Growth Is Not an Easy Solution for Europe's Woes - by Megan McArdle

I've seen a bunch of commentators today saying that "the fundamental problem Europe needs to solve is growth, not budget deficits." In some sense this is true--enough growth would solve many of the problems in the periphery. (Usual caveat: Greece is a special case.)

But while it's true, I'm not sure it's useful. For one thing, the euro itself is a major contributor to the lack of growth. Italy and Greece, especially, used to rely on serial devaluation to keep their relatively low-productivity tradeable sectors competitive. Do we have a way to dramatically increase productivity in their small, family-owned farms and firms? Keep in mind that a preponderance of such firms is not simply a historical accident; it's generally thought to be a symptom of fairly low trust levels which make it problematic to hire strangers or invest your money in them.

Growth Is Not an Easy Solution for Europe's Woes - Megan McArdle - Business - The Atlantic