eurosclerosis, the cheery defiance ofthe Maastricht rules by virtually every signatory could nolonger be tolerated. We are high quality suppliers, our products such as Turnover Mechanism Manufacturer , China Seat Slide for oversee buyer. To know more, please visits Seat Slide.
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