America under the Articles of Confederation was a mess, not unlike Europe today. Could it lead to a stronger European Union?
German Chancellor Angela Merkel and French President Nicolas Sarkozy after a joint press conference at the Elysee Palace in Paris / AP
Monday, French President Nicolas Sarkozy and German Chancellor Angela Merkel spoke of their desire to change the treaties currently holding the European Union together, and to push the countries towards a tighter, more integrated federation. "We want to make sure that the imbalances that led to the situation in the euro zone today cannot happen again," Sarkozy said.
This would be a worthy project, of course, but treaty change and Union restructuring are about as big a political and legal headache as one could possibly imagine. With Europe this fractured, could leaders really agree upon a new setup? Is the political will present in the right states? Will the markets wait for the deliberations?
One always wants to be careful with historical comparisons: though TV pundits toss them around like party favors, their predictive power is limited. Looking to the Great Depression, for instance, doesn't immediately yield a solution or a timeline for our current economic woes. But there's another moment in American history that makes for a better comparison to Europe today: the 1781 signing of the Articles of Confederation.
There's something comforting about turning to a time when America was nearly as screwed up as Europe is today. Not only did the U.S. emerge from the tangle, but it emerged considerably stronger: the states' and nation's financial and logistical problems and mismanagement wound up pushing them to develop "a more perfect Union." So let's take a look for a moment at our own country's poor showing under the Articles of Confederation.
The Articles of Confederation, our pre-Constitution national legal framework, were drafted during the American Revolution and ratified largely in the late 1770s, Maryland finally signing on in 1781. By the late 1780s -- though historians may disagree over the extent to which the states were in actual crisis -- the Confederation and its members were looking pretty shabby.
American was then a picture of, at least superficially, fascinating disarray. Under the Articles, the federal government had no power to tax. It procured money through a "requisition" system, all states contributing, in theory, to the cost of providing national, public goods. In practice, this was a disaster. After only a few requisitions, as Keith Dougherty and Michael J.G. Cain recall in an article on "Marginal Cost Sharing and the Articles of Confederation" in the journal Public Choice, "states learned to withold their payments, leaving Congress without the resources to carry out its constitutional responsibilities. Lack of revenue prevented Congress from forcefully responding to British non-compliance with the 1783 Anglo-American peace treaty, reacting to the Spanish blockade of the Mississippi River between 1784 and 1787, enforcing treaties with the Indians by limiting western movement of settlers, and averting the piracy of the Barbary states."
A pretty little arrangement, no? Much has been written about the Articles' failings, but what Dougherty and Cain point out is that they "failed to organize a union where state and national interests coincided." In practice, "states fully complying with [...] requisitions, when others did not, incurred a greater portion of the national costs than originally intended." Game theory 101.
Another set of problems, of course, came from the fact that the states were proving truly terrible at handling issues of taxation on their own. In fact, though the particulars differ, the strong financial and debt-driven component to the Confederation's problems really does prompt images of Athens in the past year.
The American Revolution, after all, was a war, wars being so famously costly that historians like Charles Tilly have argued warmaking and its associated taxation were the main drivers of state formation in Western Europe. The American Revolution had been financed through loans, bonds, and poorly conceived paper currency. States then took on this debt. Historians Oscar and Mary Flug Handlin estimated that Massachusetts in the 1780s owed over $5 million to the Confederation, its total debt around $14 million -- enormous numbers at that time. The taxes imposed as a result proved extremely burdensome, one of a few factors leading to unrest in Massachusetts culminating in the armed uprising known as Shays' Rebellion, which then became one of the factors in the general consensus that a new system might be a good idea.
Causation is tricky to establish: Robert Freer argued forcefully in The New England Quarterly back in the '60s that "in all likelihood, the Constitutional Convention would have met when it did, the same document would have been drawn up, and it would have been ratified even if Shays's Rebellion had not taken place." But one of the reasons Freer argued that we would have gotten the Constitution anyway is that there were plenty of other examples of financial and political disorder, like failure to pay federal requisitions and the states of Maryland, Virginia, and Rhode Island mucking around with paper money.
America under the Articles of Confederation, in short, was a mess. And though you could debate the details endlessly, there's little doubt that the extent of that mess was in political leaders' minds when they started talking about reconfiguring things and calling the Constitutional Convention. Thus far, the Constitution has had a better track record than the Articles in keeping order.
