Dinu Patriciu Eurasia Center Resident Senior Fellow Anders Aslund writes for the Berlin Policy Journal on the solution to the euro crisis and why New York Times columnist Paul Krugman is wrong about European fiscal policy:
The American economic debate around the European financial crisis has been dominated on the left by the idea that austerity itself is the fundamental problem. A recent New York Times article captured this view perfectly: “Nowhere have austerity policies been more aggressively tried – and generally failed to live up to results promised by advocates – than in Greece.”
This single sentence contains six key myths about austerity: that austerity is intrinsically wrong; that austerity policies were pursued most aggressively in Greece; that austerity has been bad for economic growth; that austerity is unpopular; that Greece is a victim of German austerity; and finally, that Europe should learn from the US and abandon austerity.