The economic situation in the United States – namely the upcoming recession – is attracting much attention in the foreign press. Of particular interest is the way in which the most important economic decision-making institutions – the Congress and the Fed – are seeking to stave off the downturn.
By all accounts, American economic aggression, in the form of tax cuts and dramatic rate cuts are being widely held up in Europe as the kind of pro-activity from which the Europeans could learn.
One of the most interesting articles on this, from France’s Le Monde, was recently translated by Watching America.com.
The perspective comes about from the Continental European perception of its own economic and political timidity, which contrasts with American action, including, most impressively to Europeans, the cross-aisle agreement in Congress to implement a large tax-cutting stimulus package.
Much of Europe wonders why it cannot get its act together in the same way. Certainly Europe is not facing the kind of recession on the brink of which the USA is poised, but it is facing a distinct slowdown.
What makes the Le Monde article particularly interesting is the historical context in which it puts differences between America and Europe in dealing with economic slowdown.
Here’s the crux:
For Americans, to guarantee the boat’s stability means being ready to jump on the mast and change the direction of the sails at any time. For Europeans, on the contrary, it is more important to avoid using too much sail and to minimize movements that could contribute to the boat’s capsizing. These different philosophies are surely the result of differing historical experiences, one marked by the memory of the Great Depression, the other by the memory of inflation. However, the philosophical differences result largely from the nature of the institutions themselves.
Most interesting, perhaps the U.S. – the country that is commonly regarded as having the purest form of capitalism on the planet today – is more willing to use external jolts from institutions that lie outside the free market, than is Europe, which is traditionally more comfortable with governmental and institutional intervention. Could it be that economic policy derives more from temperament (American assertiveness vs. European easy-goingness) than the political system?