One of the benefits of being in a federation—as
distinct from an international organization—is that states in fiscal
trouble can benefit from redistribution through a federal center. In other
words, federalism provides a safety buffer that is lacking at the international
level. E.U. finance ministers agreed on March 30, 2012 to create a
permanent bailout fund for states that have adopted the euro. The New York
Times reports that questions persisted “about whether the fund,
even at about $1 trillion, will be sufficient to deal with crises” in large
states like Spain and Italy, which are comparable to Illinois and California in
the U.S.[1] Mudding the water, the Times incorrectly refers to the bailout fund as
the E.U.’s IMF: “(T)he “bailout mechanism . . . is meant to be a European
equivalent of the I.M.F.”[2] However, the term “bailout fund” itself comes from
the TARP, which was not the U.S.’s IMF.
The complete essay is at Essays on Two Federal Empires, available in print and as an ebook at Amazon.
1. James Kanter,
“Europe Agrees to Bailout Fund for Euro of Over $1
Trillion,” The New York Times, March 30,
2012.
2. Ibid.
