The Euro-American Debt Dilemma

Pithy commentary by Michael Boskin at Project Syndicate

The debt dilemmas in Europe and the US prove yet again that elected officials will ignore long-run costs to achieve short-run benefits, and will act only when forced, in a doomed effort to circumvent the laws of economics and revoke the laws of arithmetic. And that implies an extended period of episodic economic disruption and political upheaval far beyond this summer’s debates on America’s debt ceiling and Europe’s distressed sovereign debtors. These debates represent just one round in an ongoing struggle, with vast political and economic consequences for years to come.