Down and Out in the United States?

For most of the past decade the world has been lectured to by Americans who proclaimed the perfection of the US economy: its focus on competition, loose labor regulation, and a modest social safety net, all of which supposedly delivered dynamism and high growth rates.

Continental Europeans were told to follow the US model and liberalize their labor markets, so that businesses that want to hire can do so without losing money and so that unemployed workers who find new jobs won't see their wages offset by cuts in welfare-state benefits. Japanese were told to socialize the losses their banking system incurred when Japan's bubble burst, then re-privatize those parts of it that could still succeed as going concerns and liquidate the rest. East Asia's Tigers were told to abandon the German-Japanese financial system based on universal banking and adopt the Anglo-American model based on liquid financial markets. They were also admonished to do a better job at regulating their financial system.

Other developing countries were told that their trade barriers, their love of inflationary finance, their failure to curb tax evasion, and their lack of governments strong enough to enforce property and contract rights against local notables, organized bandits, and - most important - their own functionaries were keeping them from participating in the new globalized economic cornucopia.

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