Last week in New York City, during my Intelligence Squared debate about stimulus, I pointed out that Germany is doing better than the United States and explained that they largely avoided any Bush/Obama Keynesian spending binges.
One of my opponents disagreed and asserted that I was wrong. Germany, this person argued, was dong better because it was more Keynesian thanks to “automatic stabilizers” that resulted in big spending increases.
This claim was made with such certainty that I wondered if I made a mistake.
Well, we were both right about Germany doing better. In the past few years, it has been enjoying yearly growth of about 3.5 percent while growth in the United States has remained below 3 percent.
But who was right about the key issue of whether Germany has been more Keynesian? At first, I was going to be lazy and not bother combing the data. But then I got motivated after reading an excellent post about Germany’s pro-growth reforms, written for National Review by Veronique de Rugy of the Mercatus Center.
So I looked up the data on annual government spending in the United States and Germany and discovered that I was right (gee, what a shock). As the chart shows, the burden of government spending has increased faster in the United States. And that is true whether 2007 or 2008 is used as the base year.
To make sure the comparison was fair, I sliced the numbers every possible way. But the results were the same, regardless of whether state and local government spending was included, whether TARP spending was included, which base year was selected, or whether I used annual spending increases or multi-year spending increases.
In every single case, the burden of government spending grew faster in the United States from 2007 to 2011.
This does not mean Germany is a role model. Government spending in Germany is far too high and it continues to grow. All we can say is that Germany is not going in the wrong direction as fast as the United States.
Oh, I suppose we also can say that I was right and my opponent was wrong. The United States has been more Keynesian than Germany.
Speaking of Germany, I combed my archives and found only one post that said anything nice about German politicians.
My other German posts mocked the country’s scheme to tax prostitutes, mocked the government for losing the blueprints for its new spy headquarters, mocked the government for a money-losing scheme to tax coffee, and even mocked the supposedly conservative Chancellor for wanting to impose new taxes.
So even though Veronique is correct about some positive changes, the Germans have a long way to go.
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[…] economic advice. Germany has actually been complying with Mitchell’s Golden Rule in recent years (and part of last decade also) and its economy is in decent […]
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[…] at least the Germans aren’t big believers in Keynesian pixie dust (and you won’t be surprised to learn Krugman goofed when trying to claim […]
[…] at least the Germans aren’t big believers in Keynesian pixie dust (and you won’t be surprised to learn Krugman goofed when trying to […]
[…] of) defended Germany a couple of times, at least on fiscal policy, explaining that the Germans didn’t squander much money on Keynesian spending schemes during the downturn and also explaining that Paul Krugman was wrong in his column on Germany and […]
[…] P.S. This isn’t the first time I’ve had to deal with folks who mischaracterize German fiscal policy. When Professor Epstein and I debated a couple of Keynesians in NYC as part of the Intelligence Squared debate, one of our opponents asserted that Germany was a case study for Keynesian stimulus. But when I looked at the data, it turned out that he was prevaricating. […]
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Dan, you say: “One of my opponents disagreed and asserted that I was wrong. Germany, this person argued, was [doing] better because it was more Keynesian”.
Naming and shaming such people who offer deliberate fabrications to promote an egregious government-increasing, anti constitutional agenda is one way to help them realize that telling the truth is crucial.
So who was this individual and where do they work?
[…] has good fiscal policy. Indeed, the best that can be said about the Merkel government is that it hasn’t moved Germany much further in the wrong direction in recent […]
[…] Suède et l'Allemagne font partie des trois pays ayant réduit leurs dépenses publiques en pourcentage du PIB, et ces […]
[…] and Germany are among the three nations that have reduced the burden of government spending as a share of GDP, […]
[…] and Germany are among the three nations that have reduced the burden of government spending as a share of GDP, […]
[…] not quite ready to trade places with Canada, but it may just be a matter of time. Like Germany and Sweden, they seem to be slowly but surely trying to move in the right […]
[…] state. It generally relies on a market-oriented approach in areas other than fiscal policy, and it avoided the Keynesian excesses that caused additional misery and red ink in America (though it is far from fiscally conservative, […]
[…] Germany did not go with a big program of government spending, and they did better than the United States. The same is true about Canada. But the real success story is the Baltic nations. They imposed real spending restraint, not the fake austerity found in places such as the United Kingdom. […]
[…] Amazingly, the Germans, who have a disturbing affinity for powerful government, decided against Keynesianism and that’s paid dividends for their economy. […]
[…] not quite ready to trade places with Canada, but it may just be a matter of time. Like Germany and Sweden, they seem to be slowly but surely trying to move in the right […]
[…] not quite ready to trade places with Canada, but it may just be a matter of time. Like Germany and Sweden, they seem to be slowly but surely trying to move in the right […]
[…] such as Switzerland’s successful spending cap, Sweden’s shift to the right on spending, Germany’s wise decision not to be Keynesian, and Portugal’s admission that “stimulus” doesn’t […]
[…] Germany did not go with a big program of government spending, and they did better than the United States. The same is true about Canada. But the real success story is the Baltic nations. They imposed real spending restraint, not the fake austerity found in places such as the United Kingdom. […]
[…] Germany did not go with a big program of government spending, and they did better than the United States. The same is true about Canada. But the real success story is the Baltic nations. They imposed real spending restraint, not the fake austerity found in places such as the United Kingdom. […]
[…] Amazingly, the Germans, who have a disturbing affinity for powerful government, decided against Keynesianism and that’s paid dividends for their economy. […]
[…] Amazingly, the Germans, who have a disturbing affinity for powerful government,decided against Keynesianism and that’s paid dividends for their economy. […]
[…] Amazingly, the Germans, who have a disturbing affinity for powerful government, decided against Keynesianism and that’s paid dividends for their economy. […]
[…] Amazingly, the Germans, who have a disturbing affinity for powerful government, decided against Keynesianism and that’s paid dividends for their economy. […]
[…] having much impact. Only the Baltic nations have done the right thing and reduced spending. The Germans also have been semi-responsible in the past couple of year, though that’s not saying much. And the Swiss were smart enough […]
[…] was it put together by a German, who is feeling sanctimonious about his country’s relatively strong position (at least compared to other European welfare states) and is tired of having to deal with the […]
[…] a very large welfare state and the tax burden is quite onerous, both of which hinder growth, but Germany has been more responsible than the United States in recent years. And while this may be damning with faint praise, this modest bit of fiscal discipline is helping […]
[…] a very large welfare state and the tax burden is quite onerous, both of which hinder growth, but Germany has been more responsible than the United States in recent years. And while this may be damning with faint praise, this modest bit of fiscal discipline is helping […]
You’re down on taxing hookers, while we are taxing tanning salons? And not hair weave parlors?