Much of the orthodox analysis of the West’s recent economic travails puts the blame squarely on a failure of political leadership.
Reality requires a more complex narrative.
Yes, the US came inexcusably close to committing hari kari by failing to lift its debt ceiling with a balanced, timely, comprehensive programme for long term fiscal sustainability.
Yes, the European Union struggles to deal with the fallout from the inherent contradictions at the heart of its monetary union.
Certainly, political failure doesn’t help lift the pervading sense of crisis, and the uncertainty it breeds contributes to financial market volatility, but it is market failure, not political failure, that is at the root of our economic malaise.
In short, the West’s growth model is broken. Continue reading
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