Those aren’t my words — they come from a NY Times story this morning: China’s growth is a bit LESS than this time last year.

The drop is, of itself, not alarming — but that it comes after a year of effort by authorities to pump up the economy for the new leadership, it suggests that we are in a slump that can’t be fixed by a simple dose of standard fiscal tools.  China is struggling as it need to import ever more energy and raw materials, while its major export markets remain weak.

China’s fate shows that it is harder and harder for global growth to be driven by any one region, or for any one region to grow vigorously while the rest of the world economy contracts.  There is just too much interdependence now for that to happen.

It is thus crucial that Europe — still the world’s largest single economy (and it is, via the Euro, a single economy) — get off its austerity bug and focus on growth.  Austerity has led to larger, not smaller, debt burdens in the UK and club Med countries, and is wiping out the opportunities for a generation of young people to establish themselves in the labor force, gain experience, and start families.  All this makes the demographic squeeze on Europe even worse.

This is no way to run a global economy!  Oops, I forget that there is no one running the global economy — just national leaders running their own national economies.  But with national economies all trying to recover on the backs of others by austerity and devaluation, they are just dragging the world economy down.

A half-century from now, economists will scratch their heads and ask how leaders of our era could have been so misguided, repeating the exact mistakes of the Great Depression even though we (unlike those of the 1930s) had the experience and the economic knowledge to avoid this.  The problem is that politics is not economics, and our global governance structure remains overly dependent on immediate post World War II structure.  I hope we can change those, and soon!