5 ms·

On the other hand though, the Eurozone population pretty much equals that of the US, and surely there are a bit underdeveloped US states compared to the overdev

by mojuba 4y ago

On the other hand though, the Eurozone population pretty much equals that of the US, and surely there are a bit underdeveloped US states compared to the overdeveloped ones, right? So why is the EU bad idea and the US is not?

seydor 4y ago
Because US is a transfer union. In EU you have a lot of transfer unions within individual states (eg. East-West germany, North-south italy). When a greek moves to germany for work, the money does not flow between the two countries
- mojuba 4y ago
  How do you mean? Euro transfers within the EU work like domestic ones, it's a rule. I've moved a few EU countries in recent years and I've been able to use the same bank (Revolut) for everything everywhere I moved.
  - jsnell 4y ago
    They mean a policy of redistribution of wealth between countries, not the mechanics of a bank transfer.
  - mantas 4y ago
    Transfers as in better-off regions supporting worse-off ones.
  - seydor 4y ago
    I mean in the sense of "rich countries aid the poor ones" https://www.dbresearch.com/PROD/RPS_EN-PROD/A_European_transfer_union%3A_How_large%2C_how_powerful/RPS_EN_DOC_VIEW.calias?rwnode=PROD0000000000435631&ProdCollection=PROD0000000000461501 https://www.dbresearch.com/PROD/RPS_EN-PROD/A_European_trans...
- Kudos 4y ago
  I'm not sure that's accurate. For example, Ireland has been the net recipient of €40B since joining the union.
- Mordisquitos 4y ago
  If you mean transfer as regards banking, the whole EU (plus EFTA and the UK) are covered by the Single Euro Payments Area, within which all bank transfers must be subject to the same rules and fees as national ones (notwithstanding currency exchange fees if applicable). If you mean transfer in a more abstract fiscal sense, not even individual EU states themselves are homogeneous regarding their internal fiscal policies. Some are federal, such as Germany, and some are highly centralised, such as France. Then you have the case of Spain where all 17 autonomous communities (≈pseudofederal states) have a small leeway regarding income tax and must follow the baseline central policy, but two regions in particular—the Basque Country and Navarre—have fully devolved powers regarding taxation due to "fueros", i.e. historical rights.
deleted 4y ago
[deleted]
macco 4y ago
It's about fiscal policy. The EU has no unified fiscal policy. It can't raise taxes for transfers from north to south. Almost every economist said in 98 that the euro is a bad idea. And it is for the south of Europe. It's great for the north and Germany especially, but for the south it is and has a killer. In my opinion, the Euro will ultimately break the current EU.
WastingMyTime89 4y ago
That’s because the euro zone is a scam. Rich countries in the north especially Germany put in place policies akin to dumping and were shielded from the effects it should have had on their money by the economic gap with the poorer countries in the south. Southern countries found themselves handicapped by an overvalued currency. Meanwhile politicians in the north refused any form of transfers and keep popularising the idea that southern countries are poorer because they lack discipline.
- asldjajlfkj 4y ago
  It’s not! Currency fluctuations don’t allow for global trade. That’s why after WW2, the Bretton-Woods system was established with fixed exchange rates. After that came to its end, Europe created a new system. Rates were not pegged to gold but to other European currencies (only 2% deviation allowed, 6% for Italy and Britain). That created a problem for countries that couldn’t keep up with the German economy: Stabilizing the exchange rate was getting very expensive for those countries. Germany started with zero gold reserves after WW2 and now has second place because of this system. The solution: a common currency. Germany gave up the privilege of getting paid for their strong currency so weak currency countries could stay in the system. A lot of money for an economically integrated Europe. Italy gave up some sovereignty over the money supply and pledged not to spend too much. Even without the euro, Italy had an “overvalued currency” that held it back because it kept devaluing its currency with no economic growth and, yes, no financial discipline (although, of course, Italians don’t lack discipline). The introduction of the euro relieved Italy of much of the burden. While I agree that there was a lot of populist rhetoric in the northern countries, pretending that the euro is bad for Italy and good for Germany is also populistic. The reverse is true. If you mean fixed exchange rates (going back to the 70s) are bad for Italy then one can discuss that. (But there’s a lot of economic literature against that – just imagine California and Kentucky had different and free-floating currencies and how trade would be impaired)
  - WastingMyTime89 4y ago
    There are a lot of confusion in your reply. > Currency fluctuations don’t allow for global trade. I’m glade to learn every country in the world with their own currency can’t participate in global trade. Obviously fluctuation is not an issue for trading. I’m guessing that by the pegging to each other you are mentioning the ECU and European Exchange Rate Mechanism. Its goal had very little to do with trade. It was mostly an attempt to avoid speculation and large monetary fluctuations which made debt management more costly for countries. It collapsed extremely fast and the southern countries were amongst the first to exit the system for reasons which are very close to why the euro is so poor for them. > The solution: a common currency. Germany gave up the privilege of getting paid for their strong currency so weak currency countries could stay in the system. A strong currency is detrimental to a country export. I’m not even addressing the rest of the paragraph as it doesn’t make much sense. Why are singling Italy by the way? The problem is the same for Spain, Portugal, Greece, in some measure Ireland and even somewhat impact France. You are also completely failing to address the distortion of the German economy which are a large part of the issues especially after Hartz IV. If you take a look at the German wage levels, saving rates and trade balance, you will see that their money should be much stronger than the euro is.
throwayyy479087 4y ago
The difference in per-capita GDP between the poorest and wealthiest US states is small compared to EU nations. I did some quick research: Luxembourg GDP Per Capita: 114,370 Ireland GDP Per Capita: 83,990 ----- Romania GDP Per Capita: 12,510 Bulgaria GDP Per Capita: 9,850 vs: New York GDP Per Capita: 93,463 ----- Mississippi GDP Per Capita: 42,411 Yes, NY transfers wealth to Mississippi but the scale of transfer and the relative number of wealthy states vs poor (there's like 5 in the deep south) means the dynamic is completely different. Without significant development in ex-Soviet states I'm not sure how the EU can hold together longterm.
- mojuba 4y ago
  Neither Romania nor Bulgaria use the Euro as a currency. I meant literally the Eurozone - https://en.wikipedia.org/wiki/Eurozone https://en.wikipedia.org/wiki/Eurozone
- vandreas2 4y ago
  There is significant development in ex Soviet states https://tradingeconomics.com/romania/gdp-per-capita https://tradingeconomics.com/romania/gdp-per-capita https://tradingeconomics.com/estonia/gdp-per-capita https://tradingeconomics.com/estonia/gdp-per-capita https://tradingeconomics.com/bulgaria/gdp-per-capita https://tradingeconomics.com/bulgaria/gdp-per-capita https://tradingeconomics.com/poland/gdp-per-capita https://tradingeconomics.com/poland/gdp-per-capita https://tradingeconomics.com/lithuania/gdp-per-capita https://tradingeconomics.com/lithuania/gdp-per-capita
- mdemare 4y ago
  Luxembourg is extremely small, and Ireland's GDP is artificially high due to tax evasion by multinationals. Excluding those, the richest country in the Eurozone is Denmark, at $61000 per capita, and the poorest is Poland, at almost $16000 per capita.
  - mojuba 4y ago
    Poland is not in the Eurozone, and as I said in the sibling comment, neither is Romania or Bulgaria. Eurozone is mostly wealthy countries, so the parent commenter's argument doesn't work here.

