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OK, I'm fed up with this.

There's yet another front page diary pointing out that a Red State or county is a net money sink.  (In this case, it's Wyoming, but that's kind of irrelevant.  I've certainly inhabited enough red-tinged money sinks in my life to understand the joke.)  Here's the problem with the laughter:  Greece.

If you follow the recent diaries, you'll see a lot of them mocking the EU, and particularly mocking Germany, for its absurd stinginess with paying off the Greek debt.  I don't happen to disagree that Germany ought to simply suck up the cost and move on, provided the EU can find a way to make sure that Greece's irresponsibility isn't rewarded again.  (There's utterly no reason to not pay off the Italian, Portuguese, Spanish, or Irish debts.  Seriously.)

Now you can ask why I feel that I have the right to make such a proclamation, seeing as how I live here in the US, far from European shores.  The answer is simple: we've been dealing with this kind of problem for several hundred years, and we've been doing so quite effectively, thank you very much.  We collect taxes nationally, and redistribute them equally nationally...and, while we're at it, we keep our little Greeces afloat, to say nothing of our Italies, our Portugals, and, yes, our Irelands.

That begs the question: why?  What do we know that Germany and France have forgotten, or, perhaps, never learned? Follow me across the orange ball of twine, and I'll tell you my guess.

I want you to think about what would happen if we cut off transfer payments to those who currently receive them.  We'd see an immediate drop in the standard of living in the poor, but we'd also see a sharp increase in the wealth of some regions.  Seattle and San Francisco, for instance, would suddenly stop sending more to DC than they got back.  So would Texas.  Arkansas, North Carolina, and Georgia?  Yeah, no, not so much; in fact, we'll be able to hear their economies crash on the Moon, interplanetary vacuum or no.

What happens then?

Well, I want you to think about who buys all those copies of Windows produced in Redmond, WA, or who clicks all those ads served up from Mountain View?  Remember all those Red Staters who are sucking the Federal teat?  Yeah...them.  Money spent on the poor stimulates the economy more effectively than does money spent on the rich, in fact.

So why pump money to poor parts of the Union?  Greed, pure and simple.  That money will come back to the richer parts of the country, just as it always has.  And that is what France and Germany have forgotten, or, perhaps, lacking our centuries of experience with moderna modern, unified economy, just never learned.  And that's why Europe is in crisis.

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Comment Preferences

  •  It's the hypocrisy (5+ / 0-)

    The objection isn't to red states recieving more $ than blue states, the objection is their hypocrisy in decrying "federal spending" while recieving so much of it.

    The world will end not with a bang, but with a "Do'oh!"
    "America is a free speech zone."

    by Love and Death on Mon Feb 27, 2012 at 04:39:10 PM PST

  •  finally (1+ / 0-)
    Recommended by:
    Kestrel228

    some US diary about the current financially catalysed, but essentially political crisis of the Eu that makes sense. Thank you!

    yes I, being a German, totally agree with you, we should buck up and pay, and the Greeks will have to accept someone others big eyes to look over their shoulder at their budgeting for the foreseeable future, but thats no different than in fact happens within, say, germany too. Laenderfinanzausgleich. Its written in the German constitution (or has been interpreted into it by the Verfassungsgericht) that one of the primary roles of the state is to ensure basically comparable preconditions of living in all parts under its hegemony. Now with the people of Europe wanting a common currency (and they do want it, let there be no doubt), thats just the other side of it.

    at current, all sides misuse these happenings to try and change Europe for good, in their own desired ways. Especially the right wing mobilises on the money redistribution theme, trying to get the people to swear off the European unification and embrace a renationalisation, under the pretext of opting for one´s own wallet. In truth, we all would make ourselves the poorer for it. But like everywhere else it is easy to tell sweet lies and less easy to face rough responsibility.  

  •  Greece had help (1+ / 0-)
    Recommended by:
    Utahrd

    Part of the ordinary EU budget are schemes to help the poorer nations and regions bring their economies up to similar levels to the rest of the Union. In the lead up to the millenium Greece was one of the main beneficiaries of these regional development funds. When the new Accession countries in the eastern part of Europe were preparing for full membership, they received more benefit because of their relative deprivation.

    What did successive Greek governments (if you want to see a hereditary democracy, look up the list of their Prime Ministers) do with the money? Hired more civil servants to buy votes, paid them 13 months salary a year and held an Olympics. About the only thing to come out of that is a nice tram system that links the center of Athens to a crumbling derelict stadium and a yaching marina with no boats.

