The €35 Billion E.U. Loan to Ukraine: One E.U. State as a Destabilizer

On September 20, 2024, it was announced that the E.U. would “raise a €35 billion loan to support the Ukrainian economy and military.”[1] At a press conference next to Ukraine’s president Zelenskyy, the E.U.’s president said, “Russia keeps targeting your civilian energy infrastructure in a blatant and vicious way to try to plunge your country in the dark.”[2] So the loan stood to impact the Ukrainian people directly and significantly. It would be a shame if the principle of unanimity in the European Council would stand in the way of the Ukrainian people being warm during the upcoming winter. This is a very tangible way for people to grasp just how real the costs are of state governments having vetoes over a significant number of E.U. competencies (i.e., enumerated powers). “The European Union is here to help you in this challenge to keep the lights on, to keep your people warm as winter is just around the corner, and to keep your economy going as you fight for survival,” Von der Leyen said at the news conference.[3] Hungary’s Viktor Orbán stood in the way, however, to securing the collateral for a long enough period to render the loan (an any from the U.S. based on the collateral) secure. 

The full essay is at "E.U. Loan to Ukraine."

---

1. Jorge Liboreiro, “EU to Raise €35 Billion Loan for Ukraine Using Russia’s Frozen Assets, Von der Leyen Says,” Euronews.com, September 20, 2024.
2. Ibid.
3. Ibid.

On the U.S. Government’s Budget Deficits and Debt: American Democracy Unhinged

It is true that a government’s budget can be read as a blueprint of priorities in terms of what is valued, and what is not so highly valued. The blueprint itself, as a whole, also evinces a priority in terms of values. As the big-ticket items, such as large spending categories and massive tax-cuts, get the most attention, whether a budget is in balance can go by the wayside, and what that says about the electorate (and thus the state of democracy) can easily be missed. Ultimately, public policy and even the votes of the elected representatives point back to the popular sovereign, the People—more specifically, the electorate, and its values. By 2024, the deficit and accumulated debt of the U.S. Government had reached such gigantic numbers that something could be said to be amiss concerning those values. The underlying culprit, which can be said to be an illness that is human, all too human, had by then infected American democracy beyond the wherewithal of virtually any elected federal representative to enunciate well enough that the electorate could look clearly at itself, and thus size itself up beyond the partial diagnoses that can be found in partisan attacks.

The full essay is at "U.S. Government Deficits and Debt."

On the Social Psychology of Rising Credit-Card Debt: A Reflection of American Society?

It is perhaps too easy to point to economic reasons for an increase in debt within a society. The Wall Street Journal reported during the first quarter of 2020 that credit-card debt in the U.S. “rose to a record in the final quarter of 2019 as Americans spent aggressively amid a strong economy and job market, and the proportion of people seriously behind on their payments increased.”[1] The record $930 billion, according to the Federal Reserve Bank of New York, was “well above the previous peak seen before the 2008 financial crisis.”[2] After critiquing the economic explanation, I will suggest that a social-psychological mentality or attitude may be behind not only the rising debt, but also other disappointing manifestations in the contemporaneous American society more broadly speaking.

The full essay is at "A Sordid Mentality Underlies Credit-Card Debt"

---

1. Yuka Hayashi, “Credit-Card Debt in U.S. Rises to Record $930 Billion,” The Wall Street Journal, February 11, 2020.

2. Ibid.

Western Banks Lending to Asia's Expanding Middle Class: Profit vs. Planet

In April 2013, debt levels in Asia were reaching record levels as international lenders were extending short-term loans to a growing middle class. Non-mortgage consumer credit in Asia outside of Japan had increased 67% from 2007 to reach $1.66 trillion by the end of 2012. This credit included credit cards and loans for cars, electronic products, and appliances. Outside of Japan, Asian car and motorcycle loans nearly doubled from 2007 to 2012, to reach a record $219.7 billion. Appliance and electronics loans also more than doubled, reaching a high of $10.9 billion. Meanwhile, credit-card loans grew by 90% to reach a record $234.1 billion, according to Euromonitor. The incentive for the banks is not difficult to fathom. At the time, more than half of the world’s middle class was expected to be in Asia by the end of the decade. That translates yearly into more than 100 million additional people per year. For the banks, this was an opportunity since at least the beginning of the decade because growth was not possible in the European Union and the United States on account of the financial crisis of 2008 and the ensuing European debt-crisis that extended well into 2013. The European Commission of the E.U. was also working on regulatory proposals that would limit the incentives of mortgage servicers to produce too many “bubble-creating” mortgages. 

So Western banks had an incentive to look east for fruitful markets. Interesting, government regulators in China, Malaysia, and Indonesia had began reining in mortgage, credit-card and auto/motorcycle lending, perhaps in fear of an Asian financial crisis. Had Western bankers learned their lesson, or were they unwittingly bringing their reckless mentality to Asia? Two levels of concerns can be extracted from this case. I contend that the more immediate concerns were crowding out attention that ought to have been paid to the larger, but longer-term, problems.

The full essay is at "Lending to China's Middle Class."

More people=More cars=More pollution    source: Businessweek

A Conflict of Interest at the U.S. Department of Education Keeps Students on the Hook

A conflict of interest can be viewed as two conflicting roles, wherein the one entailing more public responsibility is compromised or eclipsed by the other. The ongoing temptation itself may be sufficient grounds ethically to end or transfer the potentially exploitive role. In other words, sometimes the solution is as simple as ending the potentially encroaching task or role. When the institution is a governmental agency, selecting or creating another agency to perform the task is one alternative; privatizing it is another. Either way, deconstructing an institutional conflict of interest by separating problematic role-combinations is advisable even in cases in which the more private-benefits role has not corrupted the more public-benefits role. The U.S. Department of Education provides a useful case in point.

The complete essay is at “U.S. Department of Education.”

The E.U.: The Growth Union

In relying only on austerity and cheap bailout loans, the German-led strategy has proffered a false sense of European integration in the E.U. Even as expanding the bailout funds to roughly 800 billion euros and strengthening the E.U.’s means of enforcing limits on state deficits and debt are along the line of continued incremental shifts of governmental sovereignty from the state governments to that of the E.U., the related austerity (and recession) sparked a populist backlash in several states. At the state level (and this level has a major role at the E.U. level—unlike in the U.S.), the state-rights (i.e., anti-E.U.) parties have been the beneficiaries even if they could not gain outright majorities. The National Front in the state of France is an obvious example, as it captured 18% of the vote in the run up to the general election in 2012.  Other things equal, such a spike translates into brakes on further European integration in the medium term.

The full essay is in Essays on the E.U. Political Economy, available in print and as an ebook at Amazon.

The Payroll Tax Cut: A Luxury?

As U.S. deficits and thus the federal government's debt had been increasing since the Clinton Administration in the late 1990s, proposals for a payroll tax-cut entailed risking the financial condition of the U.S. Government. To be sure, increasing government spending above inflation was risky too. Here, though, tax policy as it relates to deficits, and thus debt, is analyzed. 

The full essay is at "The Payroll Tax Cut."

Is the Moneyed Interest Oriented to Ending American Federalism?

James Madison wrote in Federalist #10, “a rage for paper money, for an abolition of debts, for an equal division of property, or for any other improper or wicked project, will be less apt to pervade the whole body of the Union, than a particular member of it.” That is to say, it is in the interest of the wealthy (and especially creditors) that federalism be replaced by a consolidated central government.

The full essay is at "The Moneyed Interest and Federalism in the U.S."