by mojuba 4y ago

seydor 4y ago

Because US is a transfer union. In EU you have a lot of transfer unions within individual states (eg. East-West germany, North-south italy). When a greek moves to germany for work, the money does not flow between the two countries

mojuba 4y ago
How do you mean? Euro transfers within the EU work like domestic ones, it's a rule. I've moved a few EU countries in recent years and I've been able to use the same bank (Revolut) for everything everywhere I moved.
- jsnell 4y ago
  They mean a policy of redistribution of wealth between countries, not the mechanics of a bank transfer.
- mantas 4y ago
  Transfers as in better-off regions supporting worse-off ones.
- seydor 4y ago
  I mean in the sense of "rich countries aid the poor ones" https://www.dbresearch.com/PROD/RPS_EN-PROD/A_European_transfer_union%3A_How_large%2C_how_powerful/RPS_EN_DOC_VIEW.calias?rwnode=PROD0000000000435631&ProdCollection=PROD0000000000461501 https://www.dbresearch.com/PROD/RPS_EN-PROD/A_European_trans...
Kudos 4y ago
I'm not sure that's accurate. For example, Ireland has been the net recipient of €40B since joining the union.
Mordisquitos 4y ago
If you mean transfer as regards banking, the whole EU (plus EFTA and the UK) are covered by the Single Euro Payments Area, within which all bank transfers must be subject to the same rules and fees as national ones (notwithstanding currency exchange fees if applicable). If you mean transfer in a more abstract fiscal sense, not even individual EU states themselves are homogeneous regarding their internal fiscal policies. Some are federal, such as Germany, and some are highly centralised, such as France. Then you have the case of Spain where all 17 autonomous communities (≈pseudofederal states) have a small leeway regarding income tax and must follow the baseline central policy, but two regions in particular—the Basque Country and Navarre—have fully devolved powers regarding taxation due to "fueros", i.e. historical rights.

deleted 4y ago

[deleted]

macco 4y ago

It's about fiscal policy. The EU has no unified fiscal policy. It can't raise taxes for transfers from north to south. Almost every economist said in 98 that the euro is a bad idea. And it is for the south of Europe. It's great for the north and Germany especially, but for the south it is and has a killer. In my opinion, the Euro will ultimately break the current EU.

