You can’t vote for prosperity
Until recently life was pretty good in most of Europe. Europeans have had, as Ed Yardeni of Yardeni Research puts it, “the best governments money can buy”. Their leaders “have provided them with all sorts of wonderful social benefits”.
Many have been employed by their governments to provide those benefits to others – those who can’t find jobs they want or those who are retired (rather earlier than people elsewhere). The problem is that the good life is expensive. While income taxes are high in Europe by the standards of everywhere else, they still haven’t brought in anywhere near enough to pay the bills (partly because the bills are too high and partly because of widespread tax evasion).
So while Europe’s government spending has long ranged from 40%-60% of GDP, revenues have ranged from 30%-50%. As a result of that gap, most countries are now running scary ratios of government debt to GDP. Default aside, there aren’t many ways out.
So if Europe and Britain want real growth to return soon, they have do something radical.
• Read the full editor’s letter here: You can’t vote for prosperity.