When it comes to what should be done about a “stubbornly weak recovery and troublingly low inflation,” as this morning’s Wall Street Journal puts it, ideology has never seemed less helpful. Keynes vs. Friedman? More stimulus vs. tax cuts? Reflation vs. austerity?
These are, broadly speaking, arguments from the left and right, respectively, but they give us almost no clue to what’s happening in other major economies around the globe.
With 2.2 percent growth in the last quarter, Germany is leading the way in what economists are calling a “two-speed” Eurozone, with Northern Europe leaving behind southern basket cases like Spain and Greece. France, meanwhile, has weathered the global economic funk rather well, but faces long-term deficit problems, much like we do. (Wait a minute: Aren’t they all stinking socialists?!)
What’s Germany doing right that the rest of us can learn from?
Was it Chancellor Angela Merkel’s “austerity package,” announced last June? Nope: That hasn’t even been implemented yet. Was it, conversely, due to stimulus efforts? Hard to tell, according to this Forbes columnist.
Turns out Germany’s construction sector has perked up after a lousy winter, and German exports surged because a declining euro made them cheaper.
What about China?
Newt Gingrich has told us that America’s economy would grow by leaps and bounds if we adopted the Chinese policy of zero taxes on capital gains.
According to this NPR report, however, China’s $1.4 trillion stimulus package of two years ago spurred explosive double-digit growth, which in turn has led to fears of overheating and inflation.
And then there’s our fine neighbor to the north. Liberals love to point out that Canada didn’t melt down like we did in October 2008, thanks to tougher regulation of banks. They’ve made it through the global downturn in fine fettle and could see budget surpluses by 2015, according to the International Monetary Fund.
Then again, Canada’s prime minister, Stephen Harper, is a conservative who cut taxes. Then again, he favored stimulus spending during the recession. Then again, it was the liberal Paul Martin who cut spending in the late-‘90s to help turn around Canada’s credit rating and dramatically improve the country’s fiscal condition.
Then again ...
Feel epistemically humble yet?