Monday, June 18, 2012

When European "Austerity" Isn't

I've been skeptical of the rhetoric that there has been "brutal, crushing austerity" in Europe. When these claims are made, I have seldom heard any quantification of how brutal these "brutal" changes have been. So I looked it up.

Short version: there's been minimal to negative austerity since pre-meltdown 2008.

Longer version:
There was a bump up in spending in the PIIGS (Portugal, Ireland, Italy, Greece, and Spain) countries now in the news and some of those countries went back to around their 2008 level of spending.

I went ahead and looked at the Eurostat data on Eurozone government spending, and it certainly does not paint a picture of a draconian, totalitarian decrease in state spending. I compiled the Eurostat data into a spreadsheet (with US data included for flavor) and plotted out some charts.

Update: I've removed the US data because they are for the federal government only whereas the EU data is for total spending across all levels of government. If anyone has a pointer to a source for aggregated US local, state, and federal spending, I'd be interested in that as well. The claim that US government spending cratered post-2008 seems too politically convenient to be true.

First, the total government spending of the European Union, the Eurozone (those countries which use the Euro), and the US (Dollars converted to Euros) since 2002:



Next, the GPI (Greece, Portugal, Ireland) countries:



And finally, the biggest spenders in Europe. I included them separately from the GPI (or PIG) countries because the chart ends up mostly empty with all included.



As you can see, not nearly the inhumane government takeover of governmental reduction that it's sometimes claimed to be.

As a final piece of analysis, I looked at 2011 spending as a percentage of 2008 (as in pre-meltdown) spending. Only 10 out of the 41 countries (Switzerland didn't have 2011 numbers) had decreased spending since 2008: Iceland, Latvia, Greece, Romania, Hungary, Estonia, Lithuania, UK, Ireland, and Bulgaria. With the exceptions of Iceland and Latvia, all of the countries spent at least 90% as much in 2011 as they did in 2008. Take a look:



Update: It was suggested that I compare 2011 spending to that of 2007 as well, since some countries peaked around then. It actually ends up being more of an argument against the existence of "austerity," with only three countries decreasing their spending over the period: Iceland, the UK, and Hungary.

By the way, the US -- the pinnacle of ruthless Reganomics -- spent 120% of its 2008 level in 2011, third only to Luxembourg and Norway in governmental largess.

All of my raw data are available here.