Apologies for the unannounced hiatus. It’ll probably continue for a while longer. I’m home now and still reading a lot, but spending the day with The Sunday Times yesterday drained me of all energy to blog and share. The paper read like the end of the world was nigh. Mainly because of Greece, but also Spain, Egypt, Syria. I feel strange at the moment thinking about anything but the unfolding economic disaster I’m so financially shielded from. But all I can do is helplessly read about it and despair. My knowledge is severely stretched here.
Anyway, last week I linked to Niall Ferguson comparing the Eurozone with American federalism, and supplied a Krugman example of the latter in action. Here’s another – Texas’ savings and loan crisis in the 80s, and how Washington helped out:
Texas GDP was about $300 billion in 1987. So this was equivalent to giving — not lending, not even taking an equity stake — Spain 25 percent of its GDP to bail out its banks. And in the US it wasn’t even treated as an interstate political issue… I think you can make a strong case that if Texas had been an independent country in 1986-87 it would have experienced a huge financial and fiscal crisis.
But if there’s anything positive to say, it’s that we have little reason to expect Europe to descend into a set of autocracies, despite much doom-mongering to the contrary. Jay Ufelder has compiled the historical lessons of political science:
The empirical evidence on economic performance actually ends up supporting the “lock-in” argument from the modernization model. In the period covered by our cross-national data sets, recessions have sometimes helped to undo new democracies, but wealthy, long-established democracies like Europe’s have proved immune to these maladies.