The question is who we are to each other. It’s at the beginning and end of every political argument, regardless of whether anyone raises it. Are we lone figures passing on a cold tundra, or do we pause to stand, and even stay, in fellowship? And what will break it? Every other consideration is secondary.
Derek Thompson at the Atlantic, who often delivers brief economic insights with surprising graphs, the other day offered this one by way of Michael Cembalest of JP Morgan. Cembalest is not an optimist regarding the European Union, and this graphs presents just another reason for it.
What Thompson says is this:
The euro zone has Greece. The United States has Mississippi. Or Missouri.
The difference between the U.S. and Europe is that when the Greek economy “pulls a Mississippi” (or perhaps I should say, when Mississippi “pulls a Greece”), the EU and the U.S. have 180-degree opposite reactions. Over here, we calmly write checks to Mississippi in the form of Medicaid and unemployment insurance, no questions asked. Europe has no comparable “Peripheraid” for its weak peripheral states. Instead, it has chaos.
When you hear commentators say, “the euro zone must begin to transition toward a fiscal union,” what they are saying, in human-speak, is that the Europe needs to be more like the United States, with balanced budget laws for its individual members and seamless fiscal transfers from the rich countries to the poor, to protect the indigent, old, and sick, no matter where they reside.
The Germans call this sort of thing “a permanent bailout.” We just call it “Missouri.”
There is much to be considered another time about the whole historically accidental nature of states, as in “The United –,”, but for now I will make a different observation. What Thompson neologizes above as Peripheraid – fiscal transfers from more prosperous states to the less, as more is paid to the federal government in taxes than is received in federal aid – would fit comfortably under the rubric of from each according to its ability, to each according to its need.
Just in case Ma and Pa Tea Party didn’t have enough to keep them up at night. Jethro is reaching for the shotgun.
How curious is it, too, that the U.S. “donor” states in the graphic example above – California, Connecticut, Illinois, New Jersey, and New York – are states in which political support for the nature of this kind of economic, and other, relationship is likely to be highest, whereas the recipient states – Missouri, Tennessee, Kansas – are among those more likely to reject the philosophy upon which they happen to be benefiting, without, so far, a march on the local federal building and the burning of Obama in effigy.
The European Union, in contrast, envisioned itself, fundamentally, as a union in prosperity. How far its multi-state economic alliance imagined itself, beyond a business joint venture of nations, to be a fellowship of peoples is being tested. If the understanding is the former – and there is little reason to think most Europeans feel a greater commitment to each other than that – then it is easy, regardless of economic theory and sense, to understand the Germans, or any other nation, taking the position with Greece that it has.
“You overspent. Your were profligate. We’ll bail you out. But you’ll do it on our terms, and on terms that don’t put us at risk too.”
On what basis do the Finns and Germans feel any differently than that towards the Greeks and the Irish?
On what basis do Americans toward each other?
- The Countdown To The Break Up Of The Euro Has Officially Begun… (projectworldawareness.com)
- Eurozone contagion fears spread as Greeks refuse cuts (independent.co.uk)
- Pressure mounts on Greece to stick to the austerity plan (theglobeandmail.com)
- Why are Europeans Ousting the Political Status-quo? (theglobalproletariat.wordpress.com)
- German SPD escalates euro showdown with Merkel (vancouverdesi.com)
- 11 Quotes That Show How Worried the Financial World is About Europe Right Now (wealthwire.com)
- Euro falls in Asia amid political turmoil (dawn.com)
- Buffett says investors shouldnt act on headlines (wvgazette.com)
- Eurozone is more disparate than pretty much every other group (newstatesman.com)