Krugman aptly points out that austerity in Europe over the past 2 years hasn't worked. It hasn't encouraged investors to invest or EU consumers to spend; nor has austerity lowered crisis countries' public borrowing costs. Indeed, Ireland, the champion of European austerity, has higher borrowing costs than Spain and Italy!
Let's compare Europe to the U.S., which is projected to have between 2-3 percent GDP growth this year, depending whom you ask. Meanwhile the IMF projects that Europe as a whole will grow 0.2 percent this year, and "emerging Europe," the countries less hard-hit by the crisis, will grow only 1.9 percent. Austerity cases like Italy and Spain have fallen back into recession.
The U.S. has avoided austerity and thus repeat recession; it's growing slowly but steadily. And yet U.S. conservatives want America to emulate Europe, even now after all the evidence is in. Why? Why do they want us to copy failure?
By Paul Krugman
May 6, 2012 | New York Times
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