By Michelle Fitzpatrick - 2nd May 2006
A top US economist has criticised growing state influence in western Europe, saying growth in Europe is “stagnating”.
In an interview with the German newspaper Handelsblatt, leading monetarist and Nobel Prize winner Milton Friedman said that Europe was standing still.
“There is no progress in terms of freedom,” said Friedman, who is one of the engineers of the Maastricht criteria.
Arguing that limited freedom leads to limited economic growth, Friedman told the German daily: “In western Europe there is stagnation, because citizens do not dismantle their regulating states."
“By now, it is widely accepted that only free markets lead the way to progress. Yet we still haven’t won, if you consider the creeping expansion of state influence,” said Friedman.
He pointed out that developing countries were more successful than Europeans or Americans at breaking down regulation obstacles.
Friedman is a leading proponent of the monetarist school of economic thought, which argues that there is a strong link between money supply and inflation.
He advocated a central bank policy aimed at keeping the supply and demand for money at equilibrium.
When asked what remained of monetarism today, he replied:
“The achievements of central banks have improved substantially over the past twenty years.
"This is reflected in prices: inflation has gone down nearly everywhere, and the inflation rate is noticeably more stable. This has improved the basis for financial transactions…Better money management has led to a qualitative improvement of the financial markets.”
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