To get their faltering economies growing again, euro zone proposes radical strategy: less government.
WASHINGTON – In the coming weeks, the governments of some of Europe\’s largest economies will propose and implement economic policies that will determine the future health of those economies. In an effort to jumpstart their continually weak economies, France and Germany are set to reduce government expenditures, regulations, and tax rates.
Together with Britain, the three nations are urging the 12-member European Union (EU) to implement the same policies or face continued economic stagnation.
"Fifty years later, Europe is realizing that socialism does not work," said taxpayer advocate Grover Norquist, President of Americans for Tax Reform. "High taxes, regulations and generous welfare programs create strong disincentives for people to work or start their own businesses. It is no mystery why European countries have chronically high levels of unemployment and anemic rates of economic growth: Hard work, success, and risk-taking are not rewarded but punished."
Continually weak economic growth and widening budget deficits have put pressure on euro-zone nations to implement new economic policies to replace the current, failed ones. In a letter to the European Union, Britain, France, and Germany deemphasized Italy\’s proposal to undertake massive public works projects and instead urged the EU to cut government spending and taxes and reduce regulatory burdens.
Among large economies, the EU does not compare favorably in economic growth. Consensus Forecasts and MJ Economics predict GDP growth for the euro zone to be at 0.5% and 1.7% respectively for 2003 and 2004 compared with 1.9%/1.2% for Japan and 2.6%/3.9% for the U.S.
"Good economic policy provides the proper set of incentives to work hard, take risks, and create wealth," continued Norquist. "In market economies, the very real possibility of failure makes risks high but rewards great, giving people the incentive to work hard and be productive. But in Europe, the safety net keeps people from falling too far and rising too high. The result is uniform mediocrity and debt-ridden governments. Europe appears to be learning from its mistakes. Let us hope Europe\’s mistakes serve as an example to other nations, including the United States."