Why the Size of the Stimulus May Not Matter

China and Germany are growing not because of their stimulus size, but because they’re not America.

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No sooner do I praise him than David Brooks goes and writes something boneheaded.

To wit:

During the first half of this year, German and American political leaders engaged in an epic debate. American leaders argued that the economic crisis was so bad, governments should borrow billions to stimulate growth. German leaders argued that a little short-term stimulus was sensible, but anything more was near-sighted. What was needed was not more debt, but measures to balance budgets and restore confidence...

This divergence created a natural experiment. Who was right?

The early returns suggest the Germans were.

Then why is the Chinese economy, stoked by a comparatively massive $1.4 trillion stimulus package, growing even faster than Germany’s? By Brooks’s tortured logic, China should be in an even worse funk than we are.

In truth, such transnational comparisons are silly. We may operate in a global economy, in which nation-states have become interdependent, but that hardly means each country doesn’t benefit from local advantages—or suffer from local maladies.

The artist formerly known as Spengler, David P. Goldman, has an excellent piece in First Things in which he argues that our troubles are largely idiosyncratic and self-created: a toxic stew of demographics, insane housing policies, and a looming pension disaster at the state level.

[See a slide show of 10 wasteful stimulus projects.]

What’s worse, Goldman argues, is that both the left and right’s time-honored fiscal remedies—pump-priming or supply-side tax cuts—are powerless against a number of intractable trends.

Ultimately, China and Germany are not experiencing robust growth because of the size of their stimulus packages, big or small. They’re growing because they’re not America.