As Spain may discover, you can't run a country like a family tightening its belt

[Blue_Tires]

After being struck by the crisis, now Spain has fallen prey to a metaphor. The crisis is bad, but the metaphor is awful, and I'm not sure if the figure of speech won't end up being more harmful in the future than the economic downturn.


I'm talking about the "governments-should-be-run-like-families-you-don't-expend-the-money-you-don't-have" cliche (and I can hear the voice of Sarah Palin as I write that sentence). The Spanish president, José Luis Rodríguez Zapatero, has been persuaded by this analogy too and, pressured by the markets, is now proposing to enshrine a "zero deficit" rule in the constitution (only Germany has something similar). What this basically means is that from now on no Spanish government will be allowed to expend more money than it has. Like a family (one without a mortgage, I mean).


It's not difficult to understand why this comparison appeals to so many people: it's simple, familiar. It has a penitential ring to it. Sounds like common sense. Only that it isn't. Of course a government is nothing like a family. Governments make laws, levy taxes and print money; families don't. When a government spends, it invests in the future, harvests taxes and gets the economy going. Actually, it is government spending that got us out of recession. Now the big idea is to deprive ourselves of this tool for future crises.


There's nothing wrong with fiscal sustainability, of course, but Spain's debt problem is not in itself serious (our debt is actually lower than the EU average, lower than that of the UK for example) and our deficit is circumstantial (we were running surpluses not long ago). Spain's problem is unemployment and a sluggish growth, and a "zero deficit" budget at this point is akin to the ancient medical practice of bleeding white a sick man with leeches. Almost all patients died, but nobody questioned the doctor's authority. (Metaphors: you can make them up as you go along.)

http://www.guardian.co.uk/commentisfree/2011/sep/02/spain-run-country-family-tightening-belt

[joeybee12]

1. Exactly...knr

[ixion]

2. for starters, a family can't simply vote to raise their debt ceiling

nor can the issue T-Bills... and that's just a couple examples where there are numerous ones.

[Blue_Tires]

3. I'd like to see a similar takedown of the "run government like a business" meme

[ixion]

5. The government (in theory) is a non-profit entity

would be where I would start there. Nor do they produce products, nor are they structured like a corporation.

[Cool Logic]

4. "(only Germany has something similar)"

And Germany just happens to have the strongest economy in Europe.