European Debt Crisis Is Sliding Essay

Yet, such measures ignore not only debt, but the impact on economic growth, with rescue measures tied to austerity and tax increases. While Adam Davidson's The Other Reason Europe is Going Broke attempts to place Europe's economic crises into a debt component and an economic growth component; the reality is that they are one and the same. European economic growth has lagged the U.S. considerably since the early 1970's largely due to government involvement in the European economic model. Heavy spending on the entitlement state, financed by higher tax rates has sapped economic strength from Europe. For the U.S., the sovereign debt crisis in the EU highlights the dangers of an expanding entitlement state, which weakens economic growth through ever increasing drains on the private sector.

Conclusion

The U.S. economic future will be one of slow growth, as with Japan and Europe, as the U.S. debt to GDP ratio increases. Government influence and debt crowd out business expansion through overregulation, over taxation, and higher borrowing costs. America's future depends on a thriving and vibrant private sector economy. Long-term economic growth, stalled in Japan and Europe, will be the future for the U.S. unless entitlements are reformed, the budget balanced, and pro-growth tax reform enacted; ingredients for continued economic excellence for the U.S. In the 21st century.

References

Davidson, Adam. "The Other Reason Europe is Going Broke." The New

York Times. The New York Times, January 6, 2012. Retrieved January 11, 2012 from http://www.nytimes.com/2012/01/08/magazine/the-other-reason-europe-is-going-broke.html?pagewanted=all

Fingleton, Eamonn. "The Myth of Japan's Failure." The New York

Times. The New York Times, January 4, 2012. Retrieved January 11. 2012 from http://www.nytimes.com/2012/01/08/opinion/sunday/the-true-story-of-japans-economic-success.html