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Euro crisis - no magic bullet
Much
of Sen's lecture focused on Europe. He praised its noble foundation
ideals with political unity needed after war. He reminded us of Auden's
words in 1939 "In the nightmare of the dark All the dogs of Europe bark/And the living nations wait/ Each sequestered in its hate" Sen sees some of that hate brewing now.
Sen
stated that austerity measures in Spain will not work as they are
anti-growth. For him, the best option is to combine deficit reduction
with economic growth although he did not offer a specific policy to find
the money to pay for more stimulus. He was asked what measure he would
recommend to Chancellor Merkel if he had five minutes with her. He said
that he could not offer a single solution as there is an "asymmetry"
between entering the euro (very easy) and leaving it (very difficult,
complex and uncertain). Europe therefore has to be "creative" in the
solutions it seeks. It may find it in Keynes. In the meantime, Europe
should not tell Asian countries to reform as a solution (e.g strengthen
China's currency).
This lack of
certainty about what the solution to the euro crisis left me with a
sense of unease. But perhaps having doubts about the solutions currently
on offer is a starting point for enquiry.
NB:
For more on the role of geography and trade stimulating growth, have a look at the new course from Marginal Revolution University- fun fact: Europe has twice the length of coastal areas than Africa - partially explaining its trade-induced growth.
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