    It would probably be harsh to point out the two Greek athletes who had a "motorcycle accident" just before they were about to be drugs tested but the cynical view is that the only Olympic sport the Greeks win gold medals at is tax evasion.

    Fight poverty, oppression, hunger, ignorance, disease and aggression wherever they occur.

    by Lib Dem FoP on Mon Feb 27, 2012 at 05:03:08 PM PST

    •  This is frankly the sort (0+ / 0-)

      of BS demonization you see when Americans refer to welfare queens.

      1. Greece did a lot with those development funds. Anyone who has been to Greece from the course of 1990 on knows that it has had huge infrastructure development. Totally brand new highways, subway systems, huge bridges, airports, etc.

      2. Greece has not been one of the biggest beneficiaries because all the investments allocated to it require a 50% marker from Greece. Being a poor country, this meant that Greece used 15% of the funds allocated to it as opposed to the European average of 65% (mostly the richer countries). This means that while the poorer countries receive a lot more investment per capita in allocations, they are much less capable of using those allocations because of the 50% capital requirement.

      3. Greece's civil bureaucracy is no bigger than the rest of Europes.

      4. 13 months salary? What difference does that make? If I work at McDonald's, I get paid 52 times a year. It's irrelevant. The only relevant # is salary, not # of payments. And, do you think Greece is the only EU country with 14 payments?

      5. Greece collects 39.5% in tax revenue to GDP, which makes it on par with the rest of Europe.

      You excel at warped portrayals and demonization of the Greek people.

      There are two kinds of people in this world. The kind who divide the world into two kinds of people, and the kind who don't.

      by upstate NY on Tue Feb 28, 2012 at 10:13:32 AM PST

      [ Parent ]

  •  Love and Death nailed it (3+ / 0-)
    Recommended by:
    Kestrel228, Marie, PatriciaVa

    My own state (California) has one of the largest economies in the world, and I personally have no problem with the support we provide to other states precisely because we have the ability to do so, and we’re all part of the same nation at the end of the day.  I hope they make good use of it.  My issue with this redistribution is the fact that our red state brethren seem not to realize the direction of the cash flow, and follow it up by saying very unpleasant things about us, our politics, and the general state of our immortal souls.  It’s just bad form, to say nothing of the indefensibility of many of their arguments by any objective measure, such as the reality of anthropogenic climate change, which California could be doing more about if we weren’t subsidizing people who clearly believe my home is a pit of moral iniquity.

    •  Fair enough... (2+ / 0-)
      Recommended by:
      PatriciaVa, marsanges

      but you assume we're subsidizing them out of the goodness of our hearts.  We aren't.  We subsidize them from purely cynical reasons; it's good for us.

      So, while I find their pissing and moaning sanctimonious and hypocritical, I also laugh quietly to myself.  "Yeah, we're keeping you aflost, and laughing all the way to the bank.  You don't really want us to turn off the tap, but neither do we.  Now, you go play with your putative morals; don't get in my way, OK.  Go be a good consumer."

      •  Think 1999 Cisco... (0+ / 0-)

        ...when that company had the largest market value, bar none.

        How?

        Vendor financing.

        Cisco was financing the purchase of Cisco products for companies that had no business buying Cisco products.  So Cisco stopped extending loans to companies that would never be able to repay them.

        What happened to Cisco's shares?

        Well, its market value went from 557B (higher than Apple's today) to about 100B today.

        But at least it's still around.

        I'm all for transfer payments in the US, as the US is the United States of America.

        I'm against them in Europe, unless France and Greece agree to a United States of Europe, to be located in Berlin.

        Learn about Centrist Economics, learn about Robert Rubin's Hamilton Project. http://www1.hamiltonproject.org/es/hamilton/hamilton_hp.htm

        by PatriciaVa on Mon Feb 27, 2012 at 06:16:33 PM PST

        [ Parent ]

      •  You misunderstand (0+ / 0-)

        I realize we're not subsidizing them out of the goodness of our hearts.  I want them to recognize that they're being subsidized, and by extension accept the untenable nature of certain related aspects of their political and economic theory.  In short, I wish for them to observe the world and become better educated, as their current understanding of these matters falls far below the minimum coherence threshold.  Does that clarify it?  :-)

        •  Fair enough, but... (0+ / 0-)

          ...how do you think the Germans feel right now?  Exploited, unappreciated, and put on is how they feel -- and, when they do take on the debt, and get snubbed for it, as they will, they'll feel just as resentful as you do, and with equally good cause.

