Steven Hill: A Marshall Plan Won't Fix Europe This Time

Steven Hill is a political writer and columnist.

Few subjects have so bitterly divided our insecure times than the double-edged sword of stimulus versus austerity. Consensus over which course will end the current economic malaise has eluded the duelling experts. Without clearer signals of success, many nations have tried a confused mix of both – let's call it "aust-imulus".

While I tend to lean Keynesian, the case for fiscal stimulus is hardly the slam dunk that its most strident proponents claim. Nobel prize-winning economist Paul Krugman bases much of his call for massive amounts of stimulus on the American experience during the Great Depression. In Krugman's view, the policy intervention that finally lifted the sinking boats was an unprecedented amount of spending by the US government for its wartime effort.

But this viewpoint ignores a fairly obvious counterpoint. The United States emerged from the Second World War as the world's conqueror with virtually every economic competitor destroyed. America was the big boy on the block, and our industries enjoyed numerous competitive advantages over international rivals. The dollar suddenly was the dominant global currency, and that granted Americans cheap money and influence...