The Washington Post's Ezra Klein takes issue with my argument -- detailed in The Zombie Rises: The Return of Simpson Bowles -- that the American elite consensus on austerity will take us down the same path that Europe is heading towards recession. But he misses the point.
Ezra argues that people living in parts of America like Nevada suffer a higher unemployment than “most of Europe.” And others living in Virginia are “better off than most of Europe.” Sure, and those who live in the Nordic countries of Europe are far better off than those living in Greece, Italy, Spain, and Portugal (that are suffering though brutal austerity programs). Which incidentally was my point. Austerity inflicted on weak economies adds to the misery.
Then he argues that America is in a much stronger position than Europe because investors assume America is going to survive, while growing numbers are starting to question whether the euro zone is sustainable. “The euro zone doesn’t have a debt problem. It has a continued survival problem. America’s got a debt problem.”
But that’s an argument with conservatives who keep railing about America’s deficits will make us the next Greece. Neither Ezra nor I believe that.
I was making a different argument. America has a jobs problem. Austerity will make it worse, and might make the debt problem worse too. And proof of that is in England where austerity inflicted on an economy just beginning a halting recovery drove it back into recession. And the proof is in the euro zone where the austerity that Germany has inflicted on the countries in trouble has producing rising unemployment, increasing misery and chaos, while making reduction of deficits more difficult, and doing nothing to lift the confidence of investors.
We can learn from Europe. One of them is the lesson Ezra teaches: that conservative hystrionics are wrong: our deficits won’t turn us into Greece in the bond market because no investor thinks we will default – notwithstanding the loopiness of congressional Republicans – and no one thinks we might break apart. And one of them is the lesson I suggest: that austerity inflicted on weak economies like this one will add to misery, not cure it.
