Sunday, October 7, 2012

Romney Insults Spain as He Shows His Ignorance of Macroeconomics

Bradley Klapper thinks the story is that Mitt Romney insulted Spain during the Presidential debates. Perhaps but let me extract the relevant economic portion of this story:
“I don’t want to go down the path of Spain,” Romney said Wednesday night during the first presidential debate. He argued that government spending under Obama has reached 42 percent of the U.S. economy, a figure comparable with America’s NATO ally. “I want to go down the path of growth that puts Americans to work.” … No one contests that Spain’s situation is dire, its economy in deep recession and unemployment hovering around 25 percent. But Spain’s level of government spending is actually low by European standards, and significantly less than Germany and Scandinavian countries with far healthier economic prospects. Spain’s woes were chiefly caused by the collapse of a property bubble that had fueled more than a decade of booming economic growth.
Klapper is properly noting that the U.S. recession and the Spanish recession were both caused by similar private sector events. The U.S. has fared less badly than some countries because we at least tried a bit of fiscal stimulus for a little while. Romney has been confused whether we should follow the UK’s disastrous austerity or use military Keynesianism. As far as Spain Matt Yglesias provides a nice graph showing how fast the changed in nominal government spending in Spain has declined:
If the entire argument is really over whether or not this Noteworthy Mercatusward Change in Spanish fiscal policy deserves to be called "cuts" rather than "rapid deceleration" then I suppose we've all wasted our time.
This may not have been the headline lie among all of Romney’s lies during the debate. And maybe Romney was less being dishonest than just completely ignorant of the facts in Spain. But it is very evident that he is either completely ignorant of the macroeconomic situation in the U.S. or is being incredibly dishonest. But hey – what else is news?

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