The Belgian case for anarchy
Okay, not really, but John Lanchester has a piece in the London Review of Books this week about the global economy that includes this tidbit on why Belgium is experiencing healthier economic growth than its European neighbors:
“Because Belgium doesn’t have a government,” Lanchester writes. “Thanks to political stalemate in Brussels, it hasn’t had one for 15 months. No government means none of the stuff all the other governments are doing: no cuts and no ‘austerity’ packages. In the absence of anyone with a mandate to slash and burn, Belgian public sector spending is puttering along much as it always was; hence the continuing growth of their economy. It turns out that from the economic point of view, in the current crisis, no government is better than any government — any existing government.”
Now, granted, the Belgian miracle isn’t all that miraculous. In the second quarter of 2011, Belgium grew at a scant 0.7 percent. Still, that beats 0.1 percent for Germany, 0.2 percent for Britain and a whopping 0.0 percent for France. In the short term, Belgium seems to be getting a boost from the fact that many of the country’s salaries, pensions, and unemployment benefits are automatically indexed to inflation. So when oil prices rose earlier this year, so did Belgian private spending.
The situation’s not all rosy. As the Financial Times recently noted, Belgium’s government deadlock has adverse consequences, too. The country’s public debt is currently at nearly 100 percent of GDP and Belgium is facing higher borrowing costs from nervous investors. At some point, the country will likely have to face steep spending cuts to rein in its debt. But, for now, the country appears to be benefiting from its accidental immunity to the austerity fever that’s gripping Europe. (And for more on that, read Howard Schneider’s excellent piece in the Post.)