No Cuts, No Austerity Measures, Belgium could teach us something.

Austerity in the U.S. is a good thing. It's a new way of living in America. Not better, just new. Maybe austerity isn't what is needed right now. Look what happened in Belgium. Ezra Klein:

The world economy is paying a price for democracy," write Rich Miller and Simon Kennedy. JP Morgan, Morgan Stanley, Citicorp, UBS and Societe Generale SA have named political paralysis as one factor contributing to their ever-gloomier outlooks for the recovery.

But perhaps the most telling example came from John Lanchester, who notes that Belgium is seeing better growth than the French, German, and U.K. economies. What makes Belgium so special? Gridlock in Brussels has meant Belgium doesn't currently have a government. It hasn't had one for 15 months.

Normally, that would portend bad things for an economy. But as Lanchester notes, "no government means none of the stuff all the other governments are doing: no cuts and no ‘austerity’ packages. In the absence of anyone with a mandate to slash and burn, Belgian public sector spending is puttering along much as it always was; hence the continuing growth of their economy...It turns out that from the economic point of view, in the current crisis, no government is better than any government - any existing government."

If phase one of the economic crisis was the financial crisis, and phase two was the jobs crisis, we're now seeing phase three: the political crisis … governments around the world have tried to walk the middle path. The result of this strategy hasn't just been continued economic weakness. It's been accelerating political weakness. Doing not-quite-enough is, in some ways, the worst of both worlds: you take the hit for making unpopular decisions and then you take the hit for failing to fix the problem. "Policy-induced slowdown," Morgan Stanley calls it.

It's easy and proper to blame politicians for this, but as Miller and Kennedy write, in the West, politicians are constrained by public preferences. Our paralysis is, in part, the price of democracy. In the long-run, it's a price worth paying. But in the short-run, it is going to be a high price indeed.