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Europe’s Economic Austerity, You Must Be Kidding

Economics / Euro-Zone Oct 09, 2014 - 10:13 AM GMT

By: Steve_H_Hanke

Economics

The leading political lights in Europe -- Messrs. Hollande, Valls and Macron in France and Mr. Renzi in Italy -- are raising a big stink about fiscal austerity. They don't like it. And now Greece has jumped on the anti-austerity bandwagon. The pols have plenty of company, too. Yes, they can trot out a host of economists -- from Nobelist Krugman on down -- to carry their water.


But, with Greece's public expenditures at 58.5 percent of GDP, and Italy's and France's at 50.6 percent and 57.1 percent of GDP, respectively -- one can only wonder where all the austerity is (see the accompanying table). Government expenditures cut to the bone? You must be kidding. Even in the Unites States, where most agree that there is plenty of government largess, the government (federal, plus state and local) only accounts for a whopping 38.1 percent of GDP.

As Europe sinks under the weight of the State, it's austerity, not anti-austerity, that should be on the menu.

By Steve H. Hanke

www.cato.org/people/hanke.html

Twitter: @Steve_Hanke

Steve H. Hanke is a Professor of Applied Economics and Co-Director of the Institute for Applied Economics, Global Health, and the Study of Business Enterprise at The Johns Hopkins University in Baltimore. Prof. Hanke is also a Senior Fellow at the Cato Institute in Washington, D.C.; a Distinguished Professor at the Universitas Pelita Harapan in Jakarta, Indonesia; a Senior Advisor at the Renmin University of China’s International Monetary Research Institute in Beijing; a Special Counselor to the Center for Financial Stability in New York; a member of the National Bank of Kuwait’s International Advisory Board (chaired by Sir John Major); a member of the Financial Advisory Council of the United Arab Emirates; and a contributing editor at Globe Asia Magazine.

Copyright © 2014 Steve H. Hanke - All Rights Reserved
Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

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