Sunday, March 10, 2013

Not All Austerity Is The Same

Alberto Alesina and Veronique de Rugy points out that tax increases are a far worse method to reduce deficits than spending cuts, and that part (Italy also has deep structural problems) of Italy's problem lies in the fact that it has relied almost entirely on tax increases. If Italy is to recover, it needs to reduce spending and tax rates while addressing its structural problems. Unfortunately, the politicians who won in the latest elections are extremely unlikely to do so.