Europe’s Last Best Chance – Michael Boskin – Project Syndicate

Reforming social-welfare benefits is the only permanent solution to Europe’s crisis. One hopes that, with the help of national governments, the European Central Bank, the International Monetary Fund, and the European Financial Stability Facility, the holes in the sovereign-debt-funding dike will be temporarily plugged, and that European banks will be recapitalized. But this will work only if structural reforms make these economies far more competitive. They must both lower the tax burden and reduce bloated transfer payments. Too many people are collecting benefits relative to those working and paying taxes.

via Europe’s Last Best Chance – Michael Boskin – Project Syndicate.

America’s Economic Stalemate – Martin Feldstein – Project Syndicate

The two parties’ hardline stances anticipate the upcoming congressional and presidential elections in November 2012. The Republicans, in effect, face the voters with a sign that says, “We won’t raise your taxes, but the Democrats will.” The Democrats’ sign, by contrast, says, “We won’t reduce your pension or health benefits, but the Republicans will.”

Neither side wants any ambiguity in their message before the election, thus ruling out the possibility of any immediate changes in tax expenditures or future Social Security pensions. But, for the same reason, I am optimistic that the stalemate will end after the election. At that point, both Republicans and Democrats will be able to accept reforms that they must reject now.

via America’s Economic Stalemate – Martin Feldstein – Project Syndicate.

The country’s economic policy is being run according to the election timetable. Compare that to the Swiss democratic system from a few days ago. Makes you wonder, doesn’t it?