In your remarks, you said that Europe is suffering a “crisis of confidence.” Most economists I know say it’s suffering a crisis of growth and debt, and it’s not yet solved.
Helle Thorning-Schmidt: Let me be clear that I think the Europeans have acted rather fast, considering we are 27 sovereign nations. We have built a firewall. We have found a solution for private-sector investors. We have a new fiscal compact. And what we’re all looking at now and hoping is that the firewall will be sufficient to bring Greece out of the debt crisis. Do you need confidence for that? Yes. You need growth in other E.U. countries. We need growth in America as well.
But don’t get me wrong. This is a European problem, and we need to solve it.
Almost every analyst I’ve spoken to has been extremely skeptical that this package has any chance of bringing Greece out of its debt crisis. The night it was released, the Financial Times reported on a confidential document distributed to many of the euro zone’s finance ministers that essentially said that this package wouldn’t work. The more optimistic voices say that if more needs to be done later, it will be.
My question back would be, aren’t we all in a situation of muddling through? In the American political system in an election year, perhaps the decision-making system is not as fast as you wish it was. In Europe, it’s not as fast as we wish it was. But there has been a tremendous solidarity in Europe from bigger countries towards a smaller country in need of help. These are sovereign nations that have to decide this in democratically elected parliaments. So you could always discuss whether it could be twice as big. But they have acted, and they have acted fast.
Labor-market reforms are critical in the European economic discussion but almost unknown in America’s economic discussion. So can you explain to an American audience the role labor-market reforms are playing in Europe?
I think the European countries are different when you compare [them] to the United States. The demographic challenges will be felt very hard in Europe, because we don’t have access to immigration, politically and for other reasons. That’s not the same in the U.S. You have access to almost unlimited labor. We need to find other ways to expand our labor force, and we can only do that by raising the pension age, as we have done, asking people to work longer hours and making other reforms in the labor market.
You mention that you’re trying to institute some of those reforms in Denmark. Which?
We will ask laborers to work longer hours. I believe everyone understands now that we need to tighten our belt and contribute to the solution. If austerity is applied fairly, it will be accepted by a lot of people. People want to make sacrifices, but they don’t want to be sacrificed. We need to have austerity and cuts, but in a fair way.