WastingMyTime89 4y ago

That’s because the euro zone is a scam. Rich countries in the north especially Germany put in place policies akin to dumping and were shielded from the effects it should have had on their money by the economic gap with the poorer countries in the south. Southern countries found themselves handicapped by an overvalued currency. Meanwhile politicians in the north refused any form of transfers and keep popularising the idea that southern countries are poorer because they lack discipline.

asldjajlfkj 4y ago
It’s not! Currency fluctuations don’t allow for global trade. That’s why after WW2, the Bretton-Woods system was established with fixed exchange rates. After that came to its end, Europe created a new system. Rates were not pegged to gold but to other European currencies (only 2% deviation allowed, 6% for Italy and Britain). That created a problem for countries that couldn’t keep up with the German economy: Stabilizing the exchange rate was getting very expensive for those countries. Germany started with zero gold reserves after WW2 and now has second place because of this system. The solution: a common currency. Germany gave up the privilege of getting paid for their strong currency so weak currency countries could stay in the system. A lot of money for an economically integrated Europe. Italy gave up some sovereignty over the money supply and pledged not to spend too much. Even without the euro, Italy had an “overvalued currency” that held it back because it kept devaluing its currency with no economic growth and, yes, no financial discipline (although, of course, Italians don’t lack discipline). The introduction of the euro relieved Italy of much of the burden. While I agree that there was a lot of populist rhetoric in the northern countries, pretending that the euro is bad for Italy and good for Germany is also populistic. The reverse is true. If you mean fixed exchange rates (going back to the 70s) are bad for Italy then one can discuss that. (But there’s a lot of economic literature against that – just imagine California and Kentucky had different and free-floating currencies and how trade would be impaired)
- WastingMyTime89 4y ago
  There are a lot of confusion in your reply. > Currency fluctuations don’t allow for global trade. I’m glade to learn every country in the world with their own currency can’t participate in global trade. Obviously fluctuation is not an issue for trading. I’m guessing that by the pegging to each other you are mentioning the ECU and European Exchange Rate Mechanism. Its goal had very little to do with trade. It was mostly an attempt to avoid speculation and large monetary fluctuations which made debt management more costly for countries. It collapsed extremely fast and the southern countries were amongst the first to exit the system for reasons which are very close to why the euro is so poor for them. > The solution: a common currency. Germany gave up the privilege of getting paid for their strong currency so weak currency countries could stay in the system. A strong currency is detrimental to a country export. I’m not even addressing the rest of the paragraph as it doesn’t make much sense. Why are singling Italy by the way? The problem is the same for Spain, Portugal, Greece, in some measure Ireland and even somewhat impact France. You are also completely failing to address the distortion of the German economy which are a large part of the issues especially after Hartz IV. If you take a look at the German wage levels, saving rates and trade balance, you will see that their money should be much stronger than the euro is.

throwayyy479087 4y ago

The difference in per-capita GDP between the poorest and wealthiest US states is small compared to EU nations. I did some quick research: Luxembourg GDP Per Capita: 114,370 Ireland GDP Per Capita: 83,990 ----- Romania GDP Per Capita: 12,510 Bulgaria GDP Per Capita: 9,850 vs: New York GDP Per Capita: 93,463 ----- Mississippi GDP Per Capita: 42,411 Yes, NY transfers wealth to Mississippi but the scale of transfer and the relative number of wealthy states vs poor (there's like 5 in the deep south) means the dynamic is completely different. Without significant development in ex-Soviet states I'm not sure how the EU can hold together longterm.

mojuba 4y ago
Neither Romania nor Bulgaria use the Euro as a currency. I meant literally the Eurozone - https://en.wikipedia.org/wiki/Eurozone https://en.wikipedia.org/wiki/Eurozone
vandreas2 4y ago
There is significant development in ex Soviet states https://tradingeconomics.com/romania/gdp-per-capita https://tradingeconomics.com/romania/gdp-per-capita https://tradingeconomics.com/estonia/gdp-per-capita https://tradingeconomics.com/estonia/gdp-per-capita https://tradingeconomics.com/bulgaria/gdp-per-capita https://tradingeconomics.com/bulgaria/gdp-per-capita https://tradingeconomics.com/poland/gdp-per-capita https://tradingeconomics.com/poland/gdp-per-capita https://tradingeconomics.com/lithuania/gdp-per-capita https://tradingeconomics.com/lithuania/gdp-per-capita
mdemare 4y ago
Luxembourg is extremely small, and Ireland's GDP is artificially high due to tax evasion by multinationals. Excluding those, the richest country in the Eurozone is Denmark, at $61000 per capita, and the poorest is Poland, at almost $16000 per capita.
- mojuba 4y ago
  Poland is not in the Eurozone, and as I said in the sibling comment, neither is Romania or Bulgaria. Eurozone is mostly wealthy countries, so the parent commenter's argument doesn't work here.