No, It’s Not The Welfare State
Posted by hkarner - 6. Dezember 2011
Paul Krugman blog, 5-12
Dean Baker takes on a favorite pet peeve of mine — the incessant claim that Europe’s woes are being caused by the burden of the welfare state.
This really isn’t hard to check. Take government spending as a percentage of GDP from the IMF Fiscal Monitor (I use 2009 for Ireland because 2010 is distorted by bank bailouts), and October 10-year interest rates from the ECB. Plot them, and here’s what you get:
There’s no relationship; some high-spending countries, notably Sweden and Denmark, have very low rates, while as Dean says, Spain was a relatively low spender.
Of course, like all the zombie concepts littering our discourse, this one will be impossible to kill.