Estonia, which in 2011 became the latest country to join the eurozone, has been heralded by some as an austerity success story. That year, it clocked a faster economic growth pace than any other country in the European Union, at 7.6 percent. Estonia is also the only EU member with a budget surplus, and had the lowest public debt in 2011 — 6 percent of GDP. Fitch affirmed its A+ credit rating last week.
I might take stock in Paul Krugman’s credibility as an economist after he takes a sabatical from Princeton to spend a year opening up a small business in the heart of Newark. After spending that year putting his own money on the line trying to build something, I have little doubt he’d get a better appreciation for how money works in the real world.
Krugman continues to rant and rave that government isn’t spending enough, which of course means that we are not yet in enough debt and therefore cannot achieve prosperity. Of course, the test case for his theories is already foundering over in Europe. I guess Spain and Greece just didn’t borrow enough.