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Why Europe Can’t Compete Globally

Because their is no Europe! It’s popular to compare each country in Europe to states in the US, and for all the similarities, there are a host of important differences. There are a host of different languages, legal systems, and borders. Workers can’t move as freely between countries as we can between states. Even the way the Euro Zone governs itself is decades behind.

The European Union functions a lot like the US would have if the South had won the civil war: Individual countries laws trump Euro Zone policy (State supremacy), national leaders are more powerful than Eurozone delegates (governors vs federal senators), and which geographical areas get the benefits of a policy is a bigger deal than the policy itself. To contrast:

The United States has rich and poor regions, but the 50 states are forced to run balanced budgets, and there is greater mobility within the nation, based on a shared language and culture [and lack of interstate immigration laws]. Major national policies, like President Obama’s health care plan, are not judged primarily in terms of which states win and lose; in fact the largely opposed “red states” get a lot of the benefits through higher Medicaid subsidies.

via Economic View — Greece May Not Be as Rich as It Looks — NYTimes.com.

Even within some European countries there is a constant struggle over centralization of power. In Spain, regional governments control 40% of central government spending, and are always fighting each other for bigger pieces of the federal pie. Living in the US, it is easy to forget just how well defined and relatively well functioning our federal system of government works compared to almost every other similar government out there.