          Just keep telling yourself that you're benefiting from the transfer payments, and that you don't have to like or respect someone you've sold something to.  It will make it easier.

          •  That's fine (0+ / 0-)

            But it still won't address the root of the problem, which is that, fundamentally, most humans neither understand nor care to understand the basics of how economies and ecosystems function; the greatest threat to human civilization is always our own ignorance, and the ecological catastrophe we're cooking up now might just be our last.  That's really what I'm all about; my feelings are a minor quibble in comparison.

            But in terms of what I can actually accomplish with my limited resources, I will try your remedy of self-satisfaction and see how I feel afterwards.  :-)

  •  Wind River, Yellowstone, Grand Teton (0+ / 0-)

    Let's sell Grand Teton National Park and let Nike paint a Swoosh on it.

    Old Faithful sponsored by Viagra.

    We'll cut off Wind River and the other reservations, too.

    I think Wyoming has an air force base we could close, too.  But I'm too lazy to look it up. Closing military bases always makes for a winning election strategy.

  •  About the red states being subsidized... (0+ / 0-)

    I get very annoyed when that gets brought up for two reasons:
    1, I am pretty sure it has always been that way and has more to do with circumstances than with politics, the south has always been poorer and more rural than the north and the north in tern more industrialized. That was true when the south was democratic and the northeast and west coast (at least california) were conservative. and
    2, the people in red states whom understand that their states are being subsidized but try to pawn it off as the fault of blue states. On more than one occassion I have read replies from another site implying that southern states get more federal money becomes liberals from the north move their to retire.
    My annoyance with this argument can be summed up like this: people look at states see they are red and get more money back from the government and they just assume it's because of politics (which in part it is) and don't look for other reasons that have always existed and I get tired of the ridiculous excuses by people who live in red states, always trying to pin their troubles on those "evil, heathen lazy liberals from the blue states". I live in a red state by the way but my city is a democratic stronghold.

    •  Whether a state receives more . . . (0+ / 0-)

      in federal funding than they pay in taxes is actually rather fluid, and has changed over time. For example, through the first half of the 80's California received more in federal funding than they payed in (I don't have data from before 1981 or after 2005).  Same for Colorado from 1986 to 1993.

      To go through all the "blue" states that received more in Federal funding than they payed in taxes:

      California: 1981-1985
      Colorado: 1986-1993
      Connecticut: 1981-1982
      Florida: 1981-2001
      Hawaii: 1981-2005
      Iowa: 1985-2005
      Maine: 1981-2005
      Maryland: 1981-2005
      Massachusetts: 1981-1987, 1989-1992
      New Mexico: 1981-2005
      North Carolina: 1996-2005
      Ohio: 1989-1990, 2000-2005
      Pennsylvania: 1983, 1992-2005
      Rhode Island: 1981-1985, 1990-2004
      Vermont: 1981-1984, 1995-2005
      Virginia: 1981-2005
      Washington: 1981-1989

      on the other hand, some "red" states have paid more in taxes than they received from the government at times

      Alaska: 1982-1995
      Georgia: 1986-1991, 1993-1999, 2003-2004
      Indiana: 1981-2000, 2002-2004
      Kansas: 1981
      Louisiana: 1982-1984
      Nebraska: 1981-1982
      North Dakota: 1981
      Oklahoma: 1981-1984
      Texas: 1981-2005
      Utah: 1996
      Wyoming: 1982-1986, 1993

       (Source: The Tax Foundation http://www.taxfoundation.org/)

      Some states fit the popular 2012 thinking on this issue throughout the last 30 years (Mississippi and New York for example). Others do not.

      PS this is also something of a simplification. Some states have shifted between the "blue" and "red" columns in the last 30 years.

  •  In your efforts to make a point (0+ / 0-)

    you knocked Greece without having an understanding of it, so that makes you no better than the people you're criticizing.

    I see in a response or two that the "Welfare Queen" slurs on Greece continue but with little or no information to back up such claims.

    There are two kinds of people in this world. The kind who divide the world into two kinds of people, and the kind who don't.

    by upstate NY on Tue Feb 28, 2012 at 10:16:37 AM PST

    •  What information do you want me to know? (0+ / 0-)

      The percentage of Greek citizens payed off the public paycheck? (20%)  The Greek budget deficit -- not debt, deficit -- as a fraction of GDP?  (14.5% in 2009, 13.6% in 2010 -- that's more than a quarter of GDP in two years!)  

