03/22/2012 08:49 am ET

John H. Cochrane: Austerity Isn't Working In Europe

Austerity isn’t working in Europe.

Greece is collapsing, Italy and Spain’s output is declining, and even Germany and the U.K. are slowing down. In addition to their direct economic costs, these “austerity” measures aren’t even swiftly closing budget gaps. As incomes decline, tax revenue drops, and it becomes harder to cut spending. A downward spiral looms.

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