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Want to spur growth in the U.S.? Take a hint from Chile

What can be done to spur growth in the U.S. and the euro zone?

Image of Turnaround: Third World Lessons for First World Growth
Author: Peter Blair Henry
Publisher: Basic Books (2013)
Binding: Hardcover, 240 pages

The euro zone debt crisis may have lost some of the drama we've seen before, but new figures out this morning show it is far from over. As for the U.S. economy, the best analysts can say is that it's moving in the right direction, though tepidly.

So what can be done to spur growth in the U.S. and the euro zone? Peter Henry, Dean of NYU's Stern School of Business, thinks the answer lies in developing countries. His latest book, Turnaround: Third World Lessons for First World Growth, explores this idea and boils the secret to economic progress down to one word: Discipline.

"The biggest lesson right now for the first world is that discipline in the context of economic policy does not mean fiscal austerity," Henry says. "During the boom years from 2002-2007, countries like Chile saved so that when the global recession hit, Chile was able to instantly do a $4 billion tax cut package to stimulate the economy."

Henry says discipline means focusing on the future and taking gradual steps to prepare for that future. He adds that developing economies are now better at this long-term thinking than the U.S. or Europe.

"This is a turnaround, today it's the first world that is thinking short-term," Henry says. "The key question is, do we have the humility to look beyond at our shores and to look at emerging economies, take those lessons back home, and start living up to our potential?"

To hear Henry's thoughts on the benefits of global economic inter-dependency, click on the audio player above.

About the author

Jeremy Hobson is host of Marketplace Morning Report, where he looks at business news from a global perspective to prepare listeners for the day ahead.
Image of Turnaround: Third World Lessons for First World Growth
Author: Peter Blair Henry
Publisher: Basic Books (2013)
Binding: Hardcover, 240 pages
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Excellent piece! Mr. Henry has almost (but not quite) hit the nail on the head. The problem is not too many or too few entitlements. And the fact that we have "more things to pay for" than Chile is beside the point. The point is that because we have been so short sighted, we have spent our surpluses and our children's future wealth. And so when hard times come and hard decisions have to be made, we have fewer options.

Austerity is not the optimal solution, but it is the only one we have left ourselves.

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