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Comment by bitL | Hacker News Reader

Is USD a tragedy, given California vs Appalachia?

Krugman, who's also talked about how the Euro is a mistake, has talked about this. The difference between the EU and the US is, pensions and social security are federally managed, so even if Appalachia is bankrupt, the pensioners still get their pensions, and state legislative bodies would not have to agree to bail out other states. Meanwhile in the EU, German politicians were fighting each other asking why they should bail out Greece yet again.

I would imagine if the US had a similar union like the EU, the blue states would've long told the red states to go to hell. Although interestingly states with money would have the influence (like Germany in the EU) and would've probably pushed the smaller states around and gotten more liberal politics.

> The difference between the EU and the US is, pensions and social security are federally managed

No, they aren't, as two separate things. “Social Security” per se is federally managed, most pensions (except for federal and railroad employees) are not, neither are the bulk of social safety net programs (other than Social Security and Medicare, most of the rest are either fully state run or state adninistered within federal guidelines with partial federal reimbursement.)

> if Appalachia is bankrupt, the pensioners still get their pensions

“Appalachia” isn't an entity that can be bankrupt. But, no, in the case of a municipal bankruptcy, pensioners of that municipality lose out just like any other creditors (for states or territories, there are no general bankruptcy provisions and those would be handled ad hoc by Congress—as in Puerto Rico—but, again, pensioners would be at risk.)

Get ready for a huge upheaval, however. Urban areas in the US have typically been ok subsidizing rural areas (via healthcare and the social safety net more generally.) But since US Republicans, with their recent tax cut bill, have directly targeted urban areas with higher taxes, I'm detecting a rising current of dislike for the urban-to-rural subsidy.

We could easily end up, in the US, with the urban areas fed up with the rural areas, and once we move back to a Democratic government, the urban areas trying to punish the rural areas.

That would be really, really, really bad for the US. Really bad. (It could end up with a Greece-Germany situation happening with say Oklahoma and Kansas vs. New York and California, with crushing economic effects in red states while the blue states continue to prosper. I don't want to be alarmist but that could possibly even lead to a fracturing of the US or its currency. So yes. Really bad.)

The different monetary needs of different parts of the U.S. are a real issue but they can be papered over by taxing wealth in California and giving aid to Appalachia. That is, one country can coordinate its own monetary and fiscal policy, but countries in the E.U. can't, particularly because of the "Growth and Stability" pact.

> but countries in the E.U. can't

Do you mean countries in the euro?

You are right. The euro currency zone is not the same as the E.U.

I'm not sure that voters know the difference, but they do know there is a "democratic deficit".

> "democratic deficit".

Sorry could you elaborate? I voted for an MEP. I voted for my national government, whose leader sits on the Council. Commissioners are appointed by the same people, much like the UK civil service

taxing wealth in California and giving aid to Appalachia

That used to be taken for granted. But going forward I am worried. California is very pissed off by being targeted by this recent Republican tax cut. Let's hope it doesn't lead to retaliation against GOP base areas.

Most federal spending is not for welfare but for social security - and retirees tend to congregate in certain places. CA has less retirees than the national average. Many retirees have moved from other places, as they seek to escape high tax states. The issue seems very nuanced, not so location dependent.

There's a big gap there for sure, but the gap between (say) France and parts of eastern Europe is much larger

There used to be, but now some EEU countries already surpassed some older members like Greece and Portugal, and soon catching up with Italy and Spain (Czechia, Slovenia, Slovakia, Lithuania, Estonia). Non-EU/EEU members (Albania, Moldavia, FYROM, Montenegro, Ukraine etc.) are in a much worse shape, even at the level of the richest African countries.

Is that rift endangering the future of US as a whole?

https://en.wikipedia.org/wiki/Partition_and_secession_in_Cal...

I’m aware. Is this like a thing that’s likely to happen.

Not really. There was a pretty good chance of the state of Jefferson happening, then WWII happened and screwed up that plan. Secession would be really tricky given California's dependence on the states around it for power, water, etc.

It's a danger. It used to be unthinkable. Now it's just very very unlikely. The recent Republican tax cut for the first time really explicitly targets blue states. If the urban areas get upset and act like Germany towards Greece/Kansas/Alabama, you could see great divisions in the US.

It's the reason James Clapper[1], who measured other countries' instability, is now worried because he's seeing it in the US. https://www.wired.com/story/how-a-former-us-spy-chief-became... “The United States had begun to show many of the same characteristics of instability we used to assess other nation-states,” he writes, including rising income equality, an increasingly restive population of young people who couldn’t find work, a rural-urban divide, and declining political discourse.

[1] Leave his signals intel role aside for now; he ran agencies whose role was to predict which other countries would be unstable, and rural-urban divides are a big predictor. Gulp.

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