Air Force One winged its way to another exotic destination last night. When President Obama arrives at the posh seaside resort in Cannes, France, for the latest meeting of the G-20 today, he should ignore all the fluff put forth by French President and G-20 host Nicolas Sarkozy—a prescription of higher taxes, expanded regulation, and more statism (especially for developing countries) will not solve the EU debt crisis.
As Heritage’s Nile Gardiner writes in an op-ed, and as many others have written, the U.S. and European debt crises cannot be solved until leaders address their root causes: unsustainable welfare-state spending and false promises of cradle-to-grave care by the state.
Former Heritage analyst Gerald O’Driscoll makes a concise case, too, in today’s Wall Street Journal:
The underlying dilemma is that governments have promised their citizens more social programs than can be financed with the tax revenue generated by the private sector. High tax rates choke off the economic growth needed to finance the promises. Economic activity gets driven into the underground economy, where it often escapes taxation.
EU member states (and, indeed, every country) should be open to competition and reduce state intervention in the economy while strengthening rule of law and protection of private property. Free markets and entrepreneurship are the keys to prosperity.
Welfare statism is the road to bankruptcy.