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.


  1. So, according your data is correct and don't come from a lobby (can't access your source), are you happy with that fact or not ?

    As a personal experience which isn't suitable to draw global conclusions, I can tell I noticed the cut, here in France. I'm not in the need. All the associations I know have experienced a drop of subventions. Social organsisations are the first target, even the ones of the government.
    If the austerity isn't, then it may be a good excuse to put the money elsewhere.
    Well, difficult subject, but it is coherent with the evolution of neo-liberalism since the last decades…

    1. Hah, I'm no lobbyist. Just an American who's concerned about the shocking rise in government spending, both in the US and abroad. I heard the slogan "austerity doesn't work. Look at Europe!" too many times not to look into it further. The (implicit) second half of that phrase is "so the US government should spend even MORE." A terrifying prospect.

      The source is Eurostat. It is the official statistics collection agency of the European Union. I just checked and the very first link in this post still points to the page from which I got my data. I did not perform any manipulation, alteration, or any math of any kind on the data, aside from a single application of division, to compute the 2008-2011 spending change.

      I definitely have heard about staff layoffs in different parts of Europe so I don't doubt your experience. The puzzle, then, is to figure out just where all of that money is going. There's clearly more money moving through European governments, so how is it that people perceive cutbacks?

      I'm certainly never happy about people going through hard times. The people out of work and on the streets protesting in Greece, Spain, and elsewhere are genuinely in a tough place and are really hurting. They seem to misdiagnose the problem as one of punishment by mean politicians who are withholding money as a form of punishment. Really, the foot of the problem is that the governments promised more than they could deliver, as well as fundamentally dysfunctional economies. Europe has run out of other people's money, and Germany just doesn't have the resources to run the European Union as a charity.