Very Serious Europeans

Paul Krugman, NYT
June 4, 2014 8:19 am

I’ve just finished a review of Tim Geithner’s Stress Test; I’ll let you know when it’s available. One thing I didn’t mention in the review, however, was something surprising and refreshing: Geithner makes fun of Simpson-Bowles syndrome!

There was a lot of good policy in Simpson-Bowles, including cuts in wasteful farm subsidies and increased infrastructure spending to boost growth, but the benefit cuts and tax reforms were pretty regressive and the health care savings very modest. Nevertheless, the plan would attain mythic status among Washington elites as a symbol of noble bipartisan seriousness.

Indeed. And this leads me to another thought: I know a place where noble bipartisan seriousness truly rules, where the great and the good come together to form a consensus about what must be done, and the public is then informed about what it will support. It’s called Europe — and it’s not working very well.

Admittedly, we have our problems too — mainly the fact that crazy people have de facto blocking power over policy. But there’s this remarkable thing in Europe where critical voices simply aren’t heard. Lars Svensson can spend years pointing out that the Riksbank is blowing it, and nobody listens at all until an outsider weighs in. Every economist with a lick of sense is terrified about the euro area’s slide toward deflation, but the orthodox are surprised to hear that it’s a problem.

(More here.)