Question marks over the west: Western world in decline — and still (largely) in denial
The main thesis of the article is that the Eurozone (EMU) crisis is not the main problem of Europe, or the West, but the long-term decline in economic growth. Institutional and policy distortions of the EMU only accelerated the day of reckoning, when the inevitable cuts to the oversized public (mostly welfare) expenditures will have to made. They will be even more necessary given demographic changes. The process of adjustment has encountered a lot of political and social resistance that is going to increase further in the years to come. These difficulties stem largely from the psychological consequences of the prolonged lack of linkages between efforts and results in the welfare state as perceived by its beneficiaries. The resulting learned helplessness syndrome makes it very difficult to proceed with the necessary downward adjustment — an absolute “must” if the West is going to reaccelerate economic growth and come out of the present quagmire relatively unscathed. The economic future of the West thus raises many question marks.
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Volume (Year): 34 (2012)
Issue (Month): 4 (December)
|Note:||This article is based on chapters 6 and 9 of the forthcoming book of the author entitled Economic Futures of the West (Northampton, MA: Edward Elgar).|
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