      The Greek government was selling bread and circuses on someone else's dime.  Krugman is right that radical austerity is the wrong strategy, but the rest of Europe is right to look at Greece with horror.

      •  It's the same stuff the right peddles (0+ / 0-)

        over here in the USA.

        I don't need any information from you. I know a ton about the situation.

        As for your stats, 20%? That's a lot you think?

        OECD has the stats for a comparison:
        http://www.oecd.org/...

        Greece has one of the lowest rates of public employment among OECD countries, with general government employing just 7.9% of the total labour force in 2008. This is a slight increase from 2000, when the rate was 6.8%.
        Your informartion on Greece is all wrong. You know nothing about it.

        There are two kinds of people in this world. The kind who divide the world into two kinds of people, and the kind who don't.

        by upstate NY on Tue Feb 28, 2012 at 12:20:32 PM PST

        [ Parent ]

        •  Not correct (0+ / 0-)

          You notice that your cite points to 2008?  Well, there's a reason for that -- until the 2010 census, Greece actually didn't know how many public sector employees it had.  It turns out that (as of 2010), Greece had 700,000 direct public sector employees and another 80,000 indirect employees.  That's 850K employees (source: http://apografi.yap.gov.gr/...) out of a labour force of 4.3M people.  That's 20%.

          •  Sorry...780K employees (0+ / 0-)

            Approx 20% -- the exact figure is 18%.

          •  Let me get this straight (0+ / 0-)

            You think between 2008 and 2010 they went on a hiring spree?

            There was a hiring freeze.

            Our numbers actually agree. I'm not disputing the numbers. I'm disputing your contention that Greece had a larger public workforce than others. It didn't.

            Here's another comparison: http://www.philip-atticus.com/...

            http://www.philip-atticus.com/...

            As for social expenditures, you'll find that Greece is by no means an outlier.

            Krugman made the same point: http://krugman.blogs.nytimes.com/

            Greece is middle of the road in terms of social expenditures. Read down to public social expenditure.

            Finally, in the last year and a half, Greece has cut more than 200,000 workers. They are way down into the 500,000s.

            http://www.skai.gr/...

            The war against government is the neoliberals dream, and that's how Greece's huge debt has been couched. But it's a lie.

            There are two kinds of people in this world. The kind who divide the world into two kinds of people, and the kind who don't.

            by upstate NY on Tue Feb 28, 2012 at 02:49:43 PM PST

            [ Parent ]

            •  The older figures are *fake* (0+ / 0-)

              For what it's worth, I'm familiar with the Atticus piece.  It's wrong: it depends on the 2008 OECD sample, and  the problem is that the OECD number appears to be fraudulent.  Essentially, Brussels and Berlin told Athens "stop pulling numbers out of the sewer and get us real data."  Required to do so, Athens responded by (finally) measuring things in 2010 -- after two years of limited austerity, at which point the number was down to 18.5%.

              As to the 200K cut, yes, there have been about 30K jobs cut already (and, far more painfully, a 10% cut in stipends), and, yes there is another 150K cut scheduled.  I'm skeptical that it will ever happen.

              Here are the facts: since the artificial boost of the 2004 Olympics, Greece has been on a borrowing binge.  As of 2010, 40% of GDP was public expenditure.  As of 2006 -- prior to the austerity-induced depression hitting the country now -- public debt was at 106% of GDP.  That number has gotten catastrophically worse, both as a consequence of the rampant deflation in the country and the massive, horrific unemployment the Troika's policies have created, but it was already a disaster before all this started.

              I'm already on record saying that I don't think that austerity will fix things for Greece -- but I'm also not going to give the Greek government a pass on its fiscal irresponsibility.

              •  Two years of limited austerity? (0+ / 0-)

                I mean, I'm flabbergasted. Can hardly respond. They've slashed their budget by 34%. It's the biggest adjustment in history.

                40% of GDP AND HIGHER is public expenditure all over Europe!!!!

                Greece actually collects 39.5% of revenues in taxes.

                You're trying to stick this on the Socialist state like everyone else, but it's a lie.

                There are two kinds of people in this world. The kind who divide the world into two kinds of people, and the kind who don't.

                by upstate NY on Tue Feb 28, 2012 at 06:29:55 PM PST

                [ Parent ]

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