EUROPE HAS AN ECONOMICS LESSON FOR OBAMA
July 22, 2008
The Europe that Obama is visiting this week is quite different from the one Americans often hear about, says Henry Olson, vice president of the American Enterprise Institute and director of its National Research Initiative.
Over the last decade, much of Europe has very quietly embraced market-based reforms that draw inspiration from American successes. For example:
- In recent years, many European countries, including Germany, Spain and Britain, have reduced their countries' top corporate tax rates.
- Center-right governments in Greece, Denmark, Ireland and Eastern Europe have also dramatically reduced corporate tax rates.
- In the 1990s, Sweden passed wide ranging pension reforms that include a private account option, which enables workers to put aside up to 2.5 percent of their salary into one or more of nearly 800 competing private-sector accounts.
- In Holland, political parties came together to reform the disability insurance system by cutting benefits and tightening eligibility criteria; today, disability rolls have dropped by almost 20 percent since 2002.
European politicians now recognize that the energy and innovation of market actors can better produce wealth than traditional social democratic economic theory, says Olson.
Obama's postpartisan, "let us all come together" message is perhaps the most important reason for his meteoric rise, says Olson. Many conservatives and Republicans fear this rhetoric is divorced from reality and that an Obama presidency with a Democratic Congress would soon drop the mantle of unity and press for a purely liberal agenda.
However, if Obama were to adopt the modern European model, he would go a long way toward alleviating those fears and fulfilling his many promises, says Olson.
Source: Henry Olson, "Europe Has an Economics Lesson for Obama," Wall Street Journal, July 19, 2008.
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