Redstate

By Pejman Yousefzadeh Posted in Capitalism | Europe | Foreign Affairs | Free Market — Comments (2) / Email this page » / Leave a comment »

It can be done:

The governments of Italy, Germany, France and the UK are struggling to reform their economies, but little is happening. Is it impossible to launch substantial reforms in these countries? Do countries need an economic crisis to change? Or can only small countries do it? Are Romano Prodi, Angela Merkel, Nicolas Sarkozy and Gordon Brown stuck in a maze of reform obstacles?

Evidence from at least a dozen reformist countries of the Organisation for Economic Co-Operation and Development suggests not. Those that reformed substantially have had remarkable results. Ireland doubled incomes in a decade after dramatic reductions in the corporate tax rate; Spain integrated millions of immigrants into its labour market after deregulation; Sweden improved schools by allowing choice; New Zealand achieved full employment by labour market deregulation; Icelandic banks are all over Europe after privatisation and 16 countries introduced flat tax.

Several of these countries have brought about change in good econ­omic times, such as Australia, Sweden and Ireland. Crisis is not a prerequisite for reform. Bigger countries such as Spain and the US have reformed while some small ones have not. The four big European countries could definitely reform during this positive business cycle - in fact, it is an opportunity.

Success results from determination, political substance and strategy. Jean-Claude Juncker, former prime minister of Luxembourg, has said: "We all know what to do, but we don't know how to get re-elected once we have done it." Reforms are seen as politically difficult. In fact, nearly all reformist governments in the OECD have been re-elected at least once.

It's nice to see that doing the politically courageous thing can reap politically attractive benefits. It is also nice to see that the article takes the time to point out the following:

Political hesitation is underpinned by several myths. One is that free market reforms have socially adverse consequences. This is not true. In the countries that have reformed the most, the groups that benefited the most were usually low-income earners and the unemployed. They got jobs and higher incomes.

There may be plenty of rationales offered to explain why free market reforms are not pursued more ardently. But there are very few--if any--actual acceptable excuses for the relative lack of reform that has been pursued in Europe.