Thursday, December 29, 2011

Contrasting the U.S. and Europe


The United States has common welfare provided by the central government. This allows the less productive states and regions live within a framework where there are more productive states and regions. Europe doesn’t have that nor was it considered in the fiscal union proposal. The fiscal union proposals are designed to have the lower productive countries live within their means. This will create a stark contrast between countries and regions. While the poor states and regions in the U.S. can be very poor, the poor are much better off than the poor will ever be in Greece, Italy, Spain, and Portugal without central European welfare should the fiscal union actually happen.

The European countries that are doing well are up to their eyeballs in debt from their own individual social benefit systems.  And they can't raise their taxes any further because they are taxed to the max.  The good economies have little surplus they can give to maintain the life styles of the people in the countries not doing well.

The U.S. has more room to borrow.  But why become like them?  Why raise our taxes and borrow to the point where taxes can't be raised any further and borrowing has reached its limit.  There is only one way from that point and it is a decline in lifestyle.

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