Daniel Cohen discusses the effects of the slowdown of productivity in Europe and the United States and explains the origin of the apparent tradeoff between unemployment in Europe and wage inequality in the United States. On questions of economic policy and the competing academic views (new classical and Keynesian) of the efficacy of government intervention, Cohen inverts the Keynesian belief that government intervention causes growth and explains why waves of government interventions (including wars) usually follow upward economic trends rather than create them. But he also advocates government discretion rather than government neutrality by showing the disastrous consequences of the hands-off approach to debt, inflation and social security.