Economy

Paul Krugman on the Unforeseen Harm Trump Could Do If He Wins

The columnist looks at Europe for a lesson in how to be an imperfect union.

Photo Credit: YouTube

Until Donald Trump is elected president, Paul Krugman writes in Friday's column, the imperfect union of the U.S. is more equipped to handle challenges than the much more imperfect union in Europe. He opens by correcting the misconception about why we celebrate Thanksgiving. Lincoln made it a federal holiday. It's a celebration of national unity. "And our national unity is indeed something to be thankful for," he writes.

Europe has attempted to achieve closer social and economic integration as well. But the project is incomplete and has hit some snags recently. Krugman:

At first sight, the financial crisis, the refugee crisis, and the terrorist attacks might not seem to have anything in common. But in each case Europe’s ability to protect itself turns out to have been undermined by its imperfect union.

On the financial crisis: There’s widespread consensus among economists(though not, alas, among politicians) that Europe’s woes were mainly caused by mood swings among private investors, who recklessly poured money into southern Europe after the creation of the euro, then abruptly reversed course a decade later. Yet something similar happened in America, too, where money first poured into mortgage lending in the “sand states” — Florida, Arizona, Nevada, California — then took flight. In the U.S., however, the pain of that reversal was limited by federal institutions, ranging from Social Security to deposit insurance. In Europe, unfortunately, the cost of bank bailouts and much more fell on national governments, so that private-sector overreach soon spilled over into fiscal crisis.

On refugees: the politics of immigration in general, and refugees in particular, are nasty everywhere — just listen to Donald Trump or Ted Cruz. But Europe is also trying to maintain open internal borders while leaving the management of external borders to national governments like that of impoverished, austerity-ravaged Greece. No wonder, then, that border controls are making a comeback.

And on terrorism: No free society can ever be perfectly secure from attack. But think about how much harder it gets when antiterrorism is pretty much left up to national governments, whose capacity for policing varies greatly. Imagine how New Yorkers would feel if political paralysis in New Jersey were getting in the way of any effective antiterrorist policy there, and you have a good idea of the problems Belgium has created for France.

The solution is to strengthen its union, but countries like Germany is resisting taking steps that would stabilize banks with Europe-wide deposit insurance.

The union is further being threatened by the recent moves on border control. Krugman confesses he does not know the answer; he's just grateful to be an American at this point, "at least for now. I guess we’ll see what’s left after President Trump gets done with it."

 

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