European Success Stories

ΠΗΓΗ:NYT (via Social Europe Journal)

by P. Krugman

Oh, my:

Mr. Katainen, the 40-year-old leader of one of the euro area’s last remaining triple-A-rated countries, spoke more optimistically in his public comments of “growsterity,” a form of austerity that allows for some targeted measures to encourage growth, like Finland’s decision to grant tax relief for research spending by companies despite sharp budget cuts elsewhere.

“It’s clear that if you cut expenditures and raise taxes, it will weaken the growth in the short term,” he conceded. “But at the same time it will strengthen the credibility of the country. And once you earn back the credibility, the growth will follow, as we have seen in Ireland, for instance, or in Latvia, especially.”

Hmm:

Latvia has grown some in the past two years; so did the US in 1933-35. But it’s still a deeply depressed economy. And as for Ireland, there were some very premature victory celebrations in the early fall; remarkably, the claim that Ireland was recovering seems to have settled into the consciousness of Europe’s VSPs, while the subsequent demonstration that it was all a blip never got through