Saturday, May 1, 2010

Greece vs. California

Why is Greece's financial difficulty a more serious problem for the EU than California's for the US? Jacques Melitz ponders the question.

2 comments:

PeakVT said...

The author seems to miss a few points. 1) The deficit in California is much, much smaller relative to Cali's GDP (I calculated the 2009 number to be about 1.5% of gross state product). 2) Total debt outstanding is much lower for California (roughly 10% of GSP). 3) California - like the rest of the US - is taxed at a relative low rate.

California's deficit is entirely a political problem created by the state's bizarre constitution, not by actual spending policies.

Tom Holzman said...

I think a significant issue is one of politics and sovereignty. Here is a take on the US in a somewhat different context: http://www.washingtonpost.com/wp-dyn/content/article/2010/05/03/AR2010050304265.html

This problem looks superficially a great deal like what is going on between the main countries in the EU and the outliers in terms of bailouts (except in the US it is a longer-term issue). But, here, we are one United States, not a number of sovereign nations, and no one pays a whole lot of attention to the issue.