"Austerity Harms Economic Growth."

Not so. In the current financial crisis, Northern Europe has minimized fiscal stimulus and grown reasonably well, while Southern Europe, France, and Britain have pursued fiscal stimulus and all suffered from recession.

Sweden and Britain offer the starkest contrasts. Sweden maintained a steady budget surplus during the good years from 2004 to 2008. In 2009, it let the budget balance slip by 3 percent of GDP, but it returned to budget surplus in 2010. Britain, by contrast, wasted the good years with budget deficits of around 3 percent of GDP and lurched to a massive 11.5 percent budget deficit in 2009, when it rolled out the largest stimulus package in the European Union. The result? Austere Sweden enjoyed 6 percent more growth than free-spending Britain from 2009 to 2011.

Remarkably, British financial journalist Martin Wolf has written one article after another in the Financial Times complaining about alleged British "austerity," ignoring the fact that his country has maintained the largest public deficit (9.3 percent of GDP) from 2009 to 2012 of any EU country apart from Greece, Ireland, and Spain. Until it gets its public finances in order, Britain will have trouble restoring investors' confidence.

Milos Bicanski/Getty Images

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