It Hurts to Be Called Ugly by a Frog - Especially When the Frog is Right

European politicians are complaining that government spending in the United States is too high according to the EU Observer. Since government consumes a bigger share of economic output in almost every European nation than it does in America (see Table 25), they are throwing rocks in a glass house. But that doesn’t change the fact that they are right. Government is too big in the United States, and it wastes too much money. The EU’s Economy Commissioner, Joaquin Almunia, also is right to brag about the performance of the European Central Bank. Compared to the Fed’s easy-money policy, the ECB is Friedman-esque rock of price stability:

The European Commission has pointed to unhealthy public spending in the US as the main cause of the current global market turbulences and urged Washington to cut expenditure and boost savings, while praising Europe’s own “solid and sound” economy and the positive effect of the common currency. …Mr Almunia suggested that US policy-makers should tackle the current crisis with measures that would secure “reducing the external deficit and the fiscal deficit, and increasing domestic saving in the US both in the public and the private sectors.” He maintained that Europe’s own previous reforms and pressure for cuts in public finances have paid off, leaving the fundamentals of the bloc’s economy - in contrast to the situation across the Atlantic - as “solid and sound”.