Economic Policies for the 21st Century has an editorial commenting on a recent Financial Times piece by the head of the European Central Bank, Jean-Claude Trichet: "A French lifetime bureaucrat took to the op-ed page of an English language newspaper to defend free-market capitalism from his American counterparts....As America presses for more and more government outlays to help the economy emerge from recession, a French bureaucrat cites the economic research of a European supranational body to advocate substantial reductions in government spending. Even odder is that the benefits of increased government spending have become conventional wisdom in Washington just as sentiment moves in the exact opposite direction in capitals Americans used to deride as 'socialist.'"
Economic Policies for the 21st Century is probably giving Mr. Trichet too much credit when it terms him a defender of free-market capitalism or "a French voice for laissez-faire." Mr. Trichet doesn't dispute the idea that central banks and governments should try to fight economic downturns by adjusting monetary and fiscal policies, he just disagrees with a lot of Americans on the timing of rolling back those strategies. Mr. Trichet writes, "Without the swift and appropriate action of central banks and a very significant contribution from fiscal policies, we would have experienced a major depression." This is less an argument over the fundamental role of government in the market and more a technical argument over timing.