by Economics 21
e21: Economic Policies for the 21st Century
August 06, 2012
The President once more blamed “headwinds” from Europe for the United States economy’s poor recent performance. The President’s insistence on using Europe as a scapegoat is particularly frustrating because it breeds misunderstanding of both the European dilemma and the nature of our own challenges. First, many countries either inside of the euro zone (or highly dependent on it) have performed far better than the United States over the past few years. Secondly, the key takeaway from the crisis in Greece, Spain, and elsewhere, is that entrenched interests and constituencies dependent on government payments are not willing to surrender their hard-fought gains against the backdrop of broader budget instability. In short, increasing the size of government also increases the strength of connected constituencies.