Spain Beats EMU Growth Without a Government

Maybe Spain is outdoing its EMU peers because of--and not in spite of--having no government.

Rational choice theory holds elected officials in disdain as self-interested in political and economic gain ahead of serving the public good. Today's Spain might be an appropriate test of rational choice theory insofar as the country has not formed a government in eight months and counting. With the current caretakers having failed to do so again, never-ending elections are set to be held once more in December.

What's notable though is that government-less Spain has actually outdone its EMU peers' overall economic performance:

In Spain, nurturing the economy is so far proving easier than forming a government. Corporate investment has helped sustain growth this year, even as efforts to establish a government continue to stumble eight months on from a first round of general elections in December. With the political deadlock set to drag on after Acting Prime Minister Mariano Rajoy lost a confidence vote in parliament on Friday, the strength of the recovery may be put to the test.

Economic actors appear to be shrugging off the lack of a government:

Investment in capital stock such as factory equipment jumped 2.2 percent in the second quarter as exports climbed 4.3 percent. The economy grew 0.8 percent -- more than twice the euro zone’s pace of 0.3 percent -- while adding 484,000 full-time jobs compared with a year earlier. More flexible employment laws and falling labor costs have helped Spanish companies to grow as they also benefit from external factors including lower oil prices and European Central Bank stimulus.

In the rest of the article, there are warnings that a protracted process of sorting out Spanish leadership may (finally) hurt Spain. Consider, though, the opposite rational choice theory-esque argument: Perhaps it's the lack of government--gridlock at its finest--that is economic actors to thrive in the absence of state interference?

While the cat's away...