Pain in better faster than....
Shock or no, Mr. Balcerowicz remains adamant that fixes are best implemented as quickly as possible. Europe's PIGS—Portugal, Italy, Greece, Spain—moved slowly. By contrast, Mr. Balcerowicz offers the BELLs: Bulgaria, Estonia, Latvia and Lithuania.
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Greece focused on raising taxes, putting off expenditure cuts. They got it backward, says Mr. Balcerowicz. "If you reduce through reform current spending, which is too excessive, you are far more likely to be successful with fiscal consolidation than if you increase taxes, which are already too high."
He adds: "Somehow the impression for many people is that increasing taxes is correct and reducing spending is incorrect. It is ideologically loaded." This applies in Greece, most of Europe and the current debate in the U.S.
In Potugal we are trying to fix things increasing taxes instead of cutting expenses. It's not working according to plan because tax receipt's went down despite raising marginal tax rates.
A friend from Brazil thinks the Goverment has to try something he knows it's incorrect to show the people it doesn't work. After that people will accept cut's in Goverment expenditures.
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