The danger is not only that these austerity measures are killing the European economies but also that they threaten the very legitimacy of European democracies - not just directly by threatening the livelihoods of so many people and pushing the economy into a downward spiral, but also indirectly by undermining the legitimacy of the political system through this backdoor rewriting of the social contract.

It takes time and experience to absorb new technologies, so technologically backward producers need a period of protection from international competition during this period of learning. Such protection is costly, because the country is giving up the chance to import better and cheaper products. However, it is a price that has to be paid if it wants to develop advanced industries.

Culture changes with economic development.

Self-interest, to be sure, is one of the most important, but we have many other motives - honesty, self-respect, altruism, love, sympathy, faith, sense of duty, solidarity, loyalty, public-spiritedness, patriotism, and so on - that are sometimes even more important than self-seeking as the driver of our behaviors.

95 percent of economics is common sense made complicated, and even for the remaining 5 percent, the essential reasoning, if not all the technical details, can be explained in plain terms.

The top 10 per cent of the US population appropriated 91 per cent of income growth between 1989 and 2006, while the top 1 per cent took 59 per cent.

Democracy and markets are both fundamental building blocks for a decent society. But they clash at a fundamental level. We need to balance them.