Where’s the Austerity?
Here’s a letter I recently sent to The Economist:
SIR – you write that the “collective obsession with short-term austerity across the rich world is hurting” the prospects for global economic recovery; be afraid.
May the data allay your fears. From 2000 to 2010, the UK’s government spending boomed from 36.6 percent of GDP to 51.0 percent. France’s spending went from 51.6 percent to 56.2 percent. Even sober Germany grew its government from 45.1 percent of GDP to 46.7 percent.
When Bill Clinton left office, total U.S. government spending was 33.9 percent of GDP. It has blossomed to 42.3 percent under Presidents Bush and Obama.
If the rich world is indeed austerity-obsessed, it is no more than talk. That’s why this writer is afraid.
Fellow in Regulatory Studies
Competitive Enterprise Institute
*All data from OECD, downloadable at http://dx.doi.org/10.1787/888932443396
My colleague Greg Conko pointed out that the letter might be more persuasive if it used data from 2008-2010, to isolate government growth since the Great Recession’s start.
It’s a good point, so I looked it up. And the song remains the same. France’s government grew from 52.9 to 56.2 percent; Germany’s grew from 43.8 to 46.7 percent; the UK’s grew from 47.4 to 51.0 percent; and the U.S. grew from 39.0 to 42.3 percent. All that in three short years.