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Monday, October 1, 2012

Different Unemployment Rates in E.U. States: Stretching Federalism Too Far?

For August 2012, the unemployment rate in the E.U. was 10.5 percent, which translates into 25 million Europeans without a job. In the U.S., the comparable rate was 8.1. These figures mask the huge inter-state differences in both unions, especially in the E.U. What impact do they have on the respective federal systems? 
                                 
                                                               E.U. Unemployment Rate.    Google

The complete essay is at Essays on Two Federal Empiresavailable at Amazon.

Sunday, September 30, 2012

“USA!” at Ryder Cup 2012: Silent “EU!” Wins

The Ryder Cup of 2012, held in Illinois, can be read as payback for the European team at the expense of the Americans because the latter had come back from the same 10-6 deficit to win at the previous Cup.  The Associated Press reported that the European team’s “rally was even more remarkable, carried out before a raucous American crowd that began their chants of "USA!" some three hours before the first match got under way.” I can just imagine the looks on the Europeans’ faces amid the primal shouts some three hours before play. “Why are they doing that now? Should we get our few people in the crowd to start pumping their fists in the air while shouting “EU! EU! EU! EU!”? I can just hear a German on the team (if there was one) ask, “But what purpose would that serve?” A Brit would interrupt to make his observation known, that he cannot take part in such a cheer as it diverts from “hip hip!” and thus may interfere with being proud to be British, as Maggie used to say. A Belgian of Flemish and Walloon parentage (if such a thing exists) would try to split the difference in proposing that the small crowd of European groupies chant “hip hip EU!” The Brit would undoubtedly veto that one in a split second and the European team would be left with having to listen to the primal chants of the Americans. Of course, the warlike chant has no meaning in itself. Even a patriotic American would wonder why in the midst of a fireworks show on July 4th young men (16-25ish) suddenly feel the need to aggressively shout “USA!


                                     Europe's Martin Kaymer celebrates Europe's win at the Ryder Cup.     Reuters

USA!” as if the exploding bombs (i.e., fireworks) were some signal known only to them that we were about to invade another country. I witnessed this at a Fourth-of-July fireworks at an upscale golf course in 2012. The chants seemed so out of place, coming out of nowhere, that I could not help but wonder what was behind the impulsive act.
Was there a sort of blind, patriotic “America the Powerful” brewing at a primal level among guys who are at the prime age for military service? Is there some instinct for war in young men that was not getting satisfied by the 11-year-old war in Afghanistan? Or was it simply a problem of not getting enough sex?  Maybe the pounding fists in the air and shouted grunts are some kind of instinctual way of attracting American females who are otherwise too obsessed with their careers.  I suppose it is preferable to pissing to mark one’s territory. Nietzsche would point to the instinct “will to power,” though it is difficult to see how much of that can come out of hitting a little white ball into a hole. It seems to me that American football would be the more fitting venue.
Today I met two Europeans, one from Spain and the other from Poland. I suggested that perhaps they had not realized how much they have in common as Europeans until they came over to America. Relative to the Americans, the two women could see how much more they have in common. “Yes!” the two women added as if on cue. “You know that many Euro-skeptics over there think there is no such thing as being a European,” I stated matter-of-factly. The both nodded affirmatively. “But now you can see that there is—that you can be both Spanish and Polish and European.” Again, they nodded, perhaps more surprised to be hearing such a thing from an American than to be suddenly aware of their own federal nature—both Spanish/Polish and European. Things like this can sneak up on a person perceptually, even though it is happening to oneself.  One might not see it in oneself even though outsiders do.
So even though the Europeans in the crowd at the Ryder Cup did not add “EU!” to replace the chants of “USA!” as the Europeans turned their deficit into victory, pro-Europe slogans will come, though hopefully without the fist-pumping and aggressive shouting.  Sometimes it takes time for the perception to catch up with the changed situation on the ground.

Source:
Christopher Clarey, “Europe’s Surge Leaves Americans in Shock,” The New York Times, September 30, 2012. http://www.nytimes.com/2012/10/01/sports/golf/europe-rallies-for-stunning-victory-at-ryder-cup.html?hp

Retirement Ages in Spain and Greece: On the Politics and Economics

According to the New York Times, “Spain has a stubbornly high budget deficit, its banks require tens of billions of euros in rescue loans and the government may soon have little choice but to request bailout funds” from the E.U.’s “TARP” program. Nevertheless, the state government’s “budget would actually increase pension payouts 1 percent [in 2013]. The money includes not only pensions for former public employees, but also the social security payments that go to all retired [residents].” Pension expenditures represent nearly 40 percent of the state budget and 9 percent of the state’s economic output, so one would think that line-item would be first up on the chopping block. One might assume that politics is the driving motive of the government, but it is also the case that cutting sustenance programs could actually exacerbate the state’s public debt, given the probably decline in demand. In this case, the politics in the state dovetails with the economics.
However, delaying the increase in the retirement age in Spain from 65 to 67 until 2027 can be seen as a case of politics operating at the expense of what is most needed economically for the state. Given the advances in modern medicine and the universal health-care systems in the E.U. (as distinguished from all but one of the U.S. states), even 67 could be too early to retire from work. As I write this essay, my parents are in their seventies and they both still work full-time. I know of many academic colleagues who are still active in their seventies, even if they are writing books rather than teaching. To be sure, the nature of the work is relevant. Not many people can dig ditches every day at age 75, but work suitable to an older body can be found (or created by the state).

Do the state governments have too much power at the federal level? If so, are Greece and Spain paying the price of the self-interest of more dominant states?  
In the case of the E.U. state of Spain, extending residents’ productive years adds tax revenue while reducing the spending needed for entitlement programs (medical disability is or should be an exception to the higher retirement age). This is particularly the case in states whose demographics are leaning toward an increasing proportion of retired residents.
The state of Greece demonstrates that going just from 65 to 67 can indeed be accomplished legislative in a year, even given the political protests. “For Greece,” according to the New York Times, “the longtime generosity of its pension system — in which large numbers were previously allowed to retire at 50 and younger — came to define the bankrupt condition of the Greek state. In the years before the crisis hit, pension payments in Greece totaled as much as 14 percent” of the state’s economic output. Raising the retirement age can be distinguished from the cuts in the monthly entitlement programs, which can actually put residents’ lives at risk.
From a human-rights perspective, the increases in human life-spans distinguish increases in the retirement age from cuts in monthly sustenance payments. Moreover, austerity programs need not come at the expense of human life. Programs based at that basic level can be set aside even as excesses in retirement ages (e.g., 50 in Greece for some occupations) can be corrected.
Lastly, the differential in the austerity programs in the states of Greece and Spain can be related to, or justified by, the differing situations of the two states. Accommodating such differences is a major plus of federalism. That is to say, the E.U. bailout program can and should distinguish in terms of its requirements the divergent situations “on the ground.” So to those who want to claim that the E.U. was not already by 2012 a federal system, I counter that it was already working at a very basic level (e.g., a common program, with different applications according to salient differences between the states).

Source:

Landon Thomas, “Pension Dilemma in Europe’s Debt Crisis,” The New York Times, September 30, 2012.