What does this mean for Europe today? There are a number of cases in both American and European history where a non-lethal screwup -- say, the Articles of Confederation -- has provided the necessary impetus to establish a more screwup-resistant setup, as with the Constitution. So, while the ratings agencies seem to get more pessimistic by the day about Europe's prospects, maybe European leaders could pull out of this with something even stronger. Merkel and Sarkozy likely have a very nasty path ahead of them, if, indeed, either of them manages to stay around to push the treaty modifications through -- France, recall, has elections scheduled for next year. But there's a universe in which Europe exits this crisis in a better position than that in which it entered.
In an interview, the U.S. president ties his legacy to a pact with Tehran, argues ISIS is not winning, warns Saudi Arabia not to pursue a nuclear-weapons program, and anguishes about Israel.
On Tuesday afternoon, as President Obama was bringing an occasionally contentious but often illuminating hour-long conversation about the Middle East to an end, I brought up a persistent worry. “A majority of American Jews want to support the Iran deal,” I said, “but a lot of people are anxiety-ridden about this, as am I.” Like many Jews—and also, by the way, many non-Jews—I believe that it is prudent to keep nuclear weapons out of the hands of anti-Semitic regimes. Obama, who earlier in the discussion had explicitly labeled the supreme leader of Iran, Ayatollah Ali Khamenei, an anti-Semite, responded with an argument I had not heard him make before.
“Look, 20 years from now, I’m still going to be around, God willing. If Iran has a nuclear weapon, it’s my name on this,” he said, referring to the apparently almost-finished nuclear agreement between Iran and a group of world powers led by the United States. “I think it’s fair to say that in addition to our profound national-security interests, I have a personal interest in locking this down.”
New research confirms what they say about nice guys.
Smile at the customer. Bake cookies for your colleagues. Sing your subordinates’ praises. Share credit. Listen. Empathize. Don’t drive the last dollar out of a deal. Leave the last doughnut for someone else.
Sneer at the customer. Keep your colleagues on edge. Claim credit. Speak first. Put your feet on the table. Withhold approval. Instill fear. Interrupt. Ask for more. And by all means, take that last doughnut. You deserve it.
Follow one of those paths, the success literature tells us, and you’ll go far. Follow the other, and you’ll die powerless and broke. The only question is, which is which?
Of all the issues that preoccupy the modern mind—Nature or nurture? Is there life in outer space? Why can’t America field a decent soccer team?—it’s hard to think of one that has attracted so much water-cooler philosophizing yet so little scientific inquiry. Does it pay to be nice? Or is there an advantage to being a jerk?
The Islamic State is no mere collection of psychopaths. It is a religious group with carefully considered beliefs, among them that it is a key agent of the coming apocalypse. Here’s what that means for its strategy—and for how to stop it.
What is the Islamic State?
Where did it come from, and what are its intentions? The simplicity of these questions can be deceiving, and few Western leaders seem to know the answers. In December, The New York Times published confidential comments by Major General Michael K. Nagata, the Special Operations commander for the United States in the Middle East, admitting that he had hardly begun figuring out the Islamic State’s appeal. “We have not defeated the idea,” he said. “We do not even understand the idea.” In the past year, President Obama has referred to the Islamic State, variously, as “not Islamic” and as al-Qaeda’s “jayvee team,” statements that reflected confusion about the group, and may have contributed to significant strategic errors.
Even for people with generous insurance plans, a trip to an in-network doctor can result in thousands of dollars in unexpected charges. Can anything be done?
It shouldn’t take a Harvard expert in health policy to understand a doctor’s bill. But sometimes, it does. In August of last year, Liz was a medical student whose doctor found a lump on her tonsils. Her primary-care physician referred her to an in-network ear-nose-and-throat specialist.
Liz, who asked to go by her first name, expected the usual $20 copay. Instead, she was charged $219.90—wrongly, in her view—for separate physician and facility fees. Under the terms of her plan, Liz says, she should not have been responsible for those charges. After a polite letter to her (“Thank you for your recent grievance...”), Anthem Blue Cross upheld the charges.
