John Tamny writes in the Investor’s Business Daily:
Yardley and Ewing naturally accept the conventional view that “austerity,” whereby politicians have less to spend, is the cause of European weakness. Of course, what they miss — and in their defense most economists miss it too — is the simple truth that governments tautologically have no resources. The latter isn’t some kind of ideological assertion, or some evidence-free libertarian slogan, it’s just fact.
And with the above fact in mind, we have to ask what drives prosperity. It’s not just success, and if it were, Silicon Valley would be very impoverished. What drives prosperity is constant, market-disciplined experimentation with new ideas.
It’s 2,000 carmakers sprouting up in the early part of the 20th century in the U.S. Just about every one of them failed, but rather than implode based on all the bankruptcies, the economy soared. Fast forward to the end of the 20th century, most Internet companies similarly went belly up, but no sane individual would suggest that the U.S. economy was set back by all the bad ideas that eventually vanished.
When businesses are forming, the economy experiences a surge of information about what works and what doesn’t such that we all benefit. Success doesn’t power prosperity, but information does.
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In short, the only European “austerity” is that which empowers politicians to allocate the always limited resources created in the private economy. The latter is a barrier to the very experimentation that is necessary for an economy to evolve in prosperous fashion.