By European standards, Germany is in pretty good shape.
There’s 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 the nation survive as many other European welfare states are on the verge of collapsing.
Moreover, Germany (sort of like Denmark) partially offsets the damaging impact of bad fiscal policy by being free market-oriented in other policy areas, such as trade, regulation, and rule of law.
Knowing all this information, how would you describe Germany’s economic policy? Would you say it was a semi-responsible welfare state? Would you say it had left-wing fiscal policy combined with a social market economy?
I’m not sure about the best description, but I know that only a crack-addicted nitwit would put it in the same category as Hong Kong.
Yet, in an otherwise unremarkable article about the fiscal crisis in Europe, the Washington Post referred to ” fiscally conservative Germany.”
Rather than go through a lengthy explanation of why this is absurd, I figure this chart demonstrates why the folks at the Washington Post are clueless (though, in fairness, perhaps Germany is “conservative” compared to the ideology of the reporters and editors in the newsroom).
Keep in mind that this is a country that has parking-meter taxes for prostitutes and a nation with a supposedly conservative Chancellor who is leading the charge for a global tax on financial transactions.
If Germany is “fiscally conservative,” I’m a socialist.
Looking at the index of economic freedom, Denmark, Ireland and Switzerland are ahead of the US. I just visited Denmark and essentially got paid to go by an institution that got a huge government grant and didn’t seem to know what to do with it so I know their government isn’t that fiscally conservative. Switzerland is very federalist, and they have a very sound currency, at least until recently when they decided to peg against the Euro. Ireland was always called the Celtic Tiger until recently when they got caught up in the banking crisis and the sovereign debt crisis. I think I even remember Dan praising Ireland before 2008. If Ireland is praise-worthy and an example of economic freedom, doesn’t that call into question the thesis that only profligate welfare state countries in Europe are getting into problems?
@ Eitan. Swiss franc pegged against the euro? Great decision! I owe you an answer on austrian monetary theory. I will do it soon.
@ Eitan. Floating exchange rates are nonsense. They do horrific damage. Currency is a standard, not the pseudo commodity that Friedman invented
Funny.
[...] According to the Cluelsss Crowd at the Washington Post, Germany Is “Fiscally Conservative” Who’s Afraid of Friedrich Hayek? – Reason Magazine The market as the antidote to [...]
[...] Last month, for instance, I made fun of the Post for asserting that Germany was “fiscally conservative.” [...]
[...] Last month, for instance, I made fun of the Post for asserting that Germany was “fiscally conservative.” [...]
[...] Like Sweden and Denmark, Germany is a semi-rational welfare 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, notwithstanding the sophomoric analysis of the Washington Post). [...]
The only reason the Washington Post describes Germany as “fiscally conservative” is that it has a smaller deficit than the USA. Sadly, journalists tend to be awful economic analysts–even most of those whose beat it is.
Smaller deficits are horrible hallmarks of fiscal conservatism. As Steven E. Landsburg and Lauren J. Feinstone argue in their book, The Armchair Economist, it doesn’t really matter if government taxes or borrows to fund current spending; the effect (all else being equal) is the same on the poor taxpayer. While this is not quite the case–all else is almost never equal–it is close enough to shatter the myth that smaller deficits with more state spending is economically superior to larger deficits with less state spending.
If, however, we define fiscal conservativism as spending constraint (since government spending, however funded, tends to have a direct negative effect on the taxpayer), then Germany cannot possibly be considered “fiscally conservative”–not even more “fiscally conservative” than the USA.
As an aside, a sound argument could be made that the last fiscally conservative president and congress we’ve have is that of the Coolidge administration, and an even better argument could be made for the last Cleveland administration.
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[...] And I’ve also commented on a Washington Post story that turned a spending cut molehill into a “spending slash” mountain, a silly assertion in the New York Times that education spending has been reduced, and a Washington post claim that Germany is fiscally conservative. [...]
[...] And I’ve also commented on a Washington Post story that turned a spending cut molehill into a “spending slash” mountain, a silly assertion in the New York Times that education spending has been reduced, and a Washington post claim that Germany is fiscally conservative. [...]
[...] And I’ve also commented on a Washington Post story that turned a spending cut molehill into a “spending slash” mountain, a silly assertion in the New York Times that education spending has been reduced, and a Washington post claim that Germany is fiscally conservative. [...]
[...] A Washington post claim that Germany is fiscally conservative [...]
[...] A Washington post claim that Germany is fiscally conservative [...]
[...] wonder I mocked the Washington Post for labeling Germany a “fiscally conservative” [...]
[...] it was the Washington Post that decided to refer to a certain country as fiscally conservative. Was the reporter writing about Hong Kong or Singapore, the two jurisdictions with the smallest [...]
[…] you want some unintentional humor, the Washington Post referred to Germany as being “fiscally […]