A few months later, Liz convinced Anthem to wipe much of the bill. But here’s the thing: By that time, she was studying health policy as a master’s student at Harvard. “It took me hours of going over the insurance policy and hours of arguing with the insurance company over that insurance pamphlet,” she said. (Later, Liz realized she had been doubly insured that month—her Harvard insurance had already kicked in—and she got the other plan to take care of the remainder of the balance.)
Advocates say that a guaranteed basic income can lead to more creative, fulfilling work. The question is how to fund it.
Scott Santens has been thinking a lot about fish lately. Specifically, he’s been reflecting on the aphorism, “If you give a man a fish, he eats for a day. If you teach a man to fish, he eats for life.” What Santens wants to know is this: “If you build a robot to fish, do all men starve, or do all men eat?”
Santens is 37 years old, and he’s a leader in the basic income movement—a worldwide network of thousands of advocates (26,000 on Reddit alone) who believe that governments should provide every citizen with a monthly stipend big enough to cover life’s basic necessities. The idea of a basic income has been around for decades, and it once drew support from leaders as different as Martin Luther King Jr. and Richard Nixon. But rather than waiting for governments to act, Santens has started crowdfunding his own basic income of $1,000 per month. He’s nearly halfway to his his goal.
A settlement between five big financial companies and the federal government shows traders blithely and openly discussing their misdeeds.
Were they greedy, or were they just foolish?
It’s one of the big questions from the 2008 economic crisis that remains open to debate. Did the world’s banking system nearly collapse because financiers were grabbing money wherever they could, no matter the costs, or was it because bankers failed to understand the risks caused by a housing bubble and credit crunch?
In at least one case, there’s a ready answer: They were both greedy and foolish.
An agreement between five banks and the federal government, announced Wednesday, forces five banks to pay a combined $5.6 billion and plead guilty to rigging markets. Four banks—Barclays, Citigroup, JPMorgan Chase, and the Royal Bank of Scotland—pled guilty to antitrust violations. UBS received immunity in the antitrust case, but will plead guilty to manipulating the London Interbank Offer Rate, or LIBOR, a benchmark interest measure. (An earlier federal agreement with UBS was rejected by a federal judge as too lenient.)
After years of offshore production, General Electric is moving much of its far-flung appliance-manufacturing operations back home. It is not alone. An exploration of the startling, sustainable, just-getting-started return of industry to the United States.
For much of the past decade, General Electric’s storied Appliance Park, in Louisville, Kentucky, appeared less like a monument to American manufacturing prowess than a memorial to it.
The very scale of the place seemed to underscore its irrelevance. Six factory buildings, each one the size of a large suburban shopping mall, line up neatly in a row. The parking lot in front of them measures a mile long and has its own traffic lights, built to control the chaos that once accompanied shift change. But in 2011, Appliance Park employed not even a tenth of the people it did in its heyday. The vast majority of the lot’s spaces were empty; the traffic lights looked forlorn.
In 1951, when General Electric designed the industrial park, the company’s ambition was as big as the place itself; GE didn’t build an appliance factory so much as an appliance city. Five of the six factory buildings were part of the original plan, and early on Appliance Park had a dedicated power plant, its own fire department, and the first computer ever used in a factory. The facility was so large that it got its own ZIP code (40225). It was the headquarters for GE’s appliance division, as well as the place where just about all of the appliances were made.
Orr: First, a brief victory lap. In this space two weeks ago, I suggested that Bronn would be a big fan of the easy-listening Westerosi standard “The Dornishman’s Wife.” And when we re-encountered Bronn tonight, what was he singing? Yep, that’s right. Readers can send in their requests for any other Seven Kingdoms chart-toppers, and we’ll see what we can accomplish. Operators are standing by.
(Also: Digression from a digression. Jerome Flynn, who plays Bronn, was trying very hard not to show off his singing voice tonight. But he was in fact half of the 1990s doo-wop duo Robson and Jerome. He gets to demonstrate his pipes a bit with this amiable cover of “Up on the Roof”; and while he’s mostly backup on “Unchained Melody,” the video makes touching use of footage from David Lean’s intimate masterpiece Brief Encounter. I can’t help but think that this background is one reason thatFlynn’s able to sell even the simplest of lines with a certain musical lilt. And now back to our regularly scheduled programming.)