Should we just wait out a decade-long deleveraging process in the rest of the G-7? Or should we control our destiny by building on our strengths in the new global environment? To find and compete in new markets will require a concerted, multi-year effort by workers, firms and governments. These efforts should be guided by three principles. Openness is better than protectionism.
While it was right to also take extraordinary fiscal policy measures to avoid a 1930s-style depression, a timely exit from the fiscal stimuli is now crucial in the context of ongoing economic recovery. Any undue delay will have serious negative side-effects on confidence and economic welfare.