Friends in high places

I see a lot of concern expressed but I never see reasoning why an EU-like arrangement for our hemisphere is bad. Please consider a follow-on blog outlining your concerns.

The tension between state and federal rights goes back to before the founding of our country. "Loss of Sovereignty" is argued in our courts everyday. If we become an "NA-EU" is there any doubt American values and priorities would be dominant?

Rod, what is so surprising about elites wanting to keep their positions, wealth and power ? It's what they do. (Read your Vifredo Pareto and Gaetano Mosca.) Those in control want to remain in control, those out of control want to displace the elites and secure control for themselves and their families/Houses/lines.

Dominance games, struggles for resources and vicious, bloody conflicts for power: they're what Humans do. (The only good thing about them is that they're SO entertaining to watch !)

Your servant,

Lord Karth

Rod, you've got two completely separate topics in one blog post. Pardon me while I address them separately:

1) Small bankers have a totally legitimate gripe about the "too big to fail" phenomena. The feds clearly are showing favoritism to huge Wall Street firms. However, it does not therefore follow that huge banks should be allowed to fail, since the repercussions may be devastating for everybody. A real quandary here.

2) The North American Union is a paranoid fantasy fueled by conspiracy-mongers. The US doesn't want it. Canada doesn't want it. Mexico doesn't want it. Who the hell thinks this is going to happen?

Canadians right now are looking at exchange rates and making jokes about the American Peso. They have a good thing going right now, why would the want to board the sinking ship of the US economy?

Mexicans are by no means willing to hitch their Spanish-speaking wagon to two huge English-speaking economies, not to mention the much tougher anti-corruption laws to which they would be required to submit.

Never gonna happen. No way, no how. And everyone outside of the Paulite fringe already knows that.

I wouldnt jump off the deep end yet. The world is always changing and the old tensions are always present. Technology has made the world smaller and much of the economy is being globalized. There will be winners and losers in this process. Michigan lost auto manufacturing. Silicon valley won on computers.

This process is further magnified by our political system which swings back and forth between pro-business and anti-business, pro-worker and anti-worker. There may come a time when we will need the economy of scale and assets to form a NA union. That or become a second tier economy. We arent there yet. Do you think cheap consumer goods are always bad?

Since you mentioned Bear Stearns again my reading project for the day is to try to figure out why we did away with the uptick rule on shorts. I dont remember the purported reason. The Fed is investigating a bear run but seems to me it would be awful hard to prove.

Steve

What's so terrible about the EU? My European friends and family are pretty much happy with it (people who sell across former national borders are deliriously happy) and I haven't seen a decline in "democracy" on the Continent. If the Europeans are happy, who are we to complain?

That doesn't mean it would work here; circumstances are quite different. In fact the United States is already the original prototype for the EU. In the 1850's many felt that local sovereignty had been compromised by the Union; unfortunately the most important "sovereignty" issue for most of these people turned out to be human bondage, which displays other difficulties (!!).

I interned at the CFR about 15 years ago. I wish I could discuss some of the deliciously wicked plans we were devising back then but I might end up dead if I tell you.

NAU:

I don't see it happening anytime soon. Jacksonian America would crucify any politician that seriously pushed such a thing.

That being said, free trade & free movement of labor across the Southern border wouldn't bother me overmuch if Mexico's per-capita was closer to Canada's (as opposed to Venezuela's).

Bear Sterns:

Correct me if I'm wrong, the BS bailout was mainly aimed at preventing the fire-sale of BS assets that bankruptcy would likely have triggered. Perhaps the bondholders & counterparties are getting "bailed out" (although mainly by JP Morgan's guarantee, not the Fed) by this deal, but BS employees & shareholders certainly took it in the chin. As they probably should have (unless one believes that BS was the victim of someone else's mistakes rather than its own).

If a BS collapse wouldn't have endangered the stability of the financial system, of course, then a bailout probably wasn't necessary.

Paranoia - that's rich coming from Mr Novak, who was so paranoid about the self-dealing oil-for-food cronies in Baghdad that he went calling at the Vatican to seek absolution for the neocon hubris... and now oil is $100 a barrel!

With coolheaded rationalists like him who needs hotheaded kooks?

Seriously Rod, the issue of loss of sovereignty isn't to obsess over which point on the compass the marauders arrive on our borders. The geographical reality is they are already safely ensconced in our urban centers... the reason Mexico is still part of the third world is because their elite's own 97% of the productive factors of their economy - the land, which they "rent" out to labor at subsistence wages that run no risk of damaging their cartel on the employment pool (don't like the job, fine you're fired! We've plenty more hicks in the hinterland we can truck in)

In truth most of America is a blessing to a family man seeking to pitch his tent since cheap land is so abundant (similar sized homes in most of Europe and urban centers in Asia are multiple times more costly), the problem is twofold:

___the land is not being used as productive capital because it is covered in urban blight from last centuries myriad "boom and bust" cycles, or is bound up in tax liens issued as civic bonds to leverage current local government spending

___the remaining suburban or rural portion of collateral that this land represents is in the hands of the mortgage bankers and increasingly the 2 GSEs (Fannie Mae, Freddie Mac) which help maintain the fantasy that these AAA papers can be held as "cash reserves" at the Fed. The US is de-facto bankrupt if global capital delines the invitation to auctions of treasury notes the Fed needs to purchase up the bad debts... Reagan's "trickle-down" economics gives birth to Bush's "domino deficits"

Capitalism is the answer, but it has to be truely "laissez-faire" (land-based wealth creation by owner occupiers) not mercantilist speculation based on paper instruments being freely traded across borders, borders that the human factors of capital cannot freely cross...

The bondage you imagine (and rightly fear) is not that foreigners' and their pesos (or Rials or Yuan) shouldn't be let in, but that your dollars won't suffice to pay for you to get out... that was the fate of persecuted millions under the Dritte Reich and the raison d'etre for the founding of the State of Israel...

...where it is considered a state offense for a Jewish citizen to sell their patrimony (and increasingly considered an offense for non-citizens to demand their property rights be respected at all, as difficulties of Catholic and Orthodox arehaving with the land titles of churches, schools and convents that lie in the way of "progress" and "development" demonstrate)

...why do we not learn from history? Woe betide us!

Am I oversimplifying it to suggest that the biggest difference between the EU and the NAU is that, in the EU, there's an established social safety net that would protect workers in the richer countries from the effects of losing their jobs (or having their pay lowered) due to the inclusion of lower-paid workers-- while in the hypothetical NAU, we'd all be on our own?

The biggest gripe I hear against a North American Union isn't so much sovereignty as an accelerated loss of jobs to Mexico. The NAFTA (or NARCO, or whatever) superhighway maps I've seen show a southern terminus at a Mexican port-- the idea has to be that goods can be offloaded there and trucked to the US at a savings, if you have Mexican dock workers unloading them and Mexican truckers bringing them to El Norte.

I'm unfamiliar with the European experience, though-- has the export of manufacturing jobs from Western to Eastern Europe (assuming there has been such, and I think there has been) resulted in negative consequences among the Western European countries? And if not, has it been because of the safety net and greater controls over businesses that those governments exercise?

Kristen,

Not surprisingly, economists disagree on this. I believe there's no substantial difference between money and credit until you enter the terminal phase of a secular (long-term) credit cycle. Since we haven't been in such as phase since the 1930s, the difference has been academic until recently.

The difference between the EU and NAU is constant war on human rights in the EU, especially freedom of speech. A NAU is likely to unite under American constitutionaism as the EU comes ever more to resemble Orwell's Ministry of Truth and an anarcho-fascist state. As the American constitution allows for more freedom than the Mexican or Canadian elites will ever permit their people to have, the NAU will stop at political integration, unlike the EU which has no stopping point until it becomes like the USSR.

I'm unfamiliar with the European experience, though-- has the export of manufacturing jobs from Western to Eastern Europe (assuming there has been such, and I think there has been) resulted in negative consequences among the Western European countries? And if not, has it been because of the safety net and greater controls over businesses that those governments exercise?

Well, let's see. I am looking at last week's Economist. The running 12 month trade balance for the Eurozone is +$39billion. Germany, hardly a low wage country is running +$257 billion, nearly China's trade surplus of $265bn. Denmark, Sweden, and Switzerland are also running solid trade positive trade balances. The Eurozone's GDP grew by 1.6% last quarter, nearly triple the US.

Winston Smith

"My worry is that our leaders -- political and financial -- envision taking us the way of the European Union, which has stolen in plain sight popular sovereignty from European nations in exchange for greater material prosperity. This worry is exacerbated by my conviction that the American people would go along with it unblinkingly, as long as the cheap consumer goods keep flowing. Am I being, you know, paranoid?"

While I doubt an NAU is likely to come into being any time soon, and as one commenter pointed out above, if it did it would be under US cultural and economic dominance, why do you think that if it is created, the assent of the American people would come about "unblinkingly", the implication being that they would go along in some sort of ignorance? If the creation of an NAU would create better economic prosperity for most Americans, and they chose to support an NAU because of such prosperity, despite the political changes that it would create, that wouldn't be "unblinking" or blind support. It would be the decision of a free people to change their political and economic circumstances.

While I can understand that you may disagree with an NAU for serious and respectable policy reasons, I don't see the reason for the fear that it is some secret spectre that will come about without the knowledge and consent of the American populace. If anything, I wonder if the unspoken fear here isn't that this is something being done secretly, but that most people would (if not today, then at some point in the coming decades) accept it with eyes wide open, national sovereignty conservatism and crunchy conservatism be damned.

oops we Latins and our italic face my bad

The great thing about Christianity is that anyone can be one. You just have to say you are, and then say lots of Christiany things.

I'm a Christian too! I think everyone should be one.

Happy Blessed Easter, fellow Christians!