Germany: Stimulus free-rider

Germany: Stimulus free-rider

The United Nations’ International Labor Organization (word file courtesy of Dani Rodrik) is keeping tabs on the world’s stimulus packages. The charts make for interesting reading, filled with fun depressing financial crisis factoids.

For instance: Which countries haven’t sorted out or passed their packages yet? Austria, Denmark, Greece, Iceland (no money to spend?), Ireland, New Zealand, Poland, Sweden, and Turkey.

Who’s spending the most, in terms of percentage of G.D.P.? Spain (8.1 percent), China (6.9), and the United States (5.5). Brazil’s the biggest cheapskate. Its $4 billion package amounts to a mere two-tenths of a percent of G.D.P.

Already, the blogosphere’s parsed the data to decide which countries are pulling their weight and which are relying on others to do the spending for them.

Justin Fox at Time‘s The Curious Capitalist praises the U.S. and China and derides, well, everyone else:

“The concern is that if we in the U.S. do lots of stimulating and other economies don’t, much of the money will just leak out overseas as we spend on imports but others don’t buy our exports. China seems to be doing its part, but most of the developed world is not.”

Ezra Klein agrees:

“We’re doing a lot. China is doing a lot. Everyone else isn’t….the global economy will be slower than it needs to be, which means national economies will be slower than they need to be (if Caterpillar’s international sales sag, they’ll cut U.S. jobs).”

Singled out for specific vitriol in the blogosphere is the Eurozone — in particular, Germany, which has come under regular fire from the likes of Paul Krugman et. al. for free-riding on others’ efforts. 

Megan McArdle writes:

“Europe is dropping the ball here. The euro area is being notably stingy with both fiscal and monetary stimulus, and I’m not the only one who’s stonkered by it.  If fiscal policy remains too tight, it threatens the very union they’re supposed to be protecting–how long can Greece and Italy, Ireland and Spain, suffer under a tight regime before one of them pulls out?  And if one of them pulls out, the other weak sisters will pay sharply higher interest rates to compensate for currency risk, probably forcing them out as well.”

If there’s already global tension over which countries need to do more, just think when the arguments inevitably begin